Vince has reached an agreement with lenders to amend its senior secured term loan, which means the company can proceed with a rights offering and push forward with its turnaround efforts.

The consolidated net total leverage ratio covenant requirement has been waived all the way through the first quarter of fiscal 2019. By amending the loan, Vince can initiate its previously announced $30 million rights offering, a process that typically takes four to six weeks to play out. The agreement should allow Vince to resume normal payment terms with vendors, according to Vince executives.

“These steps, together with the completion of our proposed rights offering, will provide Vince with additional liquidity and improve the capital structure of the company,” Brendan Hoffman, chief executive officer of Vince Holdings Corp., said Wednesday. “Importantly, we believe this should relieve many of the pressures that had previously led management to conclude that there was doubt about our ability to continue as a going concern.”

Hoffman said the agreement with lenders “will alleviate the pressures on our borrowing capacity that we have seen from the accelerated terms and prepayment requirements imposed by certain vendors. We anticipate that the waiver of our covenant requirement through the first quarter of 2019, as well as the additional liquidity that we are injecting into the business, will enable us to continue to focus on driving momentum and improving performance throughout the business.”

Vince recently amended its revolving credit facility to provide an additional $5 million in borrowing capacity, which may be increased by an additional $5 million. The revolver gave Vince some short-term financial flexibility.

Vince was required not to exceed a 3.25-to-1 ratio of debt to earnings before interest, taxes, depreciation and amortization on its term loan, as disclosed at the end of the fourth quarter of this year. Breaching the covenant was a concern, but Vince doesn’t have to worry about that as it focuses on bolstering the business. The term loan stands at $45 million. Initially, when the company went public in 2013, the loan was $165 million.

The amendment to the loan is subject to certain terms and conditions, including that $9 million of proceeds from the proposed rights offering be used to pay down debt from the term loan. The company also agreed to additional amortization payments and modifications to certain negative and affirmative covenants, as well as a 2 percent increase in the interest rate and consent fees in the amount of 0.5 percent of the outstanding debt held by the consenting lenders.

Vince operates 41 full-price retail stores, 14 outlets and an e-commerce site and has corporate headquarters in New York and a design studio in Los Angeles.

For the rights offering of common stock, Vince received in June a commitment letter from its principal shareholder Sun Capital Partners to buy 58 percent of the offering, but also would buy the entire $30 million if need be.

Concerns about Vince flared up in April when the company warned of its going concern prospects and released disappointing fourth-quarter results. This year’s first-quarter results were also disappointing, with sales dropping 14.2 percent and the net loss growing to $9.3 million, though Hoffman said the results were “largely in line with expectations.”

Other steps to turn around the company included naming Caroline Belhumeur senior vice president and creative director, and Marie Fogel head of all merchandising and product development, and resetting the collection back to its original design aesthetic and quality level, with less dependence on basics. The company awaits some positive reaction from consumers.

As required, Vince sent to the New York Stock Exchange a business plan that demonstrates compliance with the stock performance requirements. The NYSE will review the plan and provide feedback to Vince in a month or two. Wednesday’s announcement on the term loan and commencement of the rights offering should factor in favorably with the NYSE.

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