Attached files
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| EX-10.1 - EXHIBIT 10.1 - HANCOCK FABRICS INC | ex10-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 15, 2012
HANCOCK FABRICS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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1-9482
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64-0740905
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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One Fashion Way
Baldwyn, Mississippi 38824
(Address of Principal Executive Offices)
(662) 365-6000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 1—Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Amended and Restated Loan and Security Agreement
Overview
On November 15, 2012, Hancock Fabrics, Inc. (the “Registrant”) entered into an amended and restated loan and security agreement with its direct and indirect subsidiaries, General Electric Capital corporation, as working capital agent, GA Capital, LLC, as term loan agent, and the lenders party thereto. The amended and restated loan and security agreement amends and restates the Registrant’s loan and security agreement dated as of August 1, 2008, and provides senior secured financing of $115 million, consisting of (a) an up to $100 million revolving credit facility and (b) an up to $15 million term loan facility. Availability of both the revolving credit facility and the term loan facility is determined by reference to the applicable borrowing base.
The Registrant, together with its subsidiaries HF Merchandising, Inc.; Hancock Fabrics of MI, Inc.; hancockfabrics.com, Inc.; and Hancock Fabrics, LLC, are the borrowers under the senior secured credit facilities. The revolving credit facility includes borrowing capacity available for letters of credit.
Interest Rate and Fees
Borrowings under the senior secured credit facilities bear interest at a rate equal to, at the option of the borrowers, either (a) a LIBOR rate determined by reference to the offered rate for deposits in dollars for the interest period relevant to such borrowing (the “Eurodollar Rate”), or (b) a prime rate, in each case plus an applicable margin and adjusted for certain additional costs and fees. The initial applicable margin for borrowings is 2.25% with respect to Eurodollar Rate loans and 1.25% with respect to prime rate loans.
Prepayments and Amortization
Principal amounts outstanding under both the revolving credit facility and the term loan facility are due in payable in full at maturity, on November 15, 2016. The borrowers may voluntarily repay outstanding loans or terminate the commitments under the revolving credit facility at any time, and may repay outstanding loans under the term loan facility at any time following the termination of the commitments under the revolving credit facility, in each case subject to certain prepayment fees and customary “breakage” costs with respect to Eurodollar Rate loans.
Guarantees and Security
All obligations under the senior secured credit facilities are guaranteed by HF Enterprises, Inc. and HF Resources, Inc., each a wholly owned subsidiary of the Registrant.
All obligations under the senior secured credit facilities are secured by substantially all of the assets of the Registrant and each of its wholly owned subsidiaries, subject to permitted liens and certain other exceptions.
Certain Covenants and Events of Default
The senior secured credit facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of the Registrant and its subsidiaries to:
| — | create liens; |
| — | make investments, loans or advances; |
| — | incur additional indebtedness; |
| — | engage in mergers or consolidations; |
| — | sell or transfer assets; |
| — | pay dividends and distributions or repurchase its own capital stock; |
| — | engage in certain transactions with affiliates; |
| — | prepay certain indebtedness, subject to exceptions for repayments of certain existing retained indebtedness, or to amend agreements governing subordinated indebtedness; and |
| — | engage in lines of business not reasonably related, ancillary, or complimentary to its current business. |
In addition, the senior secured credit facilities require the Registrant to maintain specified levels of excess availability, and if less than such level, a minimum fixed charge coverage ratio. The senior secured credit facilities also contain certain customary affirmative covenants and events of default, including without limitation, nonpayment of principal, interest or other amounts, violation of covenants, incorrectness of representations and warranties in any material respect, cross default to material indebtedness, bankruptcy, judgments, events under the Employee Retirement Income Security Act of 1974, as amended, the suspension of payments by any credit card issuer or processor, failure of any material provision of any document supporting the senior secured credit facilities to be in full force or effect, and upon a change of control, the occurrence of which would allow the lenders of the senior secured credit facilities to accelerate all outstanding loans and terminate their commitments. Certain of these events of default allow for certain grace periods.
Certain Relationships
The lenders and their affiliates have in the past engaged, and may in the future engage, in transactions with and perform services, including commercial banking, for the Registrant and its affiliates in the ordinary course of business for which they have received or will receive customary fees and expenses. Affiliates of one or more of the lenders acted as lenders and/or agents under, and as consideration therefore received customary fees and expenses in connection with, the senior secured credit facilities.
Section 2—Financial Information
Item 2.03 Creation of a Direct Financial Obligation.
The information set forth under Item 1.01 above is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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10.1
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Amended and Restated Loan and Security Agreement dated November 15, 2012 by and among Hancock Fabrics, Inc., HF Merchandising, Inc., Hancock Fabrics of MI, Inc., Hancockfabrics.com, Inc., Hancock Fabrics, LLC, HF Enterprises, Inc., HF Resources, Inc., the lenders from time to time party thereto, General Electric Capital Corporation, as working capital agent, and GA Capital, LLC, as term loan agent
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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HANCOCK FABRICS, INC.
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Date: November 19, 2012
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By:
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/s/ Robert W. Driskell | |
| Name: | Robert W. Driskell | ||
| Title: | Executive Vice President and Chief Financial Officer | ||
EXHIBIT INDEX
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Exhibit No.
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Description
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10.1
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Amended and Restated Loan and Security Agreement dated November 15, 2012 by and among Hancock Fabrics, Inc., HF Merchandising, Inc., Hancock Fabrics of MI, Inc., Hancockfabrics.com, Inc., Hancock Fabrics, LLC, HF Enterprises, Inc., HF Resources, Inc., the lenders from time to time party thereto, General Electric Capital Corporation, as working capital agent, and GA Capital, LLC, as term loan agent
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