Summary
Ross Stores, Inc. (ROST) filed a Form 8-K on July 6, 2020, to report a material definitive agreement. The company entered into a First Amendment to its Note Purchase Agreement, originally dated October 17, 2006, which governs its outstanding $65 million in 6.53% Series B Senior Notes due December 2021. This amendment modifies certain financial covenants related to these notes. The primary purpose of the amendment is to align the covenants with those in the company's existing revolving credit facilities. Notably, two previous covenants related to debt-to-capitalization and interest coverage ratios have been replaced. The new covenants include a "Consolidated Adjusted Debt to EBITDAR ratio" requirement (no less than 4.50:1.00 starting in fiscal Q1 2021) and a minimum liquidity requirement of $800 million initially, stepping down to $500 million thereafter. These changes aim to provide financial flexibility while ensuring the company maintains adequate financial health.
Key Highlights
- 1Ross Stores amended its Note Purchase Agreement for its Series B Senior Notes.
- 2The amendment modifies financial covenants related to the $65 million in outstanding notes due December 2021.
- 3New covenants are now aligned with those in the company's revolving credit facilities.
- 4Two prior financial covenants (debt-to-capitalization and interest coverage) have been replaced.
- 5A new "Consolidated Adjusted Debt to EBITDAR" ratio covenant is introduced, with a minimum requirement of 4.50:1.00 starting Q1 fiscal 2021.
- 6A minimum liquidity requirement of $800 million (initially) and $500 million (thereafter) has been established.
- 7These changes are intended to provide the company with greater financial flexibility.