The Finish Line, Inc. entered into an unsecured $50 million revolving credit facility credit agreement. The facility, which expires on March 1, 2013, provides that, under certain circumstances, the company may increase the aggregate maximum amount of the credit facility by up to an additional $50 million.
According to a filing with the Securities & Exchange Commission, the new credit agreement will be used by the company, among other things, to issue letters of credit, support working capital needs, fund capital expenditures and for other general corporate purposes.
The new credit agreement and related loan documents replace the company’s prior credit facility dated as of Feb. 25, 2005 and related loan documents, in each case as amended from time to time. All commitments under the prior credit agreement were terminated effective Feb. 18, 2010.
Existing letters of credit of $3,950,350 under the prior credit agreement were deemed issued under the New credit agreement. No advances were outstanding under the Prior credit agreement as of February 18, 2010, and no advances were borrowed under the New credit agreement on February 18, 2010. Accordingly, the total revolving credit availability under the New credit agreement immediately after the consummation of the New credit agreement was $46,049,650. The company’s ability to borrow monies in the future under the New credit agreement is subject to certain conditions, including compliance with certain covenants and making certain representations and warranties.
To maintain availability of funds under the new credit agreement, the Company will pay a 0.25% per annum commitment fee on the revolving credit commitments under the new credit agreement.
The initial interest rates per annum applicable to amounts outstanding under the New Credit Agreement are, at the Company’s option, either (a) the Base Rate as defined in the New Credit Agreement (the “Base Rate”) plus a margin of 0.75% per annum, or (b) the LIBOR Rate as defined in the New Credit Agreement (the “LIBOR Rate”) plus a margin of 1.75% per annum. The margin over the Base Rate and the LIBOR Rate under the New Credit Agreement may be adjusted quarterly based on the consolidated leverage ratio of the Company and its subsidiaries, as calculated pursuant to the New Credit Agreement. The maximum margin over the Base Rate under the New Credit Agreement will be 1.0% per annum; the maximum margin over the LIBOR Rate under the New Credit Agreement will be 2.0% per annum. Interest payments under the New credit agreement are due on the interest payment dates specified in the New credit agreement.
Amounts outstanding under the New Credit Agreement may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of a LIBOR Rate loan.
The obligations under the New credit agreement generally are unsecured, except that, upon a Collateralization Event (as defined in the New Credit Agreement), the company and the Subsidiary Borrowers will be deemed to have granted a security interest in the Collateral (as defined in the New Credit Agreement), subject to certain specified liens. In certain circumstances, such security interest may be released (and may subsequently spring back into effect) depending on whether the Collateralization Event is continuing (or a new Collateralization Event has occurred).
