Credit Agreements

3 Months Ended

Apr. 30, 2022

Credit Agreements

Credit Agreements

(7)   Credit Agreements

The Company’s long-term credit facilities consist of:

	April 30, 2022		January 29, 2022
Siena revolving loan due July 31, 2024, principal amount	$	61,149	$	60,216
8.5% Senior Unsecured Notes, due 2026, principal amount		80,000		80,000
GreenLake Real Estate Financing term loan due July 31, 2024, principal amount		28,500		28,500
Seller notes:
Seller note due in annual installments, maturing in November 2023, principal amount		18,990		20,062
Seller note due in quarterly installments, maturing in December 2023, principal amount		7,000		8,000
Total seller notes		25,990		28,062
GCP promissory note		10,600		—
Total debt		206,239		196,778
Less: unamortized debt issuance costs		(7,241)		(7,607)
Less: unamortized debt discount		(600)		—
Plus: unamortized debt premium		1,244		1,292
Total carrying amount of debt		199,641		190,463
Less: current portion of long-term debt		(24,095)		(14,031)
Long-term debt, net	$	175,546	$	176,432

GCP Promissory Note with Share Redemption Option

On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”), by and between the Company and Growth Capital Partners, LLC (“GCP”), for the purchase and sale of an unsecured promissory note (the “Promissory Note”) in the original aggregate principal amount of $10,600, which may, at the Company’s discretion, be settled in cash or at a premium into shares of the Company’s common stock, $0.01 par value (“Common Stock”), in a private placement upon the terms and subject to the limitations and conditions set forth in the Promissory Note. The aggregate purchase price of the Promissory Note was $10,000, which reflects an original issue discount of $600. On May 17, 2022, the Company paid off $7,500 of the Note. Additional information contained in Note 16 – “Subsequent Events.”

The Promissory Note accrues interest at 7% per annum, unless an Event of Default has occurred and is continuing, at which time at the election of the GCP, interest would accrued at a rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. The Promissory Note matures on May 18, 2023. Beginning six months after the purchase date, GCP has the right, exercisable at any time in its sole and absolute discretion, to redeem all or any portion of the Promissory Note, subject to a maximum monthly redemption amount of $1,500. As such, the entirety of the Promissory Note is included in the Current portion of long-term debt line item of the accompanying financial statements.

Interest expense recorded under the Note was $27 for the three-month period ended April 30, 2022.

Debt discount and issuance costs, net of amortization, relating to the Promissory Note were $720 and $0 as of April 30, 2022, and January 29, 2022, respectively and are included as a direct reduction to the Promissory Note liability balance within the accompanying consolidated balance sheets. The balance of these costs is being expensed as additional interest over the 13 month term of the Promissory Note at an effective interest rate of 13.3%.

8.50% Senior Unsecured Notes

On September 28, 2021, the Company completed and closed on its $80,000 offering of 8.50% Senior Unsecured Notes due 2026 (the “Notes”) and issued the Notes. The Company received related net proceeds of $73,700 after deducting the underwriting discount and estimated offering expenses payable by the Company (including fees and reimbursements to the underwriters). The Notes were issued under an indenture, dated September 28, 2021 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated September 28, 2021 (the “Supplemental Indenture,” and the Base Indenture as supplemented by the Supplemental Indenture, the “Indenture”), between the Company and the Trustee. The Notes were denominated in denominations of $25.00 and integral multiples of $25.00 in excess thereof.

The Notes pay interest quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on December 31, 2021, at a rate of 8.50% per year, and will mature on September 30, 2026.

The Notes are the senior unsecured obligations of the Company. There is no sinking fund for the Notes. The Notes are the obligations of iMedia Brands, Inc. only and are not obligations of, and are not guaranteed by, any of the Company’s subsidiaries. The Company may redeem the Notes for cash in whole or in part at any time at its option (i) on or after September 30, 2023 and prior to September 30, 2024, at a price equal to $25.75 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after September 30, 2024 and prior to September 30, 2025, at a price equal to $25.50 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, and (iii) on or after September 30, 2025 and prior to maturity, at a price equal to $25.25 per note, plus accrued and unpaid interest to, but excluding, the date of redemption. The Indenture provides for events of default that may, in certain circumstances, lead to the outstanding principal and unpaid interest of the Notes becoming immediately due and payable. If a Mandatory Redemption Event (as defined in the Supplemental Indenture) occurs, the Company will have an obligation to redeem the Notes, in whole but not in part, within 45 days after the occurrence of the Mandatory Redemption Event at a redemption price in cash equal to $25.50 per note plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Company used all of the net proceeds from the offering to fund its closing cash payment in connection with the acquisition of 123tv Invest GmbH and 123tv Holding GmbH, and any remaining proceeds for working capital and general corporate purposes, which may include payments related to the acquisition.

