IBG Borrower LLC Enters into Credit Agreement
Mar 8 16
Iconix Brand Group Inc. entered into a credit agreement among IBG Borrower LLC, the company’s wholly-owned direct subsidiary, as borrower (“IBG Borrower”), the company and certain wholly-owned subsidiaries of IBG Borrower, as guarantors, Cortland Capital Market Services LLC, as administrative agent and collateral agent and the lenders party thereto from time to time, including CF ICX LLC and Fortress Credit Co LLC. Pursuant to the credit agreement, the lenders are providing to IBG Borrower a senior secured term loan, scheduled to mature on March 7, 2021, in an aggregate principal amount of $300 million and bearing interest at LIBOR (with a floor of 1.50%) plus an applicable margin of 10% per annum. The net cash proceeds of the senior secured term loan, which are expected to be approximately $267 million (after deducting financing, investment banking and legal fees), will, pursuant to the terms of the credit agreement, be deposited by the lenders into an escrow account on the closing date. IBG Borrower must deposit into the escrow account certain additional funds, so that the total amount of cash on deposit in the escrow account is sufficient to pay all outstanding obligations, plus accrued interest, under the company’s 2.50% convertible senior subordinated notes due June 2016 and issued pursuant to that certain indenture, dated as of May 23, 2011, by and between the company and The Bank of New York Mellon Trust Company, N.A. as trustee. The funds in the escrow account must then be used to repay the 2016 convertible notes on or before their maturity, with any remaining funds going toward general corporate purposes permitted under the terms of the credit agreement. Borrowings under the senior secured term loan will amortize yearly at 5% of principal as long as the applicable asset coverage ratio, as defined in the credit agreement, remains greater than or equal to 1.65:1.00 as of the end of each fiscal quarter and IBG Borrower timely delivers a compliance certificate to Cortland after each fiscal quarter. If IBG Borrower’s asset coverage ratio measured as of the end of a certain fiscal quarter is 1.20:1.00 or greater but less than 1.45:1.00, or 1.45:1.00 or greater but less than 1.65:1.00, IBG Borrower will be obligated to pay during the subsequent quarter amortization at 25% per annum, or 15% per annum, respectively. IBG Borrower will also pay amortization at 25% per annum if it fails to timely deliver a compliance certificate to Cortland after each fiscal quarter. IBG Borrower’s obligations under the senior secured term loan will be guaranteed jointly and severally by the company and the other guarantors pursuant to a separate facility guaranty. IBG Borrower’s and the Guarantors’ obligations under the senior secured term loan will be secured by first priority liens on and security interests in substantially all assets of IBG Borrower, the company and the other guarantors and a pledge of substantially all equity interests of the company’s subsidiaries (subject to certain limits including with respect to foreign subsidiaries) owned by the company, IBG Borrower or any other guarantor. However, the security interests will not cover certain intellectual property and licenses associated with the exploitation of the company’s Umbro® brand in Greater China, those owned, directly or indirectly by the company’s subsidiary Iconix Luxembourg Holdings SÀRL or those subject to the company’s securitization facility. In addition, the pledges exclude certain equity interests of Complex Media Inc., Marcy Media Holdings, LLC, and the subsidiaries of Iconix China Holdings Limited.