| Item 1.01. | Entry into a Material Definitive Agreement. |
On May 5, 2022, Guess Europe Sagl (the “Company”), a Swiss wholly-owned subsidiary of Guess?, Inc., as borrower, together with Guess? Europe, B.V., a Netherlands wholly-owned subsidiary of Guess?, Inc., as guarantor (the “Guarantor”), entered into a Revolving Credit Facility Agreement (the “Credit Agreement”) with UBS Switzerland AG (“UBS”) and Credit Suisse (Switzerland) Ltd (“Credit Suisse”), as lead arrangers and joint bookrunners, UBS, as agent, and the lenders party thereto.
The Credit Agreement provides for a EUR 250 million revolving line of credit. The credit facility is scheduled to mature on May 5, 2027. At closing, there were no direct borrowings under the credit facility. The Company terminated certain short-term borrowing arrangements totaling EUR 120 million with various banks in Europe concurrently with the closing of the Credit Agreement.
Under the Credit Agreement, the Company has an option to expand the revolving credit facility by up to EUR 100 million in the aggregate and an option to extend the maturity date by up to two years, subject to the terms and conditions of the Credit Agreement, including the willingness of existing or new lenders to undertake such increases or extensions.
The revolving credit facility may be used for working capital and other general corporate purposes. Borrowings under the facility bear interest based on the daily balance outstanding at the Euro Interbank Offered Rate (EURIBOR) plus an applicable margin (varying from 0.85% to 1.20%), provided that EURIBOR may not be less than 0.0%. The credit facility carries a commitment fee equal to the available but unused borrowing capacity multiplied by 35% of an applicable margin (varying from 0.85% to 1.20%). The Company is also required to pay a utilization fee on the total amount of the loans outstanding under the facility at rates varying from 0.10% to 0.20%, depending on the balance outstanding. The applicable margins are calculated quarterly and vary based on the leverage ratio of the Guarantor and its subsidiaries as set forth in the Credit Agreement.
The Credit Agreement also contains various annual sustainability key performance targets, the achievement of which would result in an adjustment to the interest margin ranging from a plus 5 basis points to a minus 5 basis points per year.
The Credit Agreement includes a financial covenant requiring a maximum leverage ratio of the Guarantor and its subsidiaries. In addition, the Credit Agreement includes customary representations and warranties, affirmative and negative covenants and events of default.
The Company may voluntarily reduce or terminate the revolver commitments and prepay outstanding loans under the Credit Agreement, in whole or in part, at any time, subject to customary administrative provisions.
The foregoing is intended only to be a summary of the Credit Agreement and is qualified in its entirety by the Credit Agreement, which is attached as Exhibit 10.1 and incorporated herein by reference.
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