NEW YORK — Levi Strauss & Co. said it has received a commitment for a new $1.5 billion senior secured credit facility with improved terms.

The new line consists of a $750 million revolving credit facility and $750 million term loan. The San Francisco-based firm said the new agreement would reduce its borrowing costs and extend the maturity of the facility by 19 months to August 2003. Levi’s current line totals $1.6 billion and matures in January 2002.

In addition, the new commitment enables Levi’s to avoid incremental fees and expenses associated with its existing facility. Had Levi’s not refinanced its bank line, on Feb. 2 it would have been charged a 2 percent fee on its facility, or about $30 million, along with a higher interest rate, according to a Levi’s spokesman.

The commitment is from Bank of America, Citicorp USA and The Bank of Nova Scotia, and is expected to close in late January.

“The new facility would not only provide us with greater operating and financial flexibility, but also demonstrates the continuing confidence of our banks in the long-term prospects of our company as we implement our business turnaround,” said Bill Chiasson, Levi’s chief financial officer.

Levi’s bank facility was last amended in January 2000, with its lenders taking a lien on most of the company’s assets. Previously, all Levi’s loans were unsecured. The move by lenders to secure its loans was expected given Levi’s recent struggles and after its debt ratings were lowered to speculative grade in late 1999.

The new commitment also comes after Levi’s in late October postponed a private placement of $350 million of senior notes due 2007 because of “adverse market conditions” as demand for high-yield debt dried up. Proceeds were to be used to repay a portion of its bank debt as well as for general purposes. A Levi’s spokesman said a bank refinancing was one of the options the firm had looked into after the bond deal was canceled.

In the nine months ended Aug. 27, Levi’s earned $148 million against a loss of $151.7 million, though the year-ago period included $406 million in restructuring and one-time charges. Levi said that on an operating basis, its earnings before interest, taxes, depreciation and amortization climbed 20 percent to $423.4 million, due to higher margins and reduced operating expenses. Sales were down 10 percent to $3.4 billion.

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