Business Context and Reporting Period
Company: Capri Holdings Ltd
Filing Type: Form 8-K (Current Report)
Date of Report: July 1, 2022
Event: Entry into a Material Definitive Agreement (New Credit Facility) and Termination of Prior Agreement.
Key Financial Metrics and Debt Structure
This filing details a refinancing of the company's senior unsecured revolving credit facility. No operating financial metrics (revenue, profit, cash flow) are reported in this document.
- Total Revolving Credit Facility: $1.5 billion.
- Currency Options: U.S. Dollars, Euros, Canadian Dollars, Pounds Sterling, Japanese Yen, and Swiss Francs.
- Letters of Credit Sub-facility: Up to $125 million.
- Swing Line Loans: Up to $100 million (at Administrative Agent's discretion).
- Expansion Option: Ability to increase commitments or add term loans by up to $500 million, subject to lender agreement.
- Interest Rates: Variable based on benchmarks (e.g., SOFR, EURIBOR, SONIA) plus an applicable margin tied to public debt ratings and/or net leverage ratio.
- Fees: Annual administration and commitment fees ranging from 7.5 to 17.5 basis points on the average daily unused amount.
Material Changes Versus Prior Period
The 2022 Credit Facility replaces the Company's prior credit facility (originally described in an August 23, 2017 filing). The prior facility was terminated effective at the closing of the new agreement on July 1, 2022.
Covenants, Risks, and Management Commentary
Financial Covenants:
- Net Leverage Ratio: Must not exceed 4.0 to 1.0 as of the end of each fiscal quarter.
- Calculation: (Total Indebtedness + Capitalized Operating Lease Obligations - Unrestricted Cash up to $200 million) / Consolidated EBITDAR (last four consecutive fiscal quarters).
Restrictive Covenants: The agreement limits additional indebtedness, liens, acquisitions, other investments, restricted payments, and affiliate transactions.
Events of Default: Includes payment defaults, material inaccuracy of representations, covenant defaults, cross-defaults, bankruptcy/insolvency, ERISA events, material judgments, failure of guaranties, and changes of control. Default allows lenders to terminate commitments and accelerate outstanding amounts.
Prepayment: Loans may be prepaid and commitments terminated without premium or penalty, except for customary "breakage" costs on specific interest rate benchmarks.
Investor Verification Checklist
- Verify the current Net Leverage Ratio against the 4.0 to 1.0 covenant limit using the most recent quarterly financial statements.
- Confirm the Consolidated EBITDAR calculation methodology to ensure compliance with the leverage covenant definition.
- Review the public debt ratings to determine the current applicable interest rate margin and commitment fee percentage.
- Assess the impact of the $200 million unrestricted cash deduction on the leverage ratio calculation.
- Examine the full text of the Third Amended and Restated Credit Agreement (Exhibit 10.1) for specific definitions of "Total Indebtedness" and "Consolidated EBITDAR."