its first-lien credit agreement and is aiming to reduce its long-term debt in
2009 by at least $300 million. The amendment applies to the company's $990
million of term loans, as well as its revolving credit facility.
“We had a very positive response to our credit amendment, approved by an
overwhelming majority of debt holders,“ Chairman and Chief Executive Officer
Richard A. Noll said. “Resolving this issue puts us in good position to
navigate this uncertain economic environment.“
The amendment increases the companys interest-rate spread by 300 basis
points, and LIBOR will remain a floating rate with no floor. With this new
interest-rate structure, Hanesbrands expects net interest expense for 2009 to
be approximately $165 million, compared with $155 million in 2008.
“This amendment and our ability to aggressively manage costs
give us additional cushion to meet our adjusted debt-to-EBITDA ratios under a
wide range of economic conditions,“ said Hanesbrands Executive Vice President
and Chief Financial Officer E. Lee Wyatt. “Even under the scenarios we
laid out at our recent investor-day presentation, we would end 2009 with at
least as much debt cushion as we had at the end of 2008.“
Under the amendment, the adjusted debt-to-EBITDA leverage ratio limits
increase from 3.75 times to 4.25 times in the first quarter of 2009, from 3.5
times to 4.2 times in the second quarter, from 3.25 times to 3.95 times in the
third quarter, and from 3.0 times to 3.6 times in the fourth quarter. After
2009, the new ratio continues to step down from 3.6 times, ending at 3.0 times
in the third quarter 2011.
The company said the goal to accelerate debt reduction this year is
supported by a number of previously-outlined factors, including cost
reductions, product price increases, second-half commodity-cost benefits,
reduced capital-expenditure needs, and plans to reduce inventory.
“Using cash flow and conservative cost and inventory management, achieving
this debt-reduction goal would bring our total long-term debt to less than $1.9
billion, a decrease of more than $700 million since our spinoff in September
2006,“ Noll said.
In February, Hanesbrands said it does not expect to achieve its
long-term profit growth goal of 10 percent to 20 percent in 2009, and was
trying to amend its credit facility to fight the recessionary environment.
