Scholastic upsizes revolver to $300 million, extends maturity to 2026

By Marisa Wong

Los Angeles, Oct. 29 – Scholastic Corp. and principal operating subsidiary Scholastic Inc. entered into an amended and restated five-year credit agreement on Oct. 27 with a syndicate of banks and Bank of America, NA as administrative agent, according to an 8-K filed Friday with the Securities and Exchange Commission.

BofA Securities, Inc., Truist Bank and Wells Fargo Securities, LLC acted as joint lead arrangers and joint bookrunners.

The revised terms of the amended credit agreement include an increase in borrowing limits to $300 million from $250 million; an extension of the maturity date to Oct. 27, 2026; the elimination of the required securitization of the company’s inventory and accounts receivable; an unlimited basket for permitted payments of dividends and other distributions in respect of capital stock as long as the corporation’s pro forma consolidated net leverage ratio is not in excess of 2.75 to 1; the elimination of a minimum liquidity covenant; and the removal of an interest rate floor.

The applicable margin for Eurodollar borrowings under the unsecured revolver ranges from 35 basis points to 175 bps, depending upon the type of loan and the company’s then prevailing consolidated leverage ratio. Commitment fees range from 20 bps to 30 bps, also based on the consolidated leverage ratio. These terms are largely consistent with the terms of the previous credit agreement prior to its amendment in December 2020.

A portion of the revolver up to a maximum of $50 million is available for the issuance of letters of credit. In addition, up to a maximum of $15 million is available for swingline loans.

The credit agreement has an accordion feature that permits the company to increase the facility by up to an additional $150 million.

The credit agreement contains some financial covenants related to leverage and interest coverage ratios.

Scholastic is a New York-based publisher and distributor of children’s books.

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