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Gap Inc. to Shore Up Liquidity Amid Cash Squeeze Warning

April 27, 2020, 09:10 AM
Filed Under: Retail

Clothing retailer Gap Inc. announced it priced an offering (the "Offering") of $500 million aggregate principal amount of its 8.375% Senior Secured Notes due 2023 (the "2023 Notes"), $750 million aggregate principal amount of its 8.625% Senior Secured Notes due 2025 (the "2025 Notes") and $1 billion aggregate principal amount of its 8.875% Senior Secured Notes due 2027 (the "2027 Notes" and, with the 2023 Notes and the 2025 Notes, the "Notes"), each at an offering price of 100% of the principal amount thereof.

"We intend to use the net proceeds from the sale of the Notes to refinance our 5.95% notes due April 2021, refinance all outstanding amounts under our existing $500 million, five-year, unsecured revolving credit facility, which is scheduled to expire in May 2023, pay fees and expenses of the offering, and for general corporate purposes," the company said.

The closing of the offering of the Notes is expected to occur on or about May 7, 2020, and is contingent on, and expected to occur simultaneously with, an amendment, modification, replacement, or refinancing with lenders under our existing revolving credit facility, which may include our entering into an amended and restated senior secured asset-based revolving credit facility in an initial aggregate principal amount of up to $2 billion (the "ABL Credit Facility"), subject to the satisfaction of other customary conditions.

The Notes will be guaranteed on a senior secured basis, jointly and severally, by our existing and future direct and indirect domestic subsidiaries that will guarantee the ABL Credit Facility. The notes and the related guarantees will be secured by a first priority security interest in certain of our and the guarantors’ real property in addition to a lien on substantially all of our and the guarantors’ intellectual property, equipment, investment property, and general intangibles, subject to certain exceptions and permitted liens.

The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state or other securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. Gap Inc. plans to offer and issue the Notes only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States pursuant to Regulation S. The Notes will be subject to restrictions on transferability and resale and may not be transferred or resold except in compliance with the registration requirements of the Securities Act or pursuant to an exemption therefrom and in compliance with other applicable securities laws.

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