Conn’s (CONN) shares are higher by more than 16% on Monday after the company said it has amended its revolving credit facility and added $100 million to its share buyback program.
The specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products the amended credit facility provides commitments of $810 million, extends the maturity date to Oct. 2018 from Nov. 25, 2017, and increases the leverage ratio covenant to four times from previously two times.
The amended facility also adds a new minimum liquidity requirement for repurchases of the company’s common stock, notes and other debt pre-payment, which, combined with the new total leverage ratio covenant, is expected to provide the company greater flexibility for repurchases.
In addition, the company executed a second supplemental indenture, amending the start of the accounting period from which consolidated net income is calculated for purposes of determining the size of the “restricted payment basket” exception to the restricted payments limitation from May 1, 2014 to Nov. 1, 2015.
It also increased, the dollar threshold exception to the restricted payments limitation to $375 million from previously $75 million.
“The credit facility, combined with expected future securitizations and use of high-yield notes provides us with ample liquidity to pursue our growth initiatives supported by a diversified capital structure,” CEO Norm Miller said in a statement.
The amendments allow the company to add $100 million to the repurchase program, which it plans to complete in the fiscