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Big Lots Amends Revolving Credit Facility

September 23, 2021, 08:03 AM
Filed Under: Retail
Related: Big Lots

Big Lots, Inc. announced that on September 22, 2021 it successfully amended its 2018 $700 million five-year unsecured revolving credit facility. The amendment provides more favorable pricing, expands the types of permitted financing arrangements, and provides more flexibility to support the company's future capital allocation priorities.

The amended facility consists of a $600 million senior unsecured revolving credit facility, with an optional $300 million incremental uncommitted term loan or additional revolving credit facility. Interest rates and fees are determined on a tiered pricing schedule based on the more favorable of the Company's leverage ratio or, in the event that the Company's indebtedness becomes rated by Standard & Poor's and/or Moody's, its debt rating.

"As we continue to execute our Operation North Star strategy, and accelerate the company's growth trajectory, we are pleased to have entered into this amended credit facility," said Jonathan Ramsden, EVP, Chief Financial and Administrative Officer. "The Company's strong cash flow and earnings performance have allowed us to pursue a financing arrangement that is more suited to our current liquidity needs, while also providing flexibility for long term growth, in particular with regard to our goals of materially growing our store count and investing in our customer experience. We are highly appreciative of the tremendous support we have received from the bank group, led by PNC Bank, Wells Fargo Bank, US Bank, and Truist Bank, in putting this new facility in place."

Prior to the amendment, the Company's interest rate was LIBOR + 1.75% with a commitment fee of 25 bps. At closing, the Company's interest rate was reduced to LIBOR + 1.375% with a commitment fee of 15 bps. The Company anticipates that it will save a minimum of $300,000 in interest and fees through the end of its fiscal year and at least $850,000 on an annualized basis.

The amended leverage ratio fluctuates on a quarterly basis to account for seasonal inventory builds, and ranges from 3.25 to 3.75. Prior to the amendment, the leverage ratio ranged from 3.0 to 3.5. The minimum fixed coverage ratio is unchanged at 1.5.

The amendment extends the term of the revolver until September 22, 2026, with two one-year optional extensions. The amendment also contains a $75 million environmental, social and governance ("ESG") sublimit, which allows the Company, subject to the banks' approval, to receive favorable pricing and fee adjustments for its performance against future ESG performance metrics.

As of September 22, 2021, the Company had utilized $7 million in letters of credit and had no borrowings outstanding under the 2018 credit facility.

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