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Third Amendment to the 2018 Revolving Credit Facility
As the COVID-19 pandemic continues to pose significant challenges to businesses worldwide, fashion company Vince LLC (VNCE) has taken various measures to enhance its financial stability during these critical times. The company has recently made several amendments to its 2018 Revolving Credit Facility, aimed at increasing its financial flexibility and ensuring a stronger position to navigate the current uncertain landscape.
Vince LLC entered into the Third Amendment to the 2018 Revolving Credit Facility on June 8, 2020, which temporarily increased the aggregate commitments under the facility to $110,000 through November 30, 2020. Furthermore, the amendment revised the eligibility of certain account debtors, extending by 30 days the period during which these accounts may remain outstanding past due and increasing the concentration limits of certain account debtors.
Another significant aspect of the Third Amendment was the temporary increase in the applicable margin on all borrowings of revolving loans by 0.75% per annum during the Third Amendment Accommodation Period. Additionally, the LIBOR floor was increased from 0% to 1.0%. These changes aimed at providing Vince LLC with better terms for managing its credit facility during the pandemic.
Fifth Amendment to the 2018 Revolving Credit Facility
On December 11, 2020, Vince LLC entered into the Fifth Amendment to the 2018 Revolving Credit Facility. This Fifth Amendment, among other changes, extended the period during which the eligibility of certain account debtors was revised by 30 days for outstanding past dues and increased the concentration limits for certain account debtors until July 31, 2021. Moreover, it temporarily suspended the Consolidated Fixed Charge Coverage Ratio covenant through the Extended Accommodation Period, providing Vince LLC with additional financial flexibility to address the challenges brought by the pandemic.
Securing the Third Lien Credit Facility
In addition to the amendments in its 2018 Revolving Credit Facility, Vince LLC also secured a $20,000 subordinated term loan credit facility (the “Third Lien Credit Facility”) on December 11, 2020, enabling the company to repay a portion of the borrowings outstanding under the 2018 Revolving Credit Facility.
Second Amendment to the ABL Credit Agreement
Most recently, on April 21, 2023, Vince LLC entered into the Second Amendment to the ABL Credit Agreement, which aimed at further strengthening the company’s financial position. Among other modifications, the amendment permits the sale of the intellectual property related to the Vince brand, replaces LIBOR as an interest rate benchmark in favor of Daily Simple SOFR, and increases the applicable margin in respect of loans under the ABL Credit Agreement.
Financial Flexibility and Resilience
As a result of these strategic actions, Vince LLC has successfully enhanced its financial flexibility in the face of the ongoing global crisis. As of April 29, 2023, the company reported being in compliance with applicable covenants and having $20,399 available under the 2018 Revolving Credit Facility, net of the Loan Cap. The weighted average interest rate for borrowings outstanding under the 2018 Revolving Credit Facility as of April 29, 2023, was 6.6%.
In conclusion, through timely amendments to its credit facility and the securing of a subordinated term loan, Vince LLC has displayed a robust approach in navigating the financial challenges posed by the COVID-19 pandemic. These moves have enabled the company to maintain a stronger financial position and increase its resilience in the face of unprecedented economic turbulence.
Note that we may hold securities mentioned in this article. The source of this article are the SEC filings available at https://www.sec.gov/Archives/edgar/data/1579157/000095017023027589/vnce-20230429.htm that we extracted with the help of various software tools. Even though we have implemented various fact-checking processes, some incorrect information may have remained in the article (false positive). Let us know if you find any inconsistencies!