Rent-A-Center, Inc. Announces Amended Credit Facility
The amended credit facility will replace the existing maintenance
covenants with a single Fixed Charge Coverage test, which requires a
minimum level of Availability of
Key Features:
-
Fixed Charge Coverage ratio tested monthly; when less than 1.10x, the
Company must maintain
$50.0 million of excess availability on the revolver -
Revolver size of
$350.0 million , with an expansion feature of an additional$100.0 million -
The Company has
$178.2 million of availability at closing -
The existing Term Loan B, which currently has
$50.3 million outstanding, will remain in place - Asset-backed features that govern the size of the available borrowing base determined by the value of eligible rental agreements and inventory held for rent
- Pricing is substantially the same as the existing agreement, with the addition of a pricing tier when Leverage is above 4.00x
Definitions
-
Availability: Lesser of
$350 million loan amount or the borrowing base amount, minus revolver loans outstanding minus letters of credit outstanding minus reserves - Fixed Charge Coverage: Last twelve months EBITDA less unfinanced capex less net cash taxes, over interest expense and scheduled principal amortization
- Leverage: Funded debt to EBITDA
About
A rent-to-own industry leader,
Forward-Looking Statements
This press release and the guidance above contain forward-looking
statements that involve risks and uncertainties. Such forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "should," "anticipate," "believe," or “confident,” or the
negative thereof or variations thereon or similar terminology. The
Company believes that the expectations reflected in such forward-looking
statements are accurate. However, there can be no assurance that such
expectations will occur. The Company's actual future performance could
differ materially from such statements. Factors that could cause or
contribute to such differences include, but are not limited to: the
general strength of the economy and other economic conditions affecting
consumer preferences and spending; factors affecting the disposable
income available to the Company's current and potential customers;
changes in the unemployment rate; difficulties encountered in improving
the financial and operational performance of the Company's business
segments; the Company’s chief executive officer and chief financial
officer transitions, including the Company’s ability to effectively
operate and execute its strategies during the interim period and
difficulties or delays in identifying and/or attracting a permanent
chief financial officer with the required level of experience and
expertise; failure to manage the Company's store labor and other store
expenses; the Company’s ability to develop and successfully execute
strategic initiatives; disruptions, including capacity-related outages,
caused by the implementation and operation of the Company's new store
information management system, and its transition to more-readily
scalable, “cloud-based” solutions; the Company's ability to develop and
successfully implement digital or E-commerce capabilities, including
mobile applications; disruptions in the Company's supply chain;
limitations of, or disruptions in, the Company's distribution network;
rapid inflation or deflation in the prices of the Company's products;
the Company's ability to execute and the effectiveness of a store
consolidation, including the Company's ability to retain the revenue
from customer accounts merged into another store location as a result of
a store consolidation; the Company's available cash flow; the Company's
ability to identify and successfully market products and services that
appeal to its customer demographic; consumer preferences and perceptions
of the Company's brand; uncertainties regarding the ability to open new
locations; the Company's ability to acquire additional stores or
customer accounts on favorable terms; the Company's ability to control
costs and increase profitability; the Company's ability to retain the
revenue associated with acquired customer accounts and enhance the
performance of acquired stores; the Company's ability to enter into new
and collect on its rental or lease purchase agreements; the passage of
legislation adversely affecting the Rent-to-Own industry; the Company's
compliance with applicable statutes or regulations governing its
transactions; changes in interest rates; adverse changes in the economic
conditions of the industries, countries or markets that the Company
serves; information technology and data security costs; the impact of
any breaches in data security or other disturbances to the Company's
information technology and other networks and the Company's ability to
protect the integrity and security of individually identifiable data of
its customers and employees; changes in the Company's stock price, the
number of shares of common stock that it may or may not repurchase, and
future dividends, if any; changes in estimates relating to
self-insurance liabilities and income tax and litigation reserves;
changes in the Company's effective tax rate; fluctuations in foreign
currency exchange rates; the Company's ability to maintain an effective
system of internal controls; the resolution of the Company's litigation;
and the other risks detailed from time to time in the Company's
Additional Information and Where to Find It
The Company, its directors, executive officers and other employees may
be deemed to be participants in the solicitation of proxies from the
Company’s stockholders in connection with the matters to be considered
at Rent-A-Center’s 2017 Annual Meeting. On
View source version on businesswire.com: http://www.businesswire.com/news/home/20170606006611/en/
Source:
Rent-A-Center, Inc.
Daniel O’Rourke, 972-801-1104
VP -
Finance, Investor Relations and Treasury
InvestorRelations@rentacenter.com