Big 5 Sporting Goods refinanced all its outstanding debt with a CIT-led syndicate with a new credit agreement provided by a lending group led by Wells Fargo Capital Finance. Under the new agreement, Big 5 could tap up to $200 million in revolving credit.
Wells Fargo Bank will serve as the administrative and collateral agent for the credit agreement, while Bank of America will serve as documentation agent. PNC Bank and Union Bank are also participating in the new credit agreement.
The new credit agreement provides for a revolving credit facility with aggregate availability of up to $140 million, which amount may be increased at the option of the company up to a maximum of $165 million. The company may also request additional increases in aggregate availability, which the lenders have the option to provide, up to a maximum of $200 million. The credit facility includes a $50 million sublimit for the issuance of letters of credit and a $20 million sublimit for swingline loans. In each case, the availability will be subject to a borrowing base calculation under the agreement.
Loans under the new credit facility will bear interest based on LIBO rates or a specified base rate (generally Wells Fargo's prime rate), plus a margin that is determined based on the remaining availability under the credit line. The margin for LIBO rate loans ranges from 2.00% to 2.25%, and the margin for base rate loans ranges from 1.00% to 1.25%.
The company used the proceeds from the initial borrowings under this new credit facility to repay in full all of its outstanding indebtedness under its prior financing agreement with The CIT Group/Business Credit, Inc. and a syndicate of other lenders.
“We are pleased with the terms of the new credit facility and believe they reflect the strength of our business model and strong cash flow,” said Barry Emerson, the company's chief financial officer. “We feel this facility, along with our healthy financial condition, will provide our business with financial flexibility to support continued long-term growth. We are fortunate to have partnered in this effort with such a solid bank group, led by the experience and resources of Wells Fargo Capital Finance.”
The initial termination date of the new credit facility is October 18, 2014.
