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JPMorgan Chase Agents Up To $500MM Credit Facility for Ralph Lauren

September 16, 2019, 08:45 AM
Filed Under: Consumer Products
Related: JPMorgan Chase

Ralph Lauren Corporation and certain of its foreign subsidiaries entered into a definitive credit agreement for a revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent,  Bank of America, N.A. as syndication agent, Wells Fargo Bank, N.A., HSBC Bank USA, N.A., ING Bank N.V., Dublin Branch and Deutsche Bank Securities Inc. as co-documentation agents and a syndicate of financial institutions and institutional lenders. The Facility may be used to finance the working capital needs, capital expenditures, certain investments and general corporate purposes of the Borrowers and their subsidiaries (which may include commercial paper back-up) and for funding of acquisitions.  Letters of credit (the “Letters of Credit”) may be issued under the Agreement as described below.  Certain terms and conditions of the Facility are as follows:

The Agreement provides for a five-year, with options for extension, senior revolving credit facility in an aggregate amount at any one time outstanding of up to $500 million, including sub-facilities for Letters of Credit.  In addition, the Agreement provides that the revolving commitments under the Facility may be increased to $1 billion, subject to certain terms and conditions.  The Facility will mature in August 2024. Loans may be made, at the Borrowers’ election, in Euros, Hong Kong Dollars, Japanese Yen and certain other currencies, in addition to U.S. Dollars.

The Facility will be available for the issuance of Letters of Credit by the Administrative Agent or one or more other Lenders. Standby Letters of Credit may be issued in respect of obligations of the Company or any of its subsidiaries incurred pursuant to contracts made or performances undertaken, or to be undertaken, or like matters relating to contracts to which the Company or any of its subsidiaries is, or proposes to become, a party in the ordinary course of business, including, but not limited to, for insurance purposes and in connection with lease transactions.  Commercial Letters of Credit may be issued to finance purchases of goods by the Company and its subsidiaries in the ordinary course of business. The aggregate amount outstanding at any time with respect to Letters of Credit may not exceed $50 million.

Pursuant to the Agreement, borrowings under the Facility bear interest at a rate per annum equal to, at the Borrowers’ option, either (a) an alternate base rate or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made (the “Adjusted LIBO Rate”) plus an applicable margin.  The applicable margin for Adjusted LIBO Rate loans will be adjusted by reference to a grid (the “Pricing Grid”) based on ratings for the Company’s senior, unsecured long-term indebtedness provided by established ratings agencies.  Additionally, the Borrowers will pay a commitment fee, calculated at a rate per annum determined in accordance with the Pricing Grid, on the average daily unused amount of the Facility, payable quarterly in arrears, and certain fees with respect to Letters of Credit that are issued.

The Agreement contains negative covenants that, subject to significant exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur debt, engage in new lines of business, incur liens, engage in mergers, consolidations, liquidations and dissolutions, dispose of substantially all of the assets of the Company and its subsidiaries, make investments, loans, advances, guarantees and acquisitions and enter into transactions with affiliates. The Company and its subsidiaries must also meet on a quarterly basis a test based on the ratio of (a) consolidated debt and operating lease obligations to (b) consolidated earnings before interest, taxes, depreciation, amortization and operating lease expense.

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