| ITEM 1.01 |
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On August 23, 2024, Capri Holdings Limited (the “Company”) entered into a first incremental term loan amendment (the “Amendment”) to its existing senior unsecured revolving credit facility (the “Revolving Credit Facility”) with, among others, JPMorgan Chase Bank, N.A., as administrative agent (the “Existing Credit Facility” and, as amended by the Amendment, the “Credit Facility”). The Amendment amended the Existing Credit Facility, to, among other things, provide for a $450 million senior unsecured delayed draw term loan facility (the “Incremental Term Loan Facility”) that is available until November 1, 2024, the proceeds which may be used solely to repay the 4.00% senior unsecured notes issued by Michael Kors (USA), Inc., which mature on November 1, 2024.
The borrowing of the delayed draw term loans is subject to customary conditions, including pro forma compliance with the financial covenant in the Credit Facility, which requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0. If borrowed, the term loans will have a maturity date that is 364 days after the borrowing date. Amounts repaid or prepaid in respect of the term loans may not be reborrowed. The term loans will bear interest, at the Company’s option, at (i) an alternate base rate, which is the greatest of (x) the prime rate publicly announced from time to time by JPMorgan Chase, (y) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (z) the greater of term SOFR for an interest period of one month plus 10 basis points and zero, plus 100 basis points, or (ii) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero; in each case, plus an applicable margin based on the Company’s public debt ratings and/or net leverage ratio. The Incremental Term Loan Facility is subject to a commitment fee which begins to accrue 45 days after the effective date of the Amendment until the facility terminates or the term loans are funded, which is equal to 10 basis points to 20 basis points per annum, based on the Company’s public debt ratings and/or net leverage ratio, applied to the average daily unused amount of the Incremental Term Loan Facility.
The term loans may be prepaid and commitments may be terminated or reduced by the Company without premium or penalty other than customary “breakage” costs with respect to loans bearing interest based upon Adjusted Term SOFR. In addition, the Company is required to apply an amount equal to the net proceeds from certain incurrences of indebtedness for borrowed money, issuances of equity interests and dispositions of assets (subject to customary reinvestment rights) to reduce the commitments under the Incremental Term Loan Facility, or after the terms loans are funded, to prepay the term loans, subject to certain qualifications and exceptions.
The Incremental Term Loan Facility is subject to the same representations and warranties, covenants and events of default as the Revolving Credit Facility; however, the Amendment adds a covenant restricting the Company’s ability to enter into agreements for indebtedness for borrowed money that prohibits or limits any borrower or guarantor under the Credit Facility from granting liens on its assets to secure the obligations under the Credit Facility, subject to certain exceptions and qualifications.
This summary does not purport to be complete and is qualified in its entirety by reference to the Amendment, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
| ITEM 2.03 |
CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
The information contained in Item 1.01 above is hereby incorporated by reference into this Item 2.03.
