Jul 6, 2017
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Vince amends loan and revolving credit agreements

Jul 6, 2017

Vince on Wednesday announced that it has reached an agreement to amend its Senior Secured Term Loan Facility to waive the consolidated net total leverage ratio covenant requirement through, and including the first quarter of fiscal 2019. The statement also referred to the company's recent announcement that it has filed a registration statement with SEC for a proposed rights offering to existing stockholders.


In May, Vince said that it had reached an agreement to amend its Revolving Credit Facility, immediately providing an additional $5 million in borrowing capacity under such facility, which may be increased by an additional $5 million.
The new amendment is subject to certain terms and conditions, including that $9 million of proceeds from the proposed Rights Offering will be used to pay down the debt under the Term Loan. Vince also agreed to additional amortization payments and modifications to certain negative and affirmative covenants, as well as a 2% increase in the interest rate and consent fees in the amount of 0.5% of the outstanding debt held by the consenting lenders.

“We are very pleased to have obtained amended agreements with our lenders,” said CEO Brendan Hoffman. “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.”
The capital structure of the company has been in question since April when Hoffman shared “substantial doubt about the company’s ability to continue.” Vince posted a net loss of $162.7 million in fiscal 2016 compared to net income of $5.1 million in the prior fiscal year.
In the following month, Vince received a Rights Offering Commitment Letter from Sun Fund V that provides $30 million in cash proceeds in the event that the company conducts a Rights Offering of its common stock to stockholders, which Vince filed on Wednesday.
Under the proposed Rights Offering, Vince would distribute non-transferrable subscription rights to its existing stockholders as of the record date to be determined, which would entitle the stockholders to purchase additional shares of the Company’s common stock on a pro rata basis. Today, Sun Capital Partners holds 58% of Vince’s outstanding common stock.
“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,” said Hoffman. “We also expect that this 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.”

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