| ITEM 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
On January 30, 2019, American Eagle Outfitters, Inc. (the “Company”) entered into asset-based credit facilities (the “Credit Facilities”) evidenced by, among other documents, an amended and restated credit agreement (the “Credit Agreement”) among the Company, as borrower, certain of its domestic and Canadian subsidiaries, asco-borrowers or guarantors, the lenders party thereto (“Lenders”), PNC Bank, National Association (“PNC”), in its capacity as administrative agent (the “Agent”), PNC Capital Markets, LLC, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, N.A., as joint bookrunners and joint lead arrangers, and certain other parties and agents. The Credit Agreement provides for an amended and restated senior secured asset-based revolving credit facility, including revolving loans and letters of credit, pursuant to which the Lenders from time to time will lend to and the issuing banks will issue letters of credit for the account of the Company and certain of its subsidiaries in the aggregate amount of up to $400 million, which includes a swing line loan revolving facility, a Canadian revolving facility, and letter of credit facilities. The Credit Facilities also include an uncommitted incremental feature (accordion) that could increase the aggregate principal amount up to an additional $150 million.
The Company and its domestic and Canadian subsidiaries, other than certain excluded subsidiaries, have granted to the Agent (for the benefit of the Lenders and other secured parties), as collateral security for the obligations under the Credit Facilities, banking service agreements (including specified commercial letter of credit agreements) and swap agreements, security interests in their respective inventory, accounts receivable, credit card receivables, certain deposit accounts and investment property and other related personal property (in the case of the Canadian subsidiaries, solely to secure obligations under the Canadian credit facilities), and to further secure such obligations, certain domestic subsidiaries have agreed to grant mortgages and assignments of rent in certain real estate consisting of the principal executive offices and distribution centers of the Company and its domestic subsidiaries. The Credit Facilities will be used to provide funds for general corporate purposes and working capital needs of the Company and its subsidiaries.
The Credit Agreement amends and restates a credit agreement dated December 2, 2014 (the “Prior Credit Agreement”), among the Company and certain of its subsidiaries as borrowers, each lender from time to time party thereto, and JPMorgan Chase, N.A. (“JPMorgan”) as administrative agent for the lenders, and certain other parties and agents. JPMorgan has resigned as administrative and collateral agent under the Prior Credit Agreement, and the Agent has been appointed as successor administrative agent, under a resignation and appointment of agent agreement, dated January 30, 2019, among JPMorgan as resigning agent, Agent as successor agent, and the lenders and borrowers party to the Prior Credit Agreement.
Borrowings under the Credit Agreement accrue interest at the election of the Company at an adjusted LIBO rate plus an applicable margin (ranging from 1.125% to 1.375%) or an alternate base rate plus an applicable margin (ranging from 0.125% to 0.375%), each such rate being based on average borrowing availability under the Credit Facilities. Interest shall be payable quarterly and at the end of each applicable interest period for borrowing at such adjusted LIBO rate. A commitment fee equal to 0.20% per annum on the unused portion of the aggregate commitments is payable quarterly in arrears.
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