Item 1.01 Entry into a Material Definitive Agreement.
On October 5, 2020, The Children's Place, Inc. (the "Company") and certain of
its subsidiaries entered into a Credit Agreement dated October 5, 2020 with
Crystal Financial LLC, as Lender, Administrative Agent and Collateral Agent,
(the "Credit Agreement") providing for an $80 million term loan (the "Term
Loan"). The net proceeds from the Term Loan, after deducting related fees and
expenses, will be used to repay borrowings under the Company's Amended and
Restated Credit Agreement dated May 9, 2019, as amended, with Wells Fargo,
National Association ("Wells Fargo"), Bank of America, N.A., HSBC Business
Credit (USA) Inc. and JPMorgan Chase Bank, N.A., as lenders and Wells Fargo, as
Administrative Agent, Collateral Agent and Swing Line Lender (the "ABL Credit
The Term Loan (i) matures on the earlier of October 5, 2025 and the maturity
date under the ABL Credit Facility, currently in May 2024, (ii) bears interest,
payable monthly, at the greater of (1) the three month LIBOR Rate published in
the Wall Street Journal and (2) 1.00%, plus 7.75% or 8.00% depending on the
average excess availability of credit under the ABL Credit Facility, adjusted
quarterly, and (iii) amortizes by (x) 5.00% per annum payable quarterly
beginning with the fiscal quarter ending on or around July 31, 2021 through the
fiscal quarter ending on or around April 30, 2022, (y) 7.50% per annum payable
quarterly beginning with the fiscal quarter ending on or around July 31, 2022
through the fiscal quarter ending on or around April 30, 2023, and (z) 10.00%
per annum payable quarterly thereafter.
The Term Loan is secured by a first priority security interest in the Company's
intellectual property, certain furniture, fixtures and equipment, and pledges of
subsidiary capital stock (collectively, the "Term Loan Collateral"), and a
second priority security interest in the collateral, including inventory,
securing the ABL Credit Facility. In connection with the Term Loan, the lenders
under the ABL Credit Facility were granted a second priority security interest
in the Term Loan Collateral and entered into an intercreditor agreement with the
Term Loan lender. The Term Loan is guaranteed, subject to certain exceptions, by
each of the Company's subsidiaries that guarantee the ABL Credit Facility.
The Term Loan is, in whole or in part, prepayable any time and from time to
time, at prepayment premiums specified in the Credit Agreement (subject to
certain exceptions), plus accrued and unpaid interest.
Among other covenants, the Credit Agreement limits the ability of the Company
and its subsidiaries to incur certain liens, to incur certain indebtedness,
including under the ABL Credit Facility, to make certain investments,
acquisitions, dispositions or restricted payments, or to change the nature of
its business. These covenants are substantially the same covenants as provided
in the ABL Credit Facility.
The Credit Agreement contains customary events of default, which include
(subject in certain cases to customary grace and cure periods), nonpayment of
principal or interest, breach of other covenants in the Credit Agreement,
failure to pay certain other indebtedness, including under the ABL Credit
Facility, and certain events of bankruptcy, insolvency or reorganization.
Also on October 5, 2020, the Company entered into Amendment No. 2 to the ABL
Credit Facility (the "Amendment"). The Amendment provides for certain changes
that permit the Term Loan and align the terms of the ABL Credit Facility with
the Credit Agreement.
The Credit Agreement and the Amendment are filed as Exhibits 4.1 and 4.2 to this
Current Report on Form 8-K and are incorporated herein by reference. The above
descriptions of the material terms of the Credit Agreement, the Term Loan and
the Amendment are qualified in their entirety by reference to such exhibits.
A copy of the press release announcing that the Company entered into the Credit
Agreement and the Amendment is attached to this Current Report on Form 8-K as
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 2.03 by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Appointment of a Director. On October 5, 2020, the Company appointed Tracey R.
Griffin to the Company's Board of Directors and as a member of the Audit
Committee effective immediately. Ms. Griffin will hold office until the annual
meeting of stockholders of the Company to be held in 2021. Ms. Griffin is an
independent director and qualifies as an "audit committee financial expert"
under applicable SEC rules.
Ms. Griffin currently serves as the Chief Financial Officer and Chief Operating
Officer of Framebridge, Inc., an online custom framing brand and has held that
position since November 2019. Prior to Framebridge, Ms. Griffin held the
position of Chief Financial Officer of the lifestyle retail brand Kendra Scott,
from September 2018 to November 2019. Ms. Griffin served as Chief Financial
Officer of PANDORA Americas, a global affordable jewelry brand, from February
2016 to September 2018, following her tenure as Chief Operating Officer from
October 2014 to February 2016. From October 1994 to October 2014, Ms. Griffin
served in various positions at McKinsey & Company, and as a Senior Partner since
June 2010, where she focused on retail and consumer goods. Ms. Griffin, who is
55 years old, currently serves on the board of directors of ADT Inc. and the
board of the non-profit organization Partnership for Healthier America, where
she is the Chairman of the Finance and Audit Committee, and has previously
served on the Board and Strategy Committeeof United Negro College Fund. She
holds a bachelor's degree in Finance from Georgetown University and an MBA from
There is no arrangement or understanding between Ms. Griffin and any other
person pursuant to which Ms. Griffin was appointed as a director of the Company.
