Sport Chalet, Inc. has amended its credit facility with Bank of America. Under the terms of the amendment, Bank of America has waived the company's existing event of default and certain potential defaults and amended the borrowing base, certain financial covenants and interest rates.
Under the terms of the amendment, Bank of America waived an existing event of default and certain potential defaults by the company under its Amended and Restated Loan and Security Agreement and amended provisions of the Agreement relating to those potential defaults. The amount Sport Chalet can borrow against its borrowing base under its credit facility has been reduced by approximately 3% to between 61% and 66% of eligible inventory. The interest rate has been increased from bank's prime rate plus 0.5% or LIBOR plus 2.5% (subject to reduction depending upon the company's financial performance) to prime rate plus 2.0% or LIBOR plus 4.5%. The agreement expires in June 2012.
Craig Levra, Chairman and CEO, stated, “The amended agreement is a very positive step because it is more accommodating to our operations in this difficult environment and it will allow us to refocus our attention on improving our top line results, working with our vendors to procure and market compelling merchandise, and launching our sportchalet.com website. We are also continuing to work closely with FTI Consulting who has played a key role in identifying opportunities to improve our operations by focusing on cost controls while maintaining the high levels of 'expert' service that our customers demand.”