Furniture Brands Announces $550 Million Credit Deal

August 13, 2007  by in UnCategorized   

By Home Furnishings Business in on August 2007 Furniture Brands International, one of the nation’s largest furniture manufacturers and importers, announced Friday that it has closed on a long-term, $550 million credit agreement. As a result, Standard & Poors has removed the company from its credit watch list.

The St. Louis-based company, which announced its intention to enter into a new debt facility earlier this year, said it reached agreement on the deal with several financial institutions, with JPMorgan Chase Bank serving as administrative agent.

Chairman and CEO Mickey Holliman, who is retiring next year, said, “We made the decision several months ago to change our long-term debt structure to more closely match our long-term strategy and financial goals. Our new facility was well over-subscribed by our participating financial institutions, and we are pleased to have brought it to conclusion. We expect this new facility to give us the capital structure and the flexibility we need to respond to market conditions and to accommodate our growth initiatives.’’

The revolving credit facility with a commitment of $550 million is subject to a borrowing base of certain eligible accounts receivable and inventory. The facility allows for the issuance of letters of credit of up to $100 million and cash borrowings.

The company borrowed funds under the new credit agreement to pay in full the existing indebtedness of $150 million owed pursuant to the terms of its previous credit agreement from April 2006. FBI also repaid in full $150 million in senior notes issued under a note purchase agreement from May 2006. Along with that repayment, the company paid a make-whole premium of approximately $17 million and accrued interest of approximately $2.5 million, terminating the note purchase agreement. Partially offsetting those amounts, the company received payment of $2.8 million on an interest rate hedge.

Standard & Poors, New York, on Monday removed FBI from its credit watch list. The company’s credit rating is set at BB-. The company was placed on S&P’s watch list in late February as a result of the housing slump that has prouced lower sales for the manufacturer of Broyhill, Lane, Thomasville and other brands.