UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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| Item 1.01 | Entry into a Material Definitive Agreement |
In order to further strengthen its liquidity position, maximize its fortress balance sheet and maintain financial flexibility, on May 11, 2020, Williams-Sonoma, Inc. (the “Company”) entered into an amendment (the “Credit Facility Amendment”) of its $300,000,000 unsecured term loan facility to extend its maturity date by one year and an agreement (the “364-Day Credit Agreement”) for an additional $200,000,000 unsecured revolving line of credit.
The Credit Facility Amendment to its Seventh Amended and Restated Credit Agreement, dated as of January 8, 2018 (the “Existing Credit Agreement” and, as amended by the Credit Facility Amendment, the “Amended Credit Agreement”) with Bank of America, N.A., as administrative agent, letter of credit issuer and swingline lender, Wells Fargo Bank, National Association, as syndication agent, and the lenders party thereto, among other changes, extends the maturity date and amends interest rates of the $300,000,000 unsecured term loan facility under the Existing Credit Agreement. The Credit Facility Amendment maintains the maturity date and interest rate of the $500,000,000 unsecured revolving line of credit. As of May 11, 2020, the Company had the $300,000,000 term loan outstanding and the $500,000,000 revolving loan outstanding under the Amended Credit Agreement. The 364-Day Credit Agreement, by and among the Company, Bank of America, N.A., as administrative agent, and the lenders party thereto, provides for an additional $200,000,000 unsecured revolving line of credit. As of May 11, 2020, the Company had not drawn on any loans under the 364-Day Credit Agreement.
Under the Amended Credit Agreement, the Company continues to be able to elect interest rates on its revolving borrowings calculated by reference to Bank of America’s prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent or a daily rate equal to one-month LIBOR plus one percent), plus a margin based on the Company’s leverage ratio ranging from 0% to 0.775%, or LIBOR plus a margin based on the Company’s leverage ratio ranging from 0.910% to 1.775%. The Company may elect interest rates on its amended term loan borrowing subject to the formula above, except that the applicable margins for prime rate loans range from 0.750% to 1.500%, and, for LIBOR loans, 1.750% to 2.500%. The revolving loans, swingline loans and revolving commitments under the Amended Credit Agreement continue to mature on January 8, 2023, and the term loan under the Amended Credit Agreement now matures on January 8, 2022. Pursuant to the Amended Credit Agreement, the Company pays certain customary fees to the administrative agent and the lenders.
Under the 364-Day Credit Agreement, the Company may elect interest rates on its revolving borrowings calculated by reference to Bank of America’s prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent or a daily rate equal to one-month LIBOR plus one percent), plus a margin based on the Company’s leverage ratio ranging from 0.750% to 1.500%, or LIBOR plus a margin based on the Company’s leverage ratio ranging from 1.750% to 2.500%. The 364-Day Credit Agreement matures on May 10, 2021. Pursuant to the 364-Day Credit Agreement, the Company pays certain customary fees to the administrative agent and the lenders.
The credit facilities under the Amended Credit Agreement and the 364-Day Credit Agreement (the “Credit Facilities”) contain certain restrictive loan covenants, including, among others, a financial covenant requiring a maximum leverage ratio (funded debt adjusted for lease and rent expense to earnings before interest, income tax, depreciation, amortization and rent expense), and covenants limiting the Company’s and its subsidiaries’ ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of assets. The Company’s obligations under the Credit Facilities are guaranteed by certain of the Company’s U.S. subsidiaries.
The Credit Facilities contain events of default that include, among others, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of covenants, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness, ERISA defaults and events constituting a change of control. The occurrence of an event of default will increase the applicable rate of interest by 2% and could result in the acceleration of the Company’s obligations under the Credit Facilities, and an obligation of any or all of the Company’s U.S. subsidiaries that have guaranteed the Credit Facilities to pay the full amount of the Company’s obligations under the Credit Facilities.
The lenders and their affiliates have engaged in, and may in the future engage in, banking and other commercial dealings in the ordinary course of business with the Company or the Company’s affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. In particular, Bank of America, N.A. and Wells Fargo Bank, National Association, lenders under the Credit Facilities, are parties to certain reimbursement agreements in connection with the Company’s commercial letter of credit reimbursement facility.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WILLIAMS-SONOMA, INC. | ||||||
| Date: May 15, 2020 |
By: |
/s/ Julie P. Whalen | ||||
| Julie P. Whalen | ||||||
| Chief Financial Officer |