Stein Mart 2014 Annual Report Download - page 46

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STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-22
13. Subsequent Events
Credit Facilities
On February 3, 2015, we entered into a secured $250 million second amended and restated credit agreement with Wells Fargo Bank (the
New Credit Agreement) that will mature in February 2020 and a secured $25 million master loan agreement with Wells Fargo Equipment
Finance, Inc. (the Equipment Term Loanand, together with the New Credit Agreement, the Credit Facilities) that will mature in February
2018. The Credit Facilities replace the Companys former $100 million senior secured revolving credit facility which was set to mature on
February 28, 2017. Borrowings under the Credit Facilities were initially used for a special dividend, but subsequently may be used for
working capital, capital expenditures and other general corporate purposes.
The Credit Facilities contain customary representations and warranties, affirmative and negative covenants (including, in the New Credit
Agreement, the requirement of a 1 to 1 consolidated fixed charge coverage ratio upon the occurrence and during the continuance of any
Covenant Compliance Event, as defined in the New Credit Agreement), and events of default for facilities of this type, and are cross-
collateralized and cross-defaulted. Collateral for the Credit Facilities consist of substantially all of our personal property. Wells Fargo Bank
has a first lien on all collateral other than equipment, and Wells Fargo Equipment Finance has a first lien on equipment.
Borrowings under the New Credit Agreement shall be either Base Rate Loans or LIBO Rate Loans. LIBO Rate Loans bear interest equal
to the Adjusted LIBO Rate plus the Applicable Margin (125 to 175 basis points) depending on the Quarterly Average Excess Availability.
Base Rate Loans bear interest equal to the highest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the Adjusted
LIBO Rate plus one percent (1.00%), or (c) the Wells Fargo prime rate,plus the Applicable Margin (25 to 75 basis points). The total
amount available under the New Credit Agreement is the lesser of the Aggregate Commitment or 100% of eligible credit card receivables
and the Net Recovery Percentage of inventories less reserves.
Borrowings under the Equipment Term Loan shall be LIBO Rate plus 2%.
Special Dividend
On February 4, 2015, the Company announced that its Board of Directors declared a special cash dividend of $5.00 per common share
which was paid on February 27, 2015. The payment made in connection with this dividend was approximately $226 million, and was
funded by existing cash and initial borrowings of $185 million under our $275 million Credit Facilities. This dividend will reduce retained
earnings in the first quarter of 2015. The corresponding decrease in cash and increase in debt will also be reflected at that same time.
As a result of the special cash dividend, all outstanding stock options and performance share awards will be modified during 2015 so that
they retain the same fair value. No incremental compensation expense is expected to result from this modification.