Item 1.01 Entry into a Material Definitive Agreement.
On May 19, 2020 (the "Effective Date"), Tapestry, Inc. (the "Company") entered
into Amendment No. 1 (the "Amendment") to the revolving credit facility (the
"Revolving Credit Facility"), dated as of October 24, 2019, among the Company,
as borrower, Bank of America, N.A., as administrative agent (the "Administrative
Agent"), and a syndicate of banks and financial institutions (collectively, the
"Lenders"). Under the terms of the Amendment, during the period from the
Effective Date until October 2, 2021, the Company must maintain available
liquidity of $700 million (with available liquidity defined as the sum of
unrestricted cash and cash equivalents and available commitments under credit
facilities, including the Revolving Credit Facility). Following the period from
the Effective Date until the compliance certificate is delivered for the fiscal
quarter ending July 3, 2021 (the "Covenant Relief Period"), the Company must
comply on a quarterly basis with a maximum net leverage ratio of 4.0 to 1.0. In
addition, the Amendment provides that during the Covenant Relief Period, if any
two of the Company's three credit ratings are non-investment grade, the
Revolving Credit Facility will be guaranteed by the Company's material domestic
subsidiaries and will be subject to liens on accounts receivable, inventory and
intellectual property, in each case subject to customary exceptions. The
Amendment also contains negative covenants that limit the ability of the Company
and its subsidiaries to, among other things, incur certain debt, incur certain
liens, dispose of assets, make investments, loans or advances, and engage in
share buybacks during the Covenant Relief Period. An increased interest rate
will be applicable during the Covenant Relief Period when the Company's gross
leverage ratio exceeds 4.0 to 1.0. The $900 million aggregate commitment amount
under the revolving credit facility remains unchanged. As of May 20, 2020, $700
million of borrowings were outstanding under the Revolving Credit Facility.
In the ordinary course of their business, the Lenders and certain of their
affiliates have in the past or may in the future engage in investment and
commercial banking or other transactions of a financial nature with the Company
or its affiliates, including the provision of certain advisory services and the
making of loans to the Company and its affiliates.
This summary does not purport to be complete and is qualified in its entirety by
reference to the Amendment, which will be filed as an exhibit to the Company's
next annual report on Form 10-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 above regarding the Amendment is hereby
incorporated by reference into this Item 2.03.
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