Item 1.01 Entry into a Material Definitive Agreement.
Third Amendment to Revolving Credit Facility
On June 8, 2020, Vince, LLC (“Vince”), an indirectly wholly owned subsidiary of Vince Holding Corp. (the “Company”), entered into the Third Amendment (the “ABL Third Amendment”) to that certain Credit Agreement (the “Revolving Credit Facility”), dated August 21, 2018, by and among Vince, as the borrower, the guarantors named therein, Citizens Bank, N.A. ("Citizens"), as administrative agent and collateral agent, and the other lenders from time to time party thereto.
The ABL Third Amendment, among other things, increases availability under the facility’s borrowing base by (i) temporarily increasing the aggregate commitments under the Revolving Credit Facility to $110 million through November 30, 2020 (such period, the “Accommodation Period”) and $100 million thereafter; (ii) temporarily revising the eligibility of certain account debtors during the Accommodation Period by extending by 30 days the period during which those accounts may remain outstanding past due as well as increasing the concentration limits of certain account debtors and (iii) for any fiscal four quarter period ending prior to or on October 30, 2021, increasing the cap on certain items eligible to be added back to "Consolidated EBITDA" (as defined in the Revolving Credit Facility) to 27.5% from 22.5%.
The ABL Third Amendment also (a) waives events of default; (b) temporarily increases the applicable margin on all borrowings of revolving loans by 0.75% per annum during the Accommodation Period and increases the LIBOR floor from 0% to 1%; (c) eliminates Vince's and any loan party’s ability to designate subsidiaries as unrestricted and to make certain payments, restricted payments and investments during the Extended Accommodation Period (as defined below); (d) temporarily suspends the Consolidated Fixed Charge Coverage Ratio (“FCCR”) covenant through the delivery of a compliance certificate relating to the fiscal quarter ended July 31, 2021 (such period, the “Extended Accommodation Period”); (e) requires Vince to maintain an FCCR of 1.0 to 1.0 in the event the excess availability under the Revolving Credit Facility is less than (x) $10 million between September 6, 2020 and January 9, 2021, (y) $12.5 million between January 10, 2021 and January 31, 2021, and (z) $15 million at all other times during the Extended Accommodation Period; (f) imposes a requirement (y) to pay down the Revolving Loan Facility to the extent cash on hand exceeds $5 million on the last day of each week and (z) that, after giving effect to any borrowing thereunder, Vince may have no more than $5 million of cash on hand; (g) permits Vince to incur up to $8 million of additional secured debt (in addition to any interest accrued or paid in kind), to the extent subordinated to the Revolving Credit Facility on terms reasonably acceptable to Citizens; (h) establishes a method for imposing a successor reference rate if LIBOR should become unavailable, (i) extends the delivery periods for (x) annual financial statements for the fiscal year ended February 1, 2020 to June 15, 2020 and (y) quarterly financial statements for the fiscal quarters ended May 2, 2020 and ending August 1, 2020 to July 31, 2020 and October 29, 2020, respectively, and (j) grants ongoing relief through September 30, 2020 with respect to certain covenants regarding the payment of lease obligations.
Third Amendment to Term Loan Facility
On June 8, 2020, Vince entered into the Third Amendment (the “TL Third Amendment”) to that certain Credit Agreement (the “Term Loan Facility”), dated August 21, 2018, by and among Vince, as the borrower, the guarantors named therein, Crystal Financial LLC ("Crystal"), as administrative agent and collateral agent, and the other lenders from time to time party thereto.
The TL Third Amendment, among other things, (i) temporarily suspends the FCCR covenant through the Extended Accommodation Period; (ii) requires Vince to maintain an FCCR of 1.0 to 1.0 in the event the excess availability under the Revolving Credit Facility is less than (x) $10 million between September 6, 2020 and January 9, 2021, (y) $12.5 million between January 10, 2021 and January 31, 2021, and (z) $15 million during all other times during the Extended Accommodation Period; (iii) revises the FCCR required to be maintained following the Extended Accommodation Period (commencing with the fiscal month ending July 31, 2021) to be 1.50 to 1.0 for the fiscal quarter ending July 31, 2021, and 1.75 to 1.0 for each fiscal quarter thereafter; (iv) waives the amortization payments due on July 1, 2020 and October 1, 2020 (including the amortization payment due on April 1, 2020 that was previously deferred); (v) for any fiscal four quarter period ending prior to or on October 30, 2021, increasing the cap on certain items eligible to be added back to "Consolidated EBITDA" (as defined in the Term Loan Facility) to 27.5% from 22.5%; and (vi) during the Extended Accommodation Period, allows Vince to cure any default under the applicable FCCR covenant by including any amount provided by equity or subordinated debt (which amount shall be at least $1 million) in the calculation of excess availability under the Revolving Credit Facility so that the excess availability is above the applicable threshold described above.
The TL Third Amendment also (a) waives events of default; (b) temporarily revises the applicable margin to be 9.0% for one year after the TL Third Amendment effective date (2.0% of which is to be accrued but not payable in cash until the first anniversary of the TL Third Amendment effective date) and after such time and through the Extended Accommodation Period, 9.0% or 7.0%, subject to a pricing grid based on Consolidated EBITDA; (c) increases the LIBOR floor from 0% to 1%; (d) eliminates Vince’s and any loan party’s ability to designate subsidiaries as unrestricted and to make certain payments, restricted payments and investments during the Extended Accommodation Period; (e) resets the prepayment premium to 3.0% of the prepaid amount if prepaid prior to the first anniversary of the TL Third Amendment effective date, 1.5% of the prepaid amount if
prepaid prior to the second anniversary of the TL Third Amendment effective date and 0% thereafter; (f) imposes a requirement to pay down the Revolving Credit Facility to the extent cash on hand exceeds $5 million on the last day of each week; (g) permits Vince to incur up to $8 million of additional secured debt (in addition to any interest accrued or paid in kind), to the extent subordinated to the Term Loan Facility on terms reasonably acceptable to Crystal; (h) extends the delivery periods for (x) annual financial statements for the fiscal year ended February 1, 2020 to June 15, 2020 and (y) quarterly financial statements for the fiscal quarters ended May 2, 2020 and ending August 1, 2020 to July 31, 2020 and October 29, 2020, respectively, and (i) grants ongoing relief through September 30, 2020 with respect to certain covenants regarding the payment of lease obligations.
The foregoing is only a summary of the material terms of the ABL Third Amendment and the TL Third Amendment, respectively, does not purport to be complete, and is qualified in its entirety by reference to the ABL Third Amendment and the TL Third Amendment, respectively, to be filed with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending August 1, 2020.