Danier Leather Inc. has entered into a third amended and restated credit agreement with its existing lender Canadian Imperial Bank of Commerce, which converts the company's existing operating and revolving credit facilities into a senior secured asset-based revolving credit facility with CIBC. The ABL Facility has an initial term of three years, extending the maturity of Danier's facilities to August 27, 2018.
The ABL Facility provides an initial commitment of up to $35 million, which will reduce to $28.5 million if the company sells its head office location, which sale the company is pursuing as part of its strategic and operating plans. As part of that commitment, the credit agreement provides for the issuance of letters of credit up to a sub-limit of between $5 million and $10 million, depending on the time of year, and foreign exchange contracts to hedge against the company's U.S. dollar exposure, subject to a specified sub-limit. Borrowings under the ABL Facility are subject to a borrowing base calculated by reference to the company's eligible accounts receivable, inventory and real property, less availability reserves, priority payables and an availability block calculated in accordance with the credit agreement.
The company's obligations under the credit agreement are guaranteed by its material subsidiaries and secured by all of the company's and its material subsidiaries' present and after-acquired personal property, as well as a mortgage over the land and building comprising the company's head office location. The company pays a monthly collateral management fee to CIBC in respect of the ABL Facility, and will also pay fees for any unused portion of the facility, as well as interest and certain other fees in respect of letters of credit and other borrowings under the ABL Facility. The ABL Facility is subject to various financial and other covenants, reporting requirements and restrictions that, if breached, could cause a default and may result in the requirement for immediate repayment of all amounts outstanding under the ABL Facility, as well as other rights and remedies of CIBC. The company intends to use the ABL Facility to fund its working capital requirements and for general corporate purposes.
Danier Leather Inc. is a leading integrated designer, manufacturer, and retailer of high-quality fashion-oriented leather apparel and accessories.