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School Specialty amends credit facility, modifying covenants
By Sara Rosenberg
New York, July 7 - School Specialty Inc. amended its credit facility, revising the total leverage and senior secured leverage ratios and adding a consolidated EBITDA requirement, according to an 8-K filed with the Securities and Exchange Commission on Thursday.
Under the amendment, the consolidated total leverage ratio will not be tested for the fiscal quarters ending July 30 and Oct. 29, 2011. The ratio will then be increased to 5.50 to 1 for the fiscal quarter ending Jan. 28, 2012, 5.25 to 1 for the fiscal quarter ending April 28, 2012 and 5.50 to 1 for the fiscal quarter ending July 28, 2012, and will remain at a ratio of 4.50 to 1 thereafter.
The consolidated senior secured leverage ratio will not be tested for the fiscal quarters ending July 30 and Oct. 29 as well. This ratio will decrease to 3.00 to 1 for the fiscal quarters ending Jan. 28, 2012 and April 28, 2012, 3.50 to 1 for the fiscal quarter ending July 28, 2012 and 3.00 to 1 for the fiscal quarters ending Oct. 27, 2012 and Jan. 26, 2013, and will remain at a ratio of 3.00 to 1 thereafter.
And, the company now must maintain a new minimum consolidated EBITDA condition of $37 million for the fiscal quarter ending July 30 and $74 million for the two fiscal quarters ending Oct. 29.
The amendment was completed on July 1, but completion is conditioned on the exchange of at least $50 million of the company's 3.75% convertible subordinated debentures due 2026.
The delayed-draw term loan commitments will be permanently reduced by the amount of debentures exchanged.
Bank of America is the administrative agent on the deal.
School Specialty is a Greenville, Wis.-based education company.
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