Elizabeth Arden amends credit facility to extend maturity to 2019

By Jennifer Chiou

New York, Dec. 18 – Elizabeth Arden, Inc. entered into an amendment to its credit facility with JP Morgan Chase as administrative agent, extending the maturity date to Dec. 17, 2019, according to an 8-K filing with the Securities and Exchange Commission.

The company may borrow, on a revolving basis, up to $275 million, with a $25 million sub-limit for letters of credit.

The filing stated that the company may increase the size of the credit facility up to $375 million without entering into a formal amendment requiring the consent of all of the banks, subject to the satisfaction of certain conditions.

The facility continues to be guaranteed by all of the company's material U.S. subsidiaries and is collateralized by a first-priority lien on all of its U.S. accounts receivable and U.S. inventory.

Borrowings under the credit facility are limited to 85% of eligible accounts receivable and 85% of the appraised net liquidation value of the company's inventory, the filing noted.

In addition to extending the term of the credit facility and reducing the total commitments of the lenders, the amendment, among other things, also modified certain provisions relating to pricing, the financial maintenance covenant and the covenant regarding restricted payments.

Specifically, borrowings bear interest at Libor plus 150 basis points to 250 bps, compared to a margin of 175 bps to 250 bps previously. The unused commitment fee rate is now 37.5 bps per year.

There is a debt service coverage ratio that must be maintained at no less than 1.1 to 1 if average borrowing base capacity is equal to or less than 10% of total availability under the credit facility, or the company's borrowing availability under the credit facility, plus domestic cash and cash equivalents, is less than $20 million at any time.

Further, Elizabeth Arden may pay dividends or repurchase common stock if it maintains a debt service coverage ratio of not less than 1.1 to 1.0 and maintains borrowing base capacity plus domestic cash and cash equivalents of (i) at least $30 million from Feb. 1 to Aug. 31, and at least (ii) $35 million from Sept. 1 to Jan. 31, or (b) it maintains borrowing base capacity plus domestic cash and cash equivalents of (i) at least $40 million from Feb. 1 to Aug. 31, and at least (ii) $45 million from Sept. 1 to Jan. 31.

Elizabeth Arden is a Miramar, Fla.-based beauty products company.

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