Zumiez said it entered into a secured credit agreement with Wells Fargo Bank, N.A., according to a filing with the Securities & Exchange Commission.
The Credit Agreement provides the company with a senior revolving credit facility through September 1, 2013 of up to $25.0 million, which, pursuant to an accordion feature, may be increased to $35.0 million at our discretion (the “New Facility”). The New Facility replaces the company's $25.0 million secured revolving credit facility with Wells Fargo, which was scheduled to terminate on September 1, 2011 (the “Prior Facility”). See Item 1.02. “Termination of a Material Definitive Agreement” below.
Amounts outstanding under the New Facility will bear interest either at a fluctuating rate per annum equal to 1% above the Daily One Month LIBOR Rate (as defined in the Revolving Line of Credit Note) or at a fixed rate of 1 percent above LIBOR in effect on the first day of an applicable fixed rate term. The company's obligations under the New Facility are secured by a first priority lien in the Company's accounts receivable, general intangibles, inventory and equipment. The company must also provide financial information and statements to Wells Fargo. The New Facility contains financial covenants that require the company to meet a certain quick ratio at the end of each fiscal quarter and to not exceed a specified net loss after taxes threshold on a trailing four-quarter basis. The New Facility also contains certain negative covenants that generally limit the Company's ability to, among other things, incur additional indebtedness or enter into certain transactions.