The offering was made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”) on August 5, 2021 and declared effective by the Commission on August 12, 2020 (File No. 333-258519), a base prospectus included as part of the registration statement, and a prospectus supplement, dated September 23, 2021, filed with the Commission pursuant to Rule 424(b) under the Securities Act.

Interest expense recorded under the 8.50% Senior Unsecured Notes was $2,037 for the three-month period ended April 30, 2022 and $0 for the three-month period ended May 1, 2021.

Debt issuance costs, net of amortization, relating to the revolving line of credit were $5,608 and $5,925 as of April 30, 2022, and January 29, 2022, respectively and are included as a direct reduction to the 8.50% Senior Unsecured Notes liability balance within the accompanying consolidated balance sheets. The balance of these costs is being expensed as additional interest over the five-year term of the 8.50% Senior Unsecured Notes at an effective interest rate of 10.1%.

Siena Credit Facility

On July 30, 2021, the Company and certain of its subsidiaries, as borrowers, entered into a loan and security agreement (as amended through April 18, 2022, the “Loan Agreement”) with Siena Lending Group LLC and the other lenders party thereto from time to time, Siena Lending Group LLC, as agent (the “Agent”), and certain additional subsidiaries of the Company, as guarantors thereunder. The Loan Agreement has a three-year term and provides for up to a $80,000 revolving line of credit. Subject to certain conditions, the Loan Agreement also provides for the issuance of letters of credit in an aggregate amount up to $5,000 which, upon issuance, would be deemed advances under the revolving line of credit. Proceeds of borrowings were used to refinance all indebtedness owing to PNC

Bank, National Association, to pay the fees, costs, and expenses incurred in connection with the Loan Agreement and the transactions contemplated thereby, for working capital purposes, and for such other purposes as specifically permitted pursuant to the terms of the Loan Agreement. The Company’s obligations under the Loan Agreement are secured by substantially all of its assets and the assets of its subsidiaries as further described in the Loan Agreement.

On April 18, 2022, the parties to the Loan and Security Agreement entered into a Fourth Amendment to the Loan Agreement (the “Fourth Amendment”), which revised the agreement to consent to enter into a Securities Purchase Agreement and sell to Investor a convertible promissory note.

On May 6, 2022, the parties to the Loan and Security Agreement entered into a Fifth Amendment to the Loan Agreement (the “Fifth Amendment”), which revised the agreement to request that Agent and Lenders agree to join Portal as a new borrower (the “New Borrower”) under the Loan Agreement and amend the terms and conditions set forth in the Loan Agreement. Additional information contained in Note 16 – “ Subsequent  Events”.

On May 27, 2022, the parties to the Loan and Security Agreement entered into a Sixth Amendment to the Loan Agreement (the “Sixth Amendment”), which revised the agreement to consent to the repayment of the short term loan advanced by 1-2-3.TV GmbH in the amount of $1,500. The Sixth Amendment also amended the required Minimum Liquidity and Senior Debt Leverage Ratio and amended the terms and conditions set forth in the Loan Agreement. Additional information contained in Note 16 – “Subsequent Events”.

Subject to certain conditions, borrowings under the Loan Agreement bear interest at 4.50% plus the London interbank offered rate for deposits in dollars (“LIBOR”) for a period of 30 days as published in The Wall Street Journal three business days prior to the first day of each calendar month. There is a floor for LIBOR of 0.50%. As of the Sixth Amendment, the LIBOR has been replaced with the SOFR.

The Loan Agreement contains customary representations and warranties and financial and other covenants and conditions, including, among other things, minimum liquidity requirements. The Company is also subject to a maximum senior net leverage ratio. In addition, the Loan Agreement places restrictions on the Company’s ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to shareholders. The Company also pays a monthly fee at a rate equal to 0.50% per annum of the average daily unused amount of the credit facility for the previous month.

As of April 30, 2022, the Company had total borrowings of $61,149 under its revolving line of credit with Siena. Remaining available capacity under the revolving line of credit as of April 30, 2022 was approximately $4,054, which provided liquidity for working capital and general corporate purposes. As of April 30, 2022, the Company was in compliance with applicable financial covenants of the Siena Credit Facility and expects to be in compliance with applicable financial covenants over the next twelve months.

Interest expense recorded under the Siena Credit Facility was $1,030 for the three-month period ended April 30, 2022 and $0 for the three-month period ended May 1, 2021.

Deferred financing costs, net of amortization, relating to the revolving line of credit were $2,303 and $2,411 as of April 30, 2022 and January 29, 2022 and are included within other assets within the accompanying condensed consolidated balance sheets. The balance of these costs is being expensed as additional interest over the three-year term of the Siena Loan Agreement.

