Chico’s FAS, Inc. (NYSE: CHS) (the “Company”) today announced the closing of its amended and extended $300 million Senior Secured Credit Facility (the “Credit Facility”), consisting of a $285 million asset-based revolving credit agreement (“Revolver”) and a $15 million “first-in last-out” term loan (“FILO”), with Wells Fargo & Company as the lead lender. The Revolver and FILO have a five-year term maturing on October 30, 2025.
“We are pleased to announce that the Company has significantly strengthened our liquidity and enhanced our financial stability for the foreseeable future. As well, this new Credit Facility demonstrates the confidence our lenders have in Chico’s FAS and the sustainable, long-term success of our brands,” said Molly Langenstein, Chief Executive Officer and President. “We also are continuing to benefit from the aggressive measures we initiated earlier this year to streamline the organization and reduce operating and occupancy costs. These substantial ongoing cost savings initiatives are expected to benefit future years and reflect a cultural shift in how we manage our business.”
Molly Langenstein, continued: “Our new casual and cozy deliveries hitting stores were informed by customer demand during the store closure period, and these new products are resonating well across all three of our brands. Together with our three differentiated brands and strong customer loyalty for each of the brands, we are confident we have the foundation necessary to successfully navigate both the pandemic and longer term. Indeed, we are positioned to create meaningful value for our shareholders.”
David Oliver, Interim Chief Financial Officer, said: “We are pleased to have added liquidity and based on our projected cash flows do not expect to make additional draws on the Credit Facility this or next fiscal year. Our leaner expense base will allow for increases in sales to meaningfully improve profitability as the business returns to a more normal environment. We plan for a major component of our 2020 expense reductions to roll through to the bottom line in 2021, and as business continues to grow, we expect to generate increased profits.”
The amended and extended Credit Facility replaces the prior $200 million credit facility, which was scheduled to mature in August 2023. As previously reported, debt at the end of the second quarter of fiscal 2020 totaled $149 million, and there were no new borrowings on the facility prior to its amendment.
Interest on the Revolver is LIBOR (floor of 0.75%) plus a margin of 2.25% to 2.50% (based on average quarterly availability), and interest on the FILO is LIBOR (floor of 0.75) plus 4.50%. The Credit Facility is secured by inventory, receivables and real and intellectual property.
http://chicosfas.com/investors/press-releases/press-release-details/2020/Chicos-FAS-Inc.-Announces-Enhanced-Financial-Stability/default.aspx