Business Context and Reporting Period
Company: Tapestry, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 24, 2019
Event: Entry into a Material Definitive Agreement to refinance the company's unsecured revolving credit facility.
Key Financial Metrics and Facility Terms
This filing details the terms of a new credit facility rather than reporting operational financial results (revenue, profit, or cash flow). Key metrics regarding the new facility include:
- Facility Size: $900 million unsecured revolving credit facility.
- Maturity Date: October 24, 2024.
- Expansion Option: Commitments may be increased by up to $300 million subject to conditions.
- Letters of Credit: Standby letters of credit limited to $125 million; commercial letters of credit available up to the full facility amount.
- Swing Line Loans: Available up to $20 million.
- Currency Options: Loans available in U.S. Dollars, Euros, Pounds Sterling, or Japanese Yen.
- Interest Structure: Based on an alternate base rate or Adjusted LIBO Rate plus an applicable margin determined by a Pricing Grid tied to the Leverage Ratio.
Material Changes Versus Prior Period
The primary material change is the replacement of the Existing Credit Facility dated May 30, 2017, with the New Revolving Credit Facility. The new agreement maintains the unsecured nature of the debt but updates the terms, maturity, and administrative structure. The filing does not provide comparative financial performance data (e.g., revenue or earnings changes) against prior periods.
Guidance, Covenants, and Risks
Permitted Uses: Working capital, capital expenditures, permitted investments, share purchases, dividends, and general corporate purposes (including commercial paper back-up).
Financial Covenants: The Company must comply with a maximum Leverage Ratio (consolidated debt to consolidated EBITDAR) of 4.0 to 1.0 on a quarterly basis.
Restrictive Covenants: The agreement limits the ability to incur additional debt, engage in new lines of business, incur liens, merge, consolidate, liquidate, dispose of substantially all assets, make restricted payments, or enter into affiliate transactions, subject to significant exceptions.
Events of Default: Includes nonpayment of principal or interest, violation of covenants, cross-default to other material indebtedness, bankruptcy, insolvency, and change of control. Default may result in termination of commitments and acceleration of debt maturity.
Management Commentary: The filing states the agreement was entered into in the ordinary course of business. No specific forward-looking guidance on revenue or earnings is provided in this document.
Important Facts for Investor Verification
- Verify the current utilization of the $900 million facility and the company's existing debt levels to assess liquidity.
- Confirm the company's current Leverage Ratio to ensure compliance with the 4.0 to 1.0 covenant.
- Review the full text of the New Revolving Credit Facility (to be filed as an exhibit to the next Form 10-Q) for detailed fee structures and specific covenant exceptions.
- Monitor for any future use of the $300 million accordion feature to increase the facility size.