GreenLake Real Property Financing

On July 30, 2021, two of the Company’s subsidiaries, VVI Fulfillment Center, Inc. and EP Properties, LLC (collectively, the “Borrowers”), and the Company, as guarantor, entered into that certain Promissory Note Secured by Mortgages (the “GreenLake Note”) with GreenLake Real Estate Finance LLC (“GreenLake”) whereby GreenLake agreed to make a secured term loan (the “Term Loan”) to the Borrowers in the original amount of $28,500. The GreenLake Note is secured by, among other things, mortgages encumbering the Company’s owned properties in Eden Prairie, Minnesota and Bowling Green, Kentucky (collectively, the “Mortgages”) as well as

other assets as described in the GreenLake Note. Proceeds of borrowings shall be used to (i) pay fees and expenses related to the transactions contemplated by the GreenLake Note, (ii) make certain payments approved by GreenLake to third parties, and (iii) provide for working capital and general corporate purposes of the Company. The Company has also pledged the stock that it owns in the Borrowers to secure its guarantor obligations.

The GreenLake Note is scheduled to mature on July 31, 2024. The borrowings, which include all amounts advanced under the GreenLake Note, bear interest at 10.00% per annum or, at the election of the Lender upon no less than 30 days prior written notice to the Borrowers, at a floating rate equal to the prime rate plus 200 basis points.

The Borrowers may prepay the GreenLake Note in full (but not in part) before July 30, 2022 (the “Lockout Date”) upon payment of a prepayment premium equal to the amount of interest that would have accrued from the date of prepayment through the Lockout Date. After the Lockout Date, the GreenLake Note may be prepaid in full or in any installment greater than or equal to $100,000 without any prepayment penalty or premium on 90 days’ prior written notice from Borrowers to GreenLake.

The GreenLake Note contains customary representations and warranties and financial and other covenants and conditions, including, a requirement that the Borrowers comply with all covenants set forth in the Loan Agreement described above. The GreenLake Note also contains certain customary events of default.

As of April 30, 2022, there was $28,500 outstanding under the term loan with GreenLake, all of which was classified as long-term in the accompanying condensed consolidated balance sheet. Principal borrowings under the term loan are non-amortizing over the life of the loan.

Interest expense recorded under the GreenLake Note was $889 for the three-month period ended April 30, 2022 and $0 for the three-month period ended May 1, 2021.

Debt issuance costs, net of amortization, relating to the GreenLake Note were $1,513 and $1,682 as of April 30, 2022, and January 29, 2022, respectively and are included as direct reductions to the GreenLake Note liability balance within the accompanying consolidated balance sheets. The balance of these costs is being expensed as additional interest over the three-year term of the GreenLake Note at an effective interest rate of 12.4%.

Seller Notes

On November 5, 2021 the Company issued a $20,800 seller note as a component of consideration for the acquisition of 1-2-3.tv. The seller note is payable annually in two equal installments in November 2022 and November 2023. The seller note bears interest at a rate of 8.50%. $18,990 is outstanding as of April 30, 2022. Interest expense recorded under the seller note was $418 for the three months ended April 30, 2022.

On July 30, 2021, the Company issued a $10,000 seller note as a component of consideration for the acquisition of Synacor’s Portal and Advertising business. The seller note is payable in $1,000 quarterly installments, maturing on December 31, 2023. The seller note bears interest at rates between 6% and 11% depending upon the period outstanding. $7,000 is outstanding as of April 30, 2022. Interest expense recorded under the seller note was $114 for the three months ended April 30, 2022.

Maturities

The aggregate maturities of borrowings outstanding under the Company’s long-term debt obligations as of April 30, 2022 were as follows:

			GreenLake Real
	Seller		Estate Financing		Siena		8.5% Senior			GCP
Fiscal year	Notes		Term Loan		Revolving Loan		Unsecured Notes			Note	Total
2022	$	12,495	$	—	$	—	$	—	$	10,600	$	23,095
2023		13,495		—		—		—		—		13,495
2024		—		28,500		61,149		—		—		89,649
2025		—		—		—		—		—		—
2026		—		—		—		80,000		—		80,000
Total amount due	$	25,990	$	28,500	$	61,149	$	80,000	$	10,600	$	206,239
Less: unamortized debt issuance costs		—		(1,513)		—		(5,608)		(720)		(7,841)
Plus: unamortized debt premium		1,244		—		—		—		—		1,244
Total carrying amount of debt	$	27,234	$	26,987	$	61,149	$	74,392	$	9,880	$	199,641

Restricted Cash

The Company is required to keep cash in a restricted account in order to secure letters of credit to purchase inventory as well as to secure the Company’s corporate purchasing card program. Any interest income earned is recorded in that period. The Company had $1,893 in restricted cash accounts as of April 30, 2022 and January 29, 2022.