Item 1.01 | Entry into a Material Definitive Agreement. |
Item 2.03 | Creation of a Direct Financial Obligation or Obligation Under an
Off-balance Sale Arrangement of a Registrant. |
On November 15, 2021, the Loan and Security Agreement (the :Loan Agreement”) dated April 14, 2021, as amended, by and among Xcel Brands, Inc. (Xcel”), as Borrower, and its wholly-owned subsidiaries, IM Brands, LLC, JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, Judith Ripka Fine Jewelry, LLC, H Heritage Licensing, LLC, Xcel-CT MFG, LLC and Gold Licensing, LLC, as Guarantors (each a “Guarantor” and collectively, the “Guarantors”), with the financial institutions party thereto as lenders (the “Lenders”), Bank Hapoalim, B.M., as administrative agent and collateral agent for the Lenders (in such capacity, the “Administrative Agent”), and FEAC AGENT, LLC (“FEAC”), as co-collateral agent was further amended pursuant to Amendment No. 2 to Loan and Security Agreement (the “Amendment” and, the Loan Agreement as amended by the Amendment, the “Amended Loan Agreement”) among Xcel, the Guarantors, the Lenders, the Administrative Agent and FEAC. Pursuant to the Amendment, the financial covenant schedule was amended as follows:
1.Minimum EBITDA. EBITDA of Borrower and the Included Subsidiaries on a consolidated basis shall not be less than the amounts set forth below at the end of the applicable fiscal period set forth below:
| |
Fiscal Period | Minimum EBITDA |
April 1, 2021 to September 30, 2021 | $2,200,000 |
April 1, 2021 to December 31, 2021 | $3,426,000 |
For the trailing twelve month period ending March 31, 2022 | $4,515,000 |
For the trailing twelve month period ending June 30, 2022 | $5,146,000 |
For the trailing twelve month periods ending September 30, 2022 | $6,500,000 |
For the trailing twelve month periods ending December 31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023 | $7,000,000 |
For the trailing twelve month periods ending December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025 | $7,500,000 |
2.Minimum Liquid Assets. Liquid Assets of Borrower and the Included Subsidiaries on a consolidated basis shall be at least $4,000,000 at all times.
3.Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio of Borrower and the Included Subsidiaries on a consolidated basis for (a) the nine month period ending on December 31, 2021 shall not be less than 1.00 to 1.00, (b) the twelve Fiscal Month period ending March 31, 2022 shall not be less than 1.00 to 1.00 and (c) the twelve Fiscal Month period ending at the end of each Fiscal Quarter commencing with the Fiscal Quarter ending June 30, 2022 shall not be less than 1.25 to 1.00.
4.Maximum Leverage Ratio. The Leverage Ratio of Borrower and the Included Subsidiaries on a consolidated basis for (a) the twelve Fiscal Month period ending at the end of each Fiscal Quarter shall not exceed (a) 6.75 to 1.00 for the Fiscal Quarter ending December 31, 2021, (b) 5.30 to 1.00 for each Fiscal Quarter ending March 31, 2022 and (c) 4.00 to 1.00 for each Fiscal Quarter ending on and after June 30, 2022.
5.Loan To Value Ratio. At no time shall the Loan to Value Ratio exceed 50%.
Item 2.02 | Results of Operations and Financial Conditions |
On November 15, 2021, the Registrant issued a press release announcing its financial results for the three and nine months ended September 30, 2021. As noted in the press release, the Registrant has provided certain non-U.S. generally accepted accounting principles (“GAAP”) financial measures, the reasons it provided such measures and a reconciliation of the non-U.S. GAAP measures to U.S. GAAP measures. Readers should consider non-GAAP measures in addition to,
