Home Interiors & Gifts amends credit facility, converting A loans into B loans

By Sara Rosenberg

New York, Aug. 1 - Home Interiors & Gifts Inc. amended its senior secured credit facility agreement, with some holders of tranche A term loans converting their loans into tranche B term loans, according to a filing with the Securities and Exchange Commission. Bank of America is the administrative agent on the deal.

Approximately $30.96 million of term A loans were converted to term B loans.

As an incentive to convert loans, holders of tranche A loans received a conversion fee of 50 basis points.

Home Interiors also paid a 25 basis points consent fee to lenders who agreed to the change and increased interest rates by 150 basis points over the interest rates currently payable to non-consenting lenders (see table 1).

In conjunction with the conversion, the company received an advance of an additional $35 million in tranche B term loans. Proceeds from the extra $35 million will be used to fund general corporate and working capital needs.

The tranche B term loans have nominal amortization requirements until Dec. 31, 2004 and have a maturity date of Dec. 31, 2006, the filing said.

Lastly, as part of the amendment, the company's permitted acquisition basket and capital expenditure basket were increased and minimum EBITDA covenants, maximum leverage ratios and minimum fixed charge ratios were modified, according to the SEC filing.

Capital expenditures shall not exceed: $15.5 million during the fiscal year ending Dec. 31, 2001, $20 million during the fiscal year ending Dec. 31, 2002, $20 million during the fiscal year ending Dec. 31, 2003, $12 million during the fiscal year ending Dec. 31, 2004 and $12 million during the fiscal year ending Dec. 31, 2005.

EBITDA is required at not less than: $65 million at the end of the fiscal quarter ending Dec. 31, 2001, $85 million at the end of any fiscal quarter occurring during the period from and including March 31, 2002 through Sept. 30, 2003, $88 million at the end of any fiscal quarter occurring during the period from and including Dec. 31, 2003 through Sept. 30, 2004 and $90 million for the periods beginning Dec. 31, 2004 and thereafter.

The leverage ratio is set at: 4.10 to 1.00 at the end of any fiscal quarter occurring during the period from and including Dec. 31, 2001 through Sept. 30, 2003, 4.00 to 1.00 at the end of any fiscal quarter occurring during the period from Dec. 31, 2003 through Sept. 30, 2004, and 3.50 to 1.00 thereafter.

The senior leverage ratio cannot be greater than: 2.25 to 1.00 at the end of any fiscal quarter occurring during the period from and including Dec. 31, 2001 through Sept. 30, 2003, 2.20 to 1.00 at the end of any fiscal quarter occurring during the period from and including Dec. 31, 2003 through Sept. 30, 2004, 1.90 to 1.00 at the end of any fiscal quarter occurring during the period from and including Dec. 31, 2004 through Sept. 30, 2005 and 1.50 to 1.00 thereafter.

The fixed charge ratio requirement is not less than 1.10 to 1.00 beginning with the fiscal quarter ending Sept. 30, 2001 through the fiscal quarter ending on March 31, 2005 and not less than 0.75 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending June 30, 2005 and thereafter.

Table 1: Home Interiors' new interest rates for lenders consenting to amendment (margin over Libor)

Leverage Ratio Revolver, Term A Term B

Greater than or equal to 4.00 to 1.00 4.00% 4.50%

Less than 4.00 to 1.00, but equal to

or greater than 3.50 to 1.00 3.75% 4.50%

Less than 3.50 to 1.00, but equal to

or greater than 3.00 to 1.00 3.50% 4.50%

Less than 3.00 to 1.00, but equal to

or greater than 2.50 to 1.00 3.25% 4.25%

Less than 2.50 to 1.00 3.00% 4.00%

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.