Genesco amends and restates facility, bringing size to $375 million

By Jennifer Chiou

New York, June 28 - Genesco Inc. entered into an amendment and restatement of its credit agreement, lifting the capacity under its facility to $375 million from $300 million, according to an 8-K filed with the Securities and Exchange Commission.

The company put in place a $30 million first out, last in A-1 tranche, which provides for an additional 10% availability of eligible inventory, declining to a 7.5% advance rate after one year and then to a 5% advance rate after two years, plus an additional 5% availability of eligible wholesale receivables, declining to a 2.5% advance rate after one year and then zero after two years, plus an additional 5% of eligible credit card and debit card receivables less reserves.

The company entered into the amendment on June 23 with Bank of America, NA as administrative agent and collateral agent.

On Thursday, the company, through its newly formed wholly owned subsidiary Genesco (UK) Ltd., completed the acquisition of all the outstanding shares of Schuh Group Ltd., a specialty retailer of casual and athletic footwear. The facility was amended to permit the Schuh acquisition, the filing stated.

Other changes include the reduction of the company's option to further increase the availability under the credit facility to $75 million from $150 million.

The 8-K added that along with the security previously granted to the lenders, Genesco has pledged 65% of its interest in Genesco (UK) as collateral.

Further, the amendment also permits the company to incur up to $250 million of senior debt provided that certain terms are met.

Schuh facility

In connection with the acquisition, Schuh said that it entered into an amended and restated senior term facilities agreement and working capital facility letter, providing for term loans of up to £29.5 million and a £5 million working capital facility.

The facility consists of a £15.5 million A term loan and £14 million B term loan.

The A loan bears interest at Libor plus 250 basis points while the B loan comes in at Libor plus 375 bps.

The UK facility contains covenants at the Schuh level, including a minimum interest coverage covenant initially set at 4.25x and increasing to 4.5x in January 2012 and thereafter, a maximum leverage covenant initially set at 2.75x and declining over time at various rates to 2.25x beginning in July 2012 and a minimum cash flow coverage of 1.10x, the filing stated.

Genesco is a Nashville, Tenn.-based retailer of branded footwear, licensed and branded headwear and licensed sports apparel and accessories.

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