Abercrombie & Fitch Co. has initiated a refinancing of its credit facilities with an eye to taking advantage of favorable conditions in the credit markets.
A&F said it is negotiating to establish a $400 million asset-based revolving credit facility to mature in five years and a $325 million term loan maturing seven years after it’s set up.
If successfully negotiated, the facilities would replace a $350 million unsecured revolving credit line set to mature in July 2016 and a $150 million term loan due to mature in February 2017.
Proceeds from the proposed term loan are expected to be used to pay off the remaining $131.5 million balance under the existing term loan, to repay outstanding borrowings of $60 million under the existing revolver and to cover related fees and transaction expenses.
The balance of the proceeds, the firm said, would be used for general corporate purchases, which could include stock repurchases previously authorized by the company.
“The proposed refinancing we have initiated is an opportunity for A&F to take advantage of current favorable credit markets and increase financial flexibility for the company in the future,” commented Everett Gallagher, treasurer of the New Albany, Ohio-based operator of the Abercrombie & Fitch, Hollister, Abercrombie and Gilly Hicks brands.
Wells Fargo Securities, PNC Capital Markets, J.P. Morgan Securities and Goldman Sachs are acting as joint lead arrangers and joint bookrunners for the term loan. Wells Fargo, PNC and J.P. Morgan are acting in those capacities for the revolver.