Ms. Griffin will be eligible to participate in all non-management director
compensation plans and arrangements available to the Company's other independent
directors. Accordingly, on the date of her appointment as a director, Ms.
Griffin was granted time-based restricted stock units under the Company's 2011
Equity Incentive Plan (the "Plan") representing 1,397 shares of the Company's
common stock, par value $0.10 per share, which shares are deliverable to Ms.
Griffin on the first anniversary of the date of grant, subject to the terms and
conditions of the Plan.
A copy of the press release announcing the appointment of Ms. Griffin as a
director of the Company is attached to this Current Report on Form 8-K as
Appointment of Chief Operating Officer. On October 5, 2020, the Company
announced that Leah Swan Chief Administrative Officer has assumed the title of
Chief Operating Officer with continuing responsibility for Store Operations,
Information Technology, Human Resources, Real Estate, Enterprise Transformation
and Risk. Michael Scarpa continues as Chief Financial Officer. Ms. Swan and Mr.
Scarpa both continue to report to Jane Elfers, President and Chief Executive
Ms. Swan joined the Company in 2016. She has over 25 years' of experience in the
retail industry, holding Senior Vice President roles at Ross Stores and Gap
Inc., and earlier in her career holding management positions with Williams
Sonoma and The Walt Disney Company. Ms. Swan earned a Bachelor of Arts degree
from the University of Canberra of Australia.
Item 9.01 Financial Statement and Exhibits
Exhibit 4.1 Credit Agreement dated as of October 5, 2020 among the Company,
certain of its subsidiaries and Crystal Financial LLC
Exhibit 4.2 Joinder and Second Amendment dated as of October 5, 2020 to the
Amended and Restated Credit Agreement and Other Loan Documents dated
May 9, 2019 among the Company, certain of its subsidiaries and
Exhibit 99.1 Press Release dated October 6, 2020
Exhibit 99.2 Press Release dated October 6, 2020
Exhibit 104 Cover Pages Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
Forward Looking Statements
This Current Report on Form 8-K, contains or may contain forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including but not limited to statements relating
to the Company's strategic initiatives and adjusted net income per diluted
share. Forward-looking statements typically are identified by use of terms such
as "may," "will," "should," "plan," "project," "expect," "anticipate,"
"estimate" and similar words, although some forward-looking statements are
expressed differently. These forward-looking statements are based upon the
Company's current expectations and assumptions and are subject to various risks
and uncertainties that could cause actual results and performance to differ
materially. Some of these risks and uncertainties are described in the Company's
filings with the Securities and Exchange Commission, including in the "Risk
Factors" section of its annual report on Form 10-K for the fiscal year ended
February 1, 2020 and supplemented by the "Risk Factors" sections of its
quarterly reports on Form 10-Q for the fiscal quarter ended May 2, 2020 and the
fiscal quarter ended August 1, 2020. Included among the risks and uncertainties
that could cause actual results and performance to differ materially are the
risk that the Company will be unsuccessful in gauging fashion trends and
changing consumer preferences, the risks resulting from the highly competitive
nature of the Company's business and its dependence on consumer spending
patterns, which may be affected by changes in economic conditions, the risks
related to the COVID-19 pandemic, including the impact of the COVID-19 pandemic
on our business or the economy in general (including decreased customer traffic,
schools adopting a remote learning model, closures of businesses and other
activities causing decreased demand for our products and negative impacts on our
customers' spending patterns due to decreased income or actual or perceived
wealth, and the impact of the CARES Act and other legislation related to the
COVID-19 pandemic, and any changes to the CARES Act or such other legislation),
the risk that the Company's strategic initiatives to increase sales and margin
are delayed or do not result in anticipated improvements, the risk of delays,
interruptions and disruptions in the Company's global supply chain, including
resulting from COVID-19 or other disease outbreaks, foreign sources of supply in
less developed countries or more politically unstable countries, the risk that
the cost of raw materials or energy prices will increase beyond current
expectations or that the Company is unable to offset cost increases through
value engineering or price increases, various types of litigation, including
class action litigations brought under consumer protection, employment, and
privacy and information security laws and regulations, the imposition of
regulations affecting the importation of foreign-produced merchandise, including
duties and tariffs, and the uncertainty of weather patterns. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date they were made. The Company undertakes no obligation
to release publicly any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 6, 2020THE CHILDREN'S PLACE, INC.
By: /s/ Jane ElfersName: Jane Elfers
Title: President and Chief Executive Officer
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