Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported):
July
29,
2008
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
Name of Registrants as Specified in Their Charters)
(State
or
Other Jurisdiction of Incorporation)
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0-23071
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31-1241495
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(Commission
File Number)
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(IRS
Employer Identification No.)
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915
Secaucus Road, Secaucus, New Jersey
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07094
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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| Item
1.01 |
Entry
into a Material Definitive
Agreement.
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On
July
31, 2008, The Children’s Place Retail Stores, Inc. (the “Company”)
and
its indirect wholly-owned subsidiary, The Children’s Place Services Company, LLC
(“TCP
Services Co.”),
together with the Company, collectively, the “Borrowers”),
and
The Children’s Place (Virginia), LLC, The Children’s Place Canada Holdings,
Inc., thechildrensplace.com, inc. and Twin Brook Insurance Company, Inc. as
guarantors, on the one hand, and Wells Fargo Retail Finance, LLC (“Wells
Fargo”),
as
Administrative Agent, Collateral Agent, and Swing Line Lender, Bank of America,
N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, N.A.
(collectively, the “Lenders”),
on
the other hand, entered into a credit agreement (the “2008
Credit Agreement”).
In
addition, on July 31, 2008, concurrently with the execution of the 2008 Credit
Agreement, the Company, on the one hand, and Sankaty Credit Opportunities III,
L.P., Sankaty Credit Opportunities IV, L.P., RGIP, LLC, Crystal Capital Fund,
L.P., Crystal Capital Onshore Warehouse LLC, 1903 Onshore Funding, LLC, and
Bank
of America, N.A. (collectively, the “Note
Purchasers”),
on
the other hand, together with Sankaty Advisors, LLC, as Collateral Agent, and
Crystal Capital Fund Management, L.P., as Syndication Agent, entered into a
note
purchase agreement (“Note
Purchase Agreement”).
On
July
31, 2008, the proceeds from the Note Purchase Agreement were used in part to
repay in full the Borrowers’ outstanding obligations under the Fifth Amended and
Restated Loan and Security Agreement (the “2007
Amended Loan Agreement”)
and
the letter of credit agreement (the “Letter
of Credit Agreement”;
together with the 2007 Amended Loan Agreement, collectively, the “2007
Facilities”)
with
Wells Fargo as senior lender and administrative and syndicated agent, and the
Company’s other senior lenders (collectively, the “2007
Lenders”).
There
were no prepayment penalties associated with such repayment. Upon receipt of
such repayment by Wells Fargo for the benefit of the 2007 Lenders, the 2007
Facilities and the related guaranty and collateral agreements were terminated
and the associated liens were released.
2008
Credit Agreement
The
2008
Credit Agreement consists of a $200 million asset based revolving credit
facility, which includes a $175 million letter of credit sub-facility. Amounts
outstanding under the 2008 Credit Agreement bear interest, at the Borrowers’
option, at (i) the prime rate or (ii) LIBOR plus a margin of 1.50% to 2.00%
based on the amount of the Borrowers’ average excess availability (“Availability”)
under
the
facility. In addition a commitment fee of 0.25% will accrue on the unused
portion of the commitments under the facility, and letter of credit fees of
0.75% to 1.25% (based on the Availability under the 2008 Credit Agreement)
for
commercial letters of credit and 1.50% to 2.00% (based
on
the Availability under the 2008 Credit Agreement)
for
standby letters of credit will accrue on the undrawn amount of any outstanding
letters of credit under the 2008 Credit Agreement. The 2008 Credit Agreement
will mature on July 31, 2013. Because this facility is an asset based loan,
the
amount of credit actually available under the 2008 Credit Agreement is
determined by Borrowers’ collateral, which is based on inventory and accounts
receivable balances at such time.
The
outstanding obligations under the 2008 Credit Agreement may be accelerated
after
the occurrence of (and, if applicable, the expiration of the cure period)
certain events, including, among others, breach of covenants, the institution
of
insolvency proceedings, certain defaults under certain other indebtedness and
a
change of control. Should the maturity of the 2008 Credit Agreement be
accelerated for any reason, the Borrowers would be responsible for an early
termination fee in the amount of (i) 0.50% of the revolving credit facility
ceiling then in effect within the first year of the term of the facility and
(ii) 0.25% within the second year of the term of the facility. No early
termination fee would be incurred after the completion of the second year of
the
term of the facility.
The
2008
Credit Agreement contains covenants, which include limitations on annual capital
expenditures and limitations on the payment of dividends or similar payments.
Credit extended under the 2008 Credit Agreement is secured by a first or second
priority security interest in substantially all of the Company’s assets and
substantially all of the assets of its domestic subsidiaries.
Note
Purchase Agreement
Under
the
Note Purchase Agreement the Company issued $85 million of secured notes with
no
amortization with a single payment of principal due on the maturity date, July
31, 2013. Amounts outstanding under the Note Purchase Agreement bear interest
at
LIBOR, with a floor of 3.00%, plus a margin between
8.50% and 9.75% depending on the Company's leverage ratio.
The
outstanding obligations under the Note Purchase Agreement may be accelerated
after the occurrence of (and, if applicable, the expiration of the cure period)
certain events, including, among others, breach of covenants, certain defaults
under certain other indebtedness, the institution of insolvency proceedings
and
a material adverse effect. The Company would be responsible for an early
termination fee in the amount of (i) 2.00% of the aggregate principal amount
of
the notes then prepaid within the first year of the term of the facility and
(ii) 1.50% within the second year of the term of the facility if
(x) the
maturity of the notes is accelerated, (y) the Company makes any voluntary
prepayment, or (z) the Company is required to make certain mandatory
prepayments. No early termination fee would be incurred after the
completion of the second year of the term of the facility.
The
Note
Purchase Agreement contains covenants, which include limitations on annual
capital expenditures, a minimum EBITDA, a maximum leverage ratio, a minimum
fixed charge coverage ratio and limitations on the payment of dividends or
similar payments. The Company’s obligations under the Note Purchase Agreement
are secured by a first or second priority security interest in substantially
all
of the Company’s assets and substantially all of the assets of its domestic
subsidiaries.
| Item
1.02 |
Termination
of a Material Definitive
Agreement
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See
Item
1.01 above.
| Item
2.03 |
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a
Registrant
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(a)
See
Item
1.01 above.
| Item
5.02 |
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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(b)
On
July
29, 2008, the Company announced that Richard Paradise, Chief Financial Officer
and principal accounting officer, resigned from his position effective August
1,
2008 to pursue another business opportunity.
A
copy of
a press release relating to the foregoing is attached hereto as Exhibit 99.1
and
is incorporated in this Item 5.02 by reference.
| Item
9.01 |
Financial
Statement and Exhibits.
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99.1
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Press
Release, dated July 29, 2008, issued by the Company regarding the
resignation of Richard Paradise.
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
August 4, 2008
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THE
CHILDREN’S
PLACE RETAIL STORES, INC. |
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By: |
/s/
Susan J. Riley |
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Name:
Susan
J. Riley |
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Title:
Executive
Vice President, Finance and
Administration
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