Item 1.01 Entry into a Material Definitive Agreement.
On August 10, 2020, The TJX Companies, Inc. (the “Company”) entered into a 364 day revolving credit agreement with certain financial institutions, as lenders, Bank of America, N.A., as syndication agent, U.S. Bank National Association, as administrative agent, Deutsche Bank Securities Inc., HSBC Bank USA, National Association, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, and BofA Securities, Inc., U.S. Bank National Association, Deutsche Bank Securities Inc., HSBC Bank USA, National Association, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as lead arrangers and bookrunners, providing for a $500.0 million senior unsecured revolving credit facility (the “364 Day Revolving Credit Facility”). The 364 Day Revolving Credit Facility matures on August 9, 2021.
With the 364 Day Revolving Credit Facility, the Company has increased its borrowing capacity to $1.5 billion, with $1.0 billion available under its revolving credit facilities maturing in 2022 and 2024. As described in Item 7.01 below, the Company pre-paid its $1.0 billion in borrowings under the revolving credit facilities maturing 2022 and 2024 before entry into the 364 Day Credit Facility.
The Company will be required to pay an interest rate on borrowings under the 364 Day Revolving Credit Facility ranging from a rate equal to LIBOR plus a margin of 110.0 – 190.0 basis points or a base rate plus a margin of 10.0 – 90.0 basis points and a quarterly facility fee payment of 15.0 – 35.0 basis points on the total commitments under the 364 Revolving Credit Facility, in each case, based on the credit ratings of the Company’s long-term debt.
The terms of the 364 Day Revolving Credit Facility require the Company to maintain a quarterly-tested leverage ratio of funded debt to earnings before interest, taxes, depreciation and amortization and rentals (“EBITDAR”) of 5.00 to 1.00 for the test period ending May 1, 2021 (with EBITDAR annualized for the two fiscal quarters then ended) and 4.50 to 1.00 for the test period ending July 31, 2021 (with EBITDAR annualized for the three fiscal quarters then ended).
The Company is required to maintain minimum liquidity of at least $1.5 billion of unrestricted cash and cash equivalents and aggregate borrowing availability through April 30, 2021, and the Company is required to have minimum EBITDAR of at least $650.0 million for the fiscal quarter ending January 30, 2021.
The 364 Day Revolving Credit Facility includes other affirmative and negative covenants and events of default substantially similar to those in the Company’s revolving credit facilities maturing in 2022 and 2024.
The foregoing description of the 364 Day Revolving Credit Facility is a general description and is qualified in its entirety by reference to the full text of the 364 Day Revolving Credit Facility, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On July 29, 2020, the Company prepaid $1.0 billion of revolving credit loans previously borrowed on March 20, 2020 under the revolving credit facilities maturing in 2022 and 2024. Following this prepayment, the Company has no outstanding revolving credit loans. The Company has $1.0 billion of borrowing capacity under the revolving credit facilities maturing in 2022 and 2024 and $500 million of borrowing capacity under the 364 Day Revolving Credit Facility.