8-KMaterial AgreementsFinancial EventsExhibits & Filings

Burlington Stores, Inc. 8-K Report, Material Agreement (Mar 3, 2020)

Filed March 3, 2020For Securities:BURL

Summary

Burlington Stores, Inc. (BURL) announced on March 3, 2020, via an 8-K filing, an amendment to its Term Loan Credit Agreement, specifically Amendment No. 8, executed on February 26, 2020. This amendment represents a strategic move by the company to optimize its financing costs. The primary impact of this amendment is a reduction in the interest rate margins on the company's term loan facility. For prime rate loans, the margin has decreased from 1.00% to 0.75%, and for LIBOR loans, it has fallen from 2.00% to 1.75%. Importantly, a 0.00% LIBOR floor has been implemented, which can provide additional benefit in a low-interest-rate environment. These changes are expected to lead to lower interest expenses for Burlington Stores, enhancing its profitability and cash flow.

Key Highlights

  • 1Burlington Stores' indirect wholly-owned subsidiary, Burlington Coat Factory Warehouse Corporation, entered into Amendment No. 8 to its Term Loan Credit Agreement on February 26, 2020.
  • 2The amendment, filed on March 3, 2020, is designed to reduce the company's borrowing costs.
  • 3Interest rate margins on prime rate loans have been reduced from 1.00% to 0.75%.
  • 4Interest rate margins on LIBOR loans have been reduced from 2.00% to 1.75%.
  • 5A 0.00% LIBOR floor was established as part of the amendment.
  • 6JPMorgan Chase Bank, N.A. acted as the administrative agent, lead arranger, and bookrunner for the amendment.
  • 7The filing incorporates information regarding a direct financial obligation under an off-balance sheet arrangement.

Frequently Asked Questions

The primary purpose of Amendment No. 8 is to reduce the interest rate margins on Burlington Stores' term loan facility, thereby lowering the company's borrowing costs and improving its financial efficiency.

The reduced interest rates are expected to lead to lower interest expenses for Burlington Stores, which will positively impact its net income and free cash flow. This can enhance profitability and provide more financial flexibility.

A LIBOR floor is the minimum interest rate that will be charged on a LIBOR-based loan, even if the actual LIBOR rate falls below that floor. A 0.00% LIBOR floor means that the interest rate will not go below zero, which is beneficial for the borrower (Burlington Stores) if market interest rates become negative.

The key parties involved are Burlington Coat Factory Warehouse Corporation (as the borrower), JPMorgan Chase Bank, N.A. (as the administrative agent, lead arranger, and bookrunner), and the lenders and facility guarantors party to the agreement.