TILLY'S, INC.

TLYS
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TILLY'S, INC. : Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Results of Operations and Financial Condition, Financial Statements and Exhibits (form 8-K)

11/16/2020 | 04:08pm

Item 1.01 Entry into a Material Definitive Agreement



On November 9, 2020 (the "Closing Date"), World of Jeans & Tops, a California
corporation ("WOJT") and wholly-owned subsidiary of Tilly's, Inc., a Delaware
corporation (the "Company"), as borrower, and the Company, as guarantor, entered
into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National
Association
, as lender, administrative agent and collateral agent (the "Agent").
The Credit Agreement replaced WOJT's existing amended and restated credit
agreement (the "Prior Credit Agreement"), dated as of May 3, 2012, as amended,
with the Agent, under which WOJT had revolving commitments of $25.0 million and
a sublimit on letters of credit of $15.0 million. The Prior Credit Agreement was
terminated concurrently with the entry into the Credit Agreement. No borrowings
were outstanding under the Prior Credit Agreement as of the Closing Date.
Capitalized terms used without definition are defined in the Credit Agreement.



General Terms



The Credit Agreement provides for an asset-based, senior secured revolving
credit facility ("Revolving Facility") of up to $65.0 million ("Revolving
Commitment") consisting of revolving loans, letters of credit and swing line
loans provided by Lenders, with a sublimit on letters of credit outstanding at
any time of $10.0 million and a sublimit for swing line loans of $7.5 million.
The Credit Agreement also includes an uncommitted accordion feature whereby WOJT
may increase the Revolving Commitment by an aggregate amount not to exceed
$12.5 million, subject to certain conditions. The Revolving Facility matures on
November 9, 2023. The payment and performance in full of the secured obligations
under the Revolving Facility are secured by a lien on and security interest in
all of the assets of the Company and WOJT.



The maximum borrowings permitted under the Revolving Facility is equal to the
lesser of (x) the Revolving Commitment and (y) the Borrowing Base. The Borrowing
Base is equal to (a) 90% of the Borrowers' eligible credit card receivables,
plus (b) 90% of the Cost of the Borrowers' eligible inventory, less inventory
reserves established by the Agent, and adjusted by the appraised value of such
eligible inventory, plus (c) 90% of the Cost of the Borrowers' eligible
in-transit inventory, less inventory reserves established by the Agent, and
adjusted by the appraised value of such eligible in-transit inventory (not to
exceed 10% of the total amount of all Eligible Inventory included in the
Borrowing Base) less (d) reserves established by the Agent. As of the Closing
Date, WOJT was eligible to borrow up to a total of $40.1 million under the
Revolving Facility. As of the Closing Date, WOJT had no outstanding borrowings
under the Credit Agreement and the only utilization of the letters of credit
sublimit under the Credit Agreement was a $2.025 million irrevocable standby
letter of credit, which was previously issued under the Prior Credit Agreement
and was transferred on the Closing Date to the Credit Agreement.



Interest Rates and Fees



The unused portion of the Revolving Commitment accrues a commitment fee, which
ranges from 0.375% to 0.50% per annum, based on the average daily borrowing
capacity under the Revolving Facility over the applicable fiscal quarter.
Borrowings under the Revolving Facility bear interest at a rate per annum that
ranges from the LIBOR Rate plus 2.0% to the LIBOR Rate plus 2.25%, or the Base
Rate plus 1.0% to the Base Rate plus 1.25%, based on the average daily borrowing
capacity under the Revolving Facility over the applicable fiscal quarter. WOJT
may elect to apply either the LIBOR Rate or Base Rate interest to borrowings at
its discretion, other than in the case of swing line loans, to which the Base
Rate shall apply.



Covenants



Under the Credit Agreement, WOJT and the Company are subject to a variety of
affirmative and negative covenants of types customary in an asset-based lending
facility, including a financial covenant relating to availability, and provides
for customary events of default. Prior to the first anniversary of the Closing
Date, WOJT and the Company are prohibited from declaring or paying any cash
dividends to their respective stockholders or repurchasing



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their own common stock. After the first anniversary of the Closing Date, WOJT
and the Company are allowed to declare and pay cash dividends to their
respective stockholders and repurchase their own common stock, provided, among
other things, no default or event of default exists as of the date of any such
payment and after giving effect thereto and certain minimum availability and
minimum projected availability tests are satisfied.



Events of Default



Events of default under the Credit Agreement include, among other things,
failure to pay principal, interest, fees or other amounts; covenant defaults;
material inaccuracy of representations and warranties; bankruptcy events with
respect to WOJT or the Company; actual or asserted invalidity of any of the Loan
Documents; or a change of control of WOJT or the Company.



Ancillary Agreements



In connection with the entry into the Credit Agreement, on November 9, 2020,
WOJT and the Company entered into certain ancillary agreements, including (i) a
security agreement in favor of the Agent (the "Security Agreement"), and (ii) a
guaranty by the Company in favor of the Agent (the "Guaranty"). The Security
Agreement and the Guaranty replaced (i) the general pledge agreement, dated as
of May 3, 2012, by the Company in favor of Wells Fargo Bank, National
Association
(the "Prior Pledge Agreement"), (ii) the continuing guaranty by the
Company in favor of the agent, dated May 3, 2012, (the "Prior Guaranty") and
. . .



Item 1.02 Termination of a Material Definitive Agreement



The information included in 1.01 of this Current Report on Form 8-K regarding
the termination of the Prior Credit Agreement, the Prior Pledge Agreement, the
Prior Guaranty and the Prior Security Agreements is incorporated by reference
into this Item 1.02.



Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an



Off-Balance Sheet Arrangement of a Registrant



The information included in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 2.03.



Item 7.01 Results of Operations and Financial Condition



On November 9, 2020, the Company issued a press release announcing the entry
into the Credit Agreement. A copy of this press release is furnished herewith as
Exhibit 99.1. Exhibit 99.1 shall not be deemed "filed" for purposes of
Section 18 of the Exchange Act or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act or the Exchange Act, regardless of any general incorporation
language in such filings.



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Item 9.01 Financial Statements and Exhibits





(d) Exhibits.



10.1 Credit Agreement, dated November 9, 2020, by and among World of Jeans &
Tops
, Tilly's, Inc. and Wells Fargo Bank, National Association.

10.2 Security Agreement, dated November 9, 2020, by and among World of
Jeans & Tops
, Tilly's, Inc. and Wells Fargo Bank, National Association.

10.3 Guaranty, dated November 9, 2020, of Tilly's, Inc.

99.1 Press Release of Tilly's, Inc., dated November 9, 2020.

104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).



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