Macy's Inc.
04/09/2025 | Press release | Distributed by Public on 04/09/2025 14:34
Material Agreement, Financial Obligation (Form 8-K)
Item 1.01. Entry into a Material Definitive Agreement.
Refinancing and Extension of Existing Asset-Based Credit Facility
On April 9, 2025, Macy's Inventory Funding LLC (the "ABL Borrower"), an indirect subsidiary of Macy's, Inc. ("Macy's"), and Macy's Inventory Holdings LLC (the "ABL Parent"), a direct subsidiary of Macy's and the direct parent of the ABL Borrower, entered into an amendment (the "Amendment") to the credit agreement governing the existing $3.0 billion asset-based credit facility (the "Existing ABL Credit Facility"), which was set to expire in March 2027. The Amendment reduced the asset-based credit facility to $2.1 billion (the "Amended & Extended ABL Credit Facility") and extended the maturity date to April 2030. The Amendment therefore provides Macy's with access to $2.1 billion of committed liquidity for the next five years. The ABL Borrower may request increases in the size of the Amended & Extended ABL Credit Facility up to an additional aggregate principal amount of $1.75 billion. The Amended & Extended ABL Credit Facility replaces the Existing ABL Credit Facility, with similar collateral support, but reduced commercial letter of credit fees and unused facility fees. The Amended & Extended ABL Credit Facility is undrawn and Macy's had $1.3 billion of cash and cash equivalents as of the end of its 2024 fiscal year on February 1, 2025.
The Amended & Extended ABL Credit Facility is secured on a first priority basis (subject to customary exceptions) by (i) all assets of the ABL Borrower including all such inventory and the proceeds thereof and (ii) the equity of the ABL Borrower. The ABL Parent guarantees the ABL Borrower's obligations under the Amended & Extended ABL Credit Facility.
The Amended & Extended ABL Credit Facility contains customary borrowing conditions including a borrowing base equal to the sum of (i) 90% of the net orderly liquidation percentage of eligible inventory, minus (ii) customary reserves. Amounts borrowed under the Amended & Extended ABL Credit Facility are subject to interest at a rate per annum equal to, at the ABL Borrower's option, either (i) adjusted SOFR (calculated to include a 0.10% credit adjustment spread) plus a margin of 1.25% to 1.50% or (ii) a base rate plus a margin of 0.25% to 0.50%, in each case depending on revolving line utilization. The Amended & Extended ABL Credit Facility also contains customary covenants that provide for, among other things, limitations on indebtedness, liens, fundamental changes, restricted payments, and prepayment of certain indebtedness as well as customary representations and warranties and events of default typical for credit facilities of this type.
The Amended & Extended ABL Credit Facility also requires Macy's and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any fiscal quarter if Availability plus Suppressed Availability (each as defined in the Amended & Extended ABL Credit Facility) is less than the greater of (a) 10% of the Loan Cap (as defined in the Amended & Extended ABL Credit Facility) and (b) $175 million, in each case, as of the end of such fiscal quarter.
The above summary of the Amended & Extended ABL Credit Facility is qualified in its entirety by reference to the full text of the Amendment, which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation.
The information set forth in Item 1.01 is incorporated herein by reference into this Item 2.03.