Furniture Brands International Announces Closing of Debt Refinancing
Furniture World Magazine
Furniture Brands International announced that it has closed on its previously announced long-term debt facility.
On August 9, 2007, the Company entered into a Credit Agreement with certain financial institutions and JPMorgan Chase Bank, N.A., as Administrative Agent. The new Credit Agreement is a revolving credit facility with a commitment of $550 million, subject to a borrowing base of certain eligible accounts receivable and inventory. The facility allows for the issuance of letters of credit of up to $100 million and cash borrowings. Interest under the facility for the first six months will equal either: (i) the greater of the prime rate and the Federal Funds Effective Rate plus 1/2% for base rate loans, or (ii) 1.25% plus LIBOR for the applicable interest period for Eurodollar loans. After six months interest will fluctuate with average availability. The new facility is asset-based, and is secured by all of the Company's and its domestic subsidiaries' accounts receivable, inventory, cash deposit and securities accounts and certain intangibles.
The Company borrowed funds under the new Credit Agreement to pay in full the existing indebtedness in the amount of $150 million owed by the Company pursuant to the terms of its Credit Agreement dated April 21, 2006. The old Credit Agreement terminated upon the payment of those amounts. The Company also repaid in full the $150 million in Senior Notes issued under a Note Purchase Agreement dated May 17, 2006. Along with that repayment, the Company paid a make-whole premium of approximately $17 million and accrued interest of approximately $2.5 million, terminating the Note Purchase Agreement. Partially offsetting these amounts, the Company received payment of $2.8 million on an interest rate hedge.
More detail about the new credit facility, together with a copy of the Credit Agreement, will be included in a Form 8-K filing to be made by the Company soon.
W. G. (Mickey) Holliman, Chairman and Chief Executive Officer, commented: "We made the decision several months ago to change our long-term debt structure to more closely match our long-term strategy and financial goals. Our new facility was well over-subscribed by our participating financial institutions, and we are pleased to have brought it to conclusion. We expect this new facility to give us the capital structure and the flexibility we need to respond to market conditions and to accommodate our growth initiatives."
About Furniture Brands: Furniture Brands International is one of America's largest residential furniture companies. The company produces, sources, and markets its products under six of the best-known brand names in the industry -- Broyhill, Lane, Thomasville, Henredon, Drexel Heritage, and Maitland-Smith.