By  on December 17, 2008

Macy’s Inc. said Wednesday that it amended its existing bank credit agreement, led by Bank of America and J.P. Morgan Chase & Co., and saw its shares soar.

While the size of the credit facility, $2 billion, and its Aug. 31, 2012, maturity day remain unchanged, the covenants were revised. First, a leverage covenant moves from debt-to-capitalization to debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization), which Macy’s said was a more market-based approach that eliminates from the calculation any potential future noncash goodwill or asset impairment charges. Analysts previously had expressed concern that, under the earlier credit arrangement, a write-down of Macy’s assets could have put it out of compliance with existing covenants.

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