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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): August 14, 2008
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Conn's, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-50421 06-1672840
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
3295 College Street
Beaumont, Texas
(Address of principal executive 77701
offices) (Zip Code)
Registrant's telephone number, including area code: (409) 832-1696
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Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
Asset Backed Loan Credit Facility
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Effective August 14, 2008, we entered a LOAN AND SECURITY AGREEMENT with
certain financial institutions as parties to the Agreement from time to time
referred to as Lenders, BANK OF AMERICA, N.A., a national banking association,
as Administrative Agent and Joint Book Runner for the Lenders, referred to as
Agent, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Syndication Agent and Joint
Book Runner for the Lenders, and CAPITAL ONE, N.A., as Co-Documentation Agent
for the Lenders.
This Agreement provides a $210 million revolving loan facility, referred
to as the ABL Facility, with an accordion feature allowing for future expansion
of the committed amount up to $350 million, that provides funding based on a
borrowing base calculation that includes accounts receivable and inventory. The
borrowing base is calculated as eligible inventory and receivables multiplied by
specified funding percentages, less certain reserves specified in the agreement.
The ABL Facility replaces our existing $100 million revolving credit facility,
which was terminated upon the closing of the ABL Facility. The ABL Facility
matures in August 2011 and bears interest at LIBOR plus a spread ranging from
225 basis points to 275 basis points, based on a fixed charge coverage ratio, on
the principal outstanding from time to time. All of our receivables not sold
under our asset backed securitization facility, referred to as our ABS Facility,
together with our inventory and other assets, will be pledged to the Lenders
under the ABL Facility.
Amendments to Existing Asset-Backed Securitization Facility
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In conjunction with completing this ABL Facility, Conn Funding II, L.P.,
our qualified special purpose entity, referred to as our QSPE, amended certain
of its agreements related to its ABS Facility to provide for the existence of
our ABL Facility and adjust certain terms of its borrowing arrangements to
current market requirements, including reducing the advance rate on its variable
funding note facility from a maximum of 85% to a maximum of 76%. The amended
agreements also provide for, among other things, the extension of the maturity
date on our QSPE's 364-day variable funding note facility in the amount of $100
million, from August 15 until August 28, 2008, to provide the lenders additional
time to consider renewal of the facility and the terms of renewal in light of
the completion of the ABL Facility.
Effective August 14, 2008, our QSPE, as Issuer, entered into a "Supplement
No. 1 to Amended and Restated Series 2002-A Supplement" with Wells Fargo Bank,
National Association, as Trustee, amending that certain Amended and Restated
Series 2002-A Supplement dated as of September 10, 2007 between Issuer and
Trustee. Supplement No. 1 to Amended and Restated Series 2002-A Supplement
provides for the addition of a definition of our ABL Facility, as well as
additional definitions and definitional modifications to reflect our ABL
Facility, including, among other things, additional portfolio performance
covenants relating to the combined performance of receivables financed under our
ABL Facility and the ABS Facility, and a reduction of the advance rate on the
variable funding note facility from a maximum of 85% to a maximum of 76%,
beginning on September 30, 2008.
Also, effective August 14, 2008, our QSPE entered, as Issuer, a Fourth
Supplemental Indenture with Wells Fargo Bank, National Association, as Trustee,
modifying certain definitions contained in the Base Indenture, dated as of
September 1, 2002, as amended and supplemented, providing for, among other
things, a reduction in the allowable percentage of eligible contract receivables
that have been re-aged, as adjusted per the agreement, from 20% to 15% (by
principal balance), to conform to the terms of the Series 2006-A Bonds.
Further, effective August 14, 2008, our QSPE, as Issuer, and one of our
subsidiaries, Conn Appliances, Inc., as Seller, entered a Second Amended and
Restated Note Purchase Agreement with Three Pillars Funding LLC and Park Avenue
Receivables Company, LLC, together "Conduit Purchasers", JPMorgan Chase Bank,
N.A., as funding agent for Park Avenue Receivables Company and as "Committed
Purchaser", and SunTrust Robinson Humphrey, Inc., as Administrator. The Second
Amended and Restated Note Purchase Agreement provides for, among other things,
the extension of the maturity date on the $100 million Tranche A Commitment to
August 28, 2008, the conversion of the $200 million Tranche B Commitment to a
364-day commitment with the option for the Issuer to request the commitment be
extended to September 10, 2012, if acceptable renewal terms are not provided,
and modification of the fixed charge coverage and leverage ratios to match those
in the ABL Facility.
Effective August 14, 2008, our subsidiaries Conn Appliances, Inc., as
Initial Servicer for our ABL Facility, Conn Credit Corporation, Inc. and Conn
Credit I, LP, together as Borrower under the ABL Facility, Bank of America,
N.A., as ABL Agent under the ABL Facility, Wells Fargo Bank, National
Association, as Securitization Trustee under our ABS Facility, and Bank of
America, N.A., as Collateral Agent for the ABL Agent and the Securitization
Trustee entered into an "Intercreditor Agreement" providing for, among other
things, the appointment of a collateral agent to protect the interests of the
lenders and security holders in both the ABL Facility and the ABS Facility in
amounts held by us in our bank accounts representing commingled proceeds of
assets of both us and of the QSPE, and setting forth the responsibilities of the
ABL Agent and the Securitization Trustee to the other relative to the handling
of assets pledged to the other, including the handling of customer payments,
returned or repossessed merchandise and other of our and the QSPE's assets.
Item 9.01 Financial Statements and Exhibits
Exhibit 99.1 Loan and Security Agreement (without Exhibits)
Exhibit 99.2 Supplement No. 1 to Amended and Restated Series
2002-A Supplement
Exhibit 99.3 Second Amended and Restated Note Purchase
Agreement
Exhibit 99.4 Fourth Supplemental Indenture
Exhibit 99.5 Intercreditor Agreement
SIGNATURE
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.
CONN'S, INC.
Date: August 20, 2008 By: /s/ Michael J. Poppe
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Name: Michael J. Poppe
Title: Chief Financial Officer