School Specialty enters amendment, limited waiver to loan agreement

By Jennifer Chiou

New York, Nov. 4 – School Specialty, Inc. entered into an amendment, consent and limited waiver to its loan agreement with Bank of America, NA as administrative agent and SunTrust Bank and Bank of Montreal as lenders, according to an 8-K filing with the Securities and Exchange Commission.

The company additionally entered into an amendment to its asset-backed loan agreement with Credit Suisse AG as administrative agent and collateral agent.

Under the terms of the ABL amendment,

• The cap on the amount that may be added back under the definition of EBITDA for non-recurring, unusual or extraordinary charges, business optimization expenses and other restructuring charges or reserves and cash expenses relating to earn outs and similar obligations was increased to 25% of EBITDA for each of fiscal years 2015 and 2016 and to an amount equal to 20% of EBITDA declining to 10% of EBITDA for calculation periods including portions of both fiscal years 2016 and 2017;

• The definition of “equity interest” was expanded to include additional types of equity awards that are available for grant under the company’s 2014 incentive plan and amendments related to the settlement of those awards; and

• The company may change its fiscal year to December 31, subject to certain conditions.

Under the ABL amendment, the filing stated that the lenders also waived certain defaults and events of default that occurred as a result of the conversion of certain subsidiaries of the company to Delaware limited liability companies.

Under the term loan amendment,

• The cap on the amount that may be added back under the definition of consolidated EBITDA for non-recurring, unusual or extraordinary charges, business optimization expenses and other restructuring charges or reserves and cash expenses relating to earn outs and similar obligations was increased to $8.1 million for fiscal year 2014 and $15 million for each of fiscal years 2015 and 2016;

• The definition of “equity interests” was expanded to include additional types of equity awards that are available for grant under the company’s 2014 incentive plan and amendments related to the settlement of those awards;

• The prepayment premium was changed to (a) 3% of the principal amount of term loans repaid, repriced or refinanced prior to the six month anniversary of the amendment effective date, (b) 2% of the principal amount of term loans repaid, repriced or refinanced on or prior to the first anniversary and after the six-month anniversary of the amendment effective date and (c) 1% of the principal amount of term loans repaid, repriced or refinanced on or prior to the second anniversary and after the first anniversary of the amendment effective date; and

• The company may change its fiscal year to December 31, subject to certain conditions.

School Specialty is a Greenville, Wis.-based education company.

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