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Amendments to Third Lien Credit Facility
Vince LLC (VNCE) recently announced amendments to its Third Lien Credit Facility held by SK Financial Services, LLC, an affiliate of Sun Capital Partners, Inc. The changes include an extension of its maturity date to March 6, 2027, a revised interest rate, and adjustments regarding its relationship with the Term Loan Credit Facility and the A&R Revolving Credit Facility Agreement.
As of April 29, 2023, Sun Capital and its affiliates own roughly 69% of the company’s common stock. Vince LLC is a subsidiary of fashion brand Vince Holding Corp., which operates under a global licensing agreement with ABG Vince following the sale of the VINCE brand’s intellectual property.
Interest Rate Changes
As per the Third Lien Credit Agreement, interest rates on loans under the Third Lien Credit Facility are paid at a rate equal to the LIBOR rate, with a 1.0% floor and applicable margins based on minimum Consolidated EBITDA. However, with the changes brought by the Third Lien First Amendment, the interest rate is now equal to the 90-day LIBOR rate plus 9.0% across the board.
Similarities with 2018 Term Loan Facility
Moreover, the Third Lien Credit Agreement does not include any financial covenants and has representations, conditions, and covenants that are substantially similar to those in the 2018 Term Loan Facility.
Funding the Third Lien Credit Facility
To fund the Third Lien Credit Facility, Vince LLC incurred $485 in deferred financing costs, which include a $400 closing fee. This amount will be payable in kind and added to the principal balance. The deferred financing costs will be recorded as deferred debt issuance costs, which are to be amortized over the remaining term of the Third Lien Credit Facility.
Repaying Borrowings and Additional Amendments
On December 11, 2020, Vince LLC received the proceeds, which were used to repay a portion of the borrowings outstanding under the 2018 Revolving Credit Facility. The Third Lien Second Amendment, signed on September 30, 2022, also permits the sale of intellectual property belonging to Rebecca Taylor, Inc. and Parker Holding, LLC, as well as the liquidation of Rebecca Taylor, Inc.
Significant Changes in Third Amendment
Furthermore, on April 21, 2023, Vince LLC entered into the Third Amendment to Third Lien Credit Agreement, which made significant changes to the agreement. These include permitting the sale of the Vince Business’s intellectual property in the Asset Sale, replacing the LIBOR with Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, and amending the maturity date of the Third Lien Credit Agreement.
Additional Amendments and Future Outlook
In addition, the amendments to the Third Lien Credit Agreement involve reducing the capacity to incur indebtedness and liens, creating restrictions on dispositions and investments, and modifying certain representations and warranties, covenants, and events of default related to the Asset Sale documentation.
With the changes to the Third Lien Credit Facility, Vince LLC aims to maintain adequate liquidity to service its debt, meet contractual payment obligations, and fund its operations. This will depend on its ability to generate sufficient cash flow from operations, maintain adequate availability under its 2018 Revolving Credit Facility, and obtain other financing as needed.
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!