| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 31, 2022, Bed Bath & Beyond Inc. (the “Company”) entered into an amendment (the “Amendment”) among the Company, certain of the Company’s US and Canadian subsidiaries party thereto, JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Agent”) and Sixth Street Specialty Lending, Inc., as FILO agent (in such capacity, the “FILO Agent”), and the lenders party thereto, to that certain Amended and Restated Credit Agreement, dated as of August 9, 2021, among the Company, certain of the Company’s US and Canadian subsidiaries party thereto and the Agent (the “Credit Agreement”, and as amended by the Amendment, the “Amended Credit Agreement”).
The Credit Agreement provides for an asset-based revolving credit facility (the “ABL Facility”) with aggregate revolving commitments of $1,000,000,000, including a swingline subfacility and a letter of credit subfacility. The Amendment increased the aggregate revolving commitments by $130,000,000 to $1,130,000,000 for the time periods set forth in such Amended Credit Agreement. The Amendment also provides for a first-in-last-out term loan facility of $375,000,000, which term loans will be drawn on or prior to September 2, 2022 (such date, the “Funding Date”) (such facility, the “FILO Facility” and together with the ABL Facility, the “Credit Facilities”). The ABL Facility matures on August 9, 2026, unless required to mature earlier pursuant to the terms of the Amended Credit Agreement. The FILO Facility matures on August 31, 2027, unless required to mature earlier pursuant to the terms of the Amended Credit Agreement.
The Credit Facilities are secured on a first priority basis (subject to customary exceptions) on substantially all assets of the Company and its subsidiaries that are borrowers or guarantors under the Credit Facilities. Amounts available to be drawn from time to time under the ABL Facility (including, in part, in the form of letters of credit) are equal to the lesser of (i) outstanding revolving commitments under the Amended Credit Agreement and (ii) a borrowing base equal to the sum of (a) 90% of eligible credit card receivables, plus (b) 90% of eligible inventory (excluding eligible foreign in-transit inventory), valued at the lower of cost or market value, determined on a weighted average cost basis, minus (c) customary reserves, minus (d) FILO deficiency reserves. The term loans under the FILO Facility are subject to a borrowing base equal to the sum of (a) 15% of eligible credit card receivables, plus (b)(i) 15% of eligible inventory, plus (ii) 100% of eligible foreign in-transit inventory, plus (iii) 15% of eligible domestic in-transit inventory, in each case, valued at the lower of cost or market value, determined on a weighted average cost basis, plus (c) the lesser of (i) 68% of eligible intellectual property, which shall be reduced by 2.5% each fiscal quarter commencing with the fiscal quarter ending on or about February 25, 2023 and (ii) $115,000,000, which shall be reduced by (A) $4,687,500 each fiscal quarter commencing with the fiscal quarter ending on or about February 25, 2023 and (B) $75,000,000 upon the consummation of certain dispositions.
Subject to customary exceptions and restrictions, the Company may voluntarily repay outstanding amounts under the ABL Facility at any time without premium or penalty. Any voluntary prepayments made will not reduce commitments under the ABL Facility. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base under the ABL Facility, the Company will be required to prepay outstanding amounts or cash collateralize letter of credit obligations under the ABL Facility.
Subject to customary exceptions and restrictions, the Company may voluntarily repay outstanding amounts under the FILO Facility after the ABL Facility is paid in full. The term loans under the FILO Facility are non-callable for a period of 18 months following the Funding Date, subject to a customary make-whole premium (using a discount rate set at the treasury rate plus 0.50% per annum). Following such date, prepayments of the FILO Facility are subject to a prepayment premium equal to (i) 2.00% of the principal amount of such prepayment if made between 18 months and 30 months following the Funding Date, (ii) 1.00% of the principal amount of such prepayment if made between 30 months and 36 months following the Funding Date, and (iii) 0% after such date. Further, certain dispositions of assets, are subject to modified prepayment premiums and/or mandatory paydown requirements. If at any time the outstanding amount under the FILO Facility exceeds the borrowing base under the FILO Facility, the Company will be required to prepay term loans in an amount equal to such excess under the FILO Facility.
Outstanding amounts under the Amended Credit Agreement bear interest at a rate per annum equal to, at the applicable borrower’s election: (i) in the case of loans denominated in US dollars, SOFR and an alternate base rate and (ii) for loans denominated in Canadian dollars, CDOR and the Canadian prime rate, in each case as set forth in
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