The Sportsman's Warehouse, which is reorganizing in bankruptcy court proceedings, is seeking to amend its debtor-in-possession financing facility after defaulting on its credit agreement. The amended facility would enable the hunt and fish retailer to continue to have access to financing and use of cash collateral while protecting the interest of lenders.
According to court papers filed with the U.S. Bankruptcy Court in Delaware and obtained by Sports Executive Weekly, General Electric Capital Corporation sent a letter to Sportsman's Warehouse on May 22 indicating that the retailer was in default of the minimum inventory level covenant under the DIP financing agreement. Sportsmans Warehouse also said it realized at the time that it would soon need an additional waiver of the restructuring milestones set forth in the DIP loan. As a result, negotiations between Sportsman's Warehouse, GECC and GB Merchant Partners, ensued.
The original DIP facility provided up to $85 million in post-petition financing to Sportsman's Warehouse.
The amendment, according to court papers, waives the minimum inventory default and sets new minimum inventory level covenants.
It also establishes new restructuring milestones and benchmarks for the commencement of going-out-of-business sales in the event that certain restructuring milestones are not met. Further, the amendment increases the availability block by $3 million. Sportsman's Warehouse also agreed to continue to retain their financial advisors to provide consulting services to the CFO on a regular basis.
In exchange for the amendment and waiver of the default, Sportsman's Warehouse has agreed to pay $100,000 to GECC and $50,000 to GB.
Under the amendment, if GB withdraws its consent to Sportsman's Warehouse's use of cash collateral following an alleged default under the amended DIP order, the retailer may contest whether such default occurred but may not seek to prime GB's collateral or to further use cash collateral over GB's objection.
Sportsman's Warehouse filed a reorganization plan and related disclosure statement on May 22. The plan calls for the retailer to emerge from bankruptcy on a stand-alone basis around a group of smaller, profitable stores. A bankruptcy court hearing on this latest matter has been scheduled for June 24.
