Item 1.01. Entry into a Material Definitive Agreement.
On April 14, 2020, Caleres, Inc. (the “Company”) and certain of its subsidiaries (Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds LLC, Vionic International LLC and Vionic Group LLC (collectively with the Company, the “Borrowers”)) entered into a Fourth Amendment to Fourth Amended and Restated Credit Agreement dated as of April 14, 2020 (the “Amendment”) with a group of lenders named in the Credit Agreement (as hereinafter defined) (collectively, the “Lenders”) and Bank of America, N.A., as administrative agent and collateral agent. The Amendment amended the Fourth Amended and Restated Credit Agreement, dated as of December 18, 2014 (as amended, the “Credit Agreement”). The Credit Agreement matures on January 18, 2024.
The Amendment, among other modifications to the Credit Agreement, increases the amount of the senior secured revolving credit facilities available to the Borrowers by $100.0 million to an aggregate amount of up to $600.0 million, subject to the calculated borrowing base restrictions, which may be further increased by up to $150.0 million (which may be further increased to account for excess borrowing base), from time to time during the term of the Credit Agreement, subject to the approval of the lenders assuming a portion thereof. As of April 14, 2020, the Company had approximately $440.0 million of credit extensions outstanding (including outstanding letters of credit), and approximately $160.0 million available for borrowing, under the Credit Agreement.
Interest on borrowings is at variable rates based on the LIBOR rate (with a floor of 1.00% imposed by the Amendment) or the prime rate, as defined in the Credit Agreement, plus a spread based upon the level of “excess availability” under the Credit Agreement (i.e., the excess, if any, of (a) the lesser of the then Loan Cap, over (b) the outstanding credit extensions). There is an unused line fee payable on the excess availability under the facility and a letter of credit fee payable on the outstanding exposure under letters of credit. The Amendment increased the spread applied to the LIBOR rate or the prime rate by a total of 75 basis points and increases the unused line fee by 5 basis points. The Amendment also restricts the ability of the Borrowers to draw upon amounts available under the Credit Agreement in excess of $450.0 million if the draw would cause the Borrowers to have greater than $60.0 million in the aggregate in its deposit accounts.
In addition, certain additional covenants would be triggered if excess availability were to fall below specified levels, including fixed charge coverage ratio requirements. Furthermore, if excess availability falls below the greater of 10.0% of the Loan Cap and $48.0 million (increased from $40.0 million by the Amendment) for three consecutive business days or an event of default occurs, the collateral agent may assume dominion and control over the Company’s cash (a “cash dominion event”) until such event of default is cured or waived or the excess availability exceeds such amount for 30 consecutive days, provided that a cash dominion event shall be deemed continuing (even if an event of default is no longer continuing and/or excess availability exceeds the required amount for thirty (30) consecutive business days) after a cash dominion event has occurred and been discontinued on two (2) occasions in any twelve (12) month period.
The foregoing description is only a summary and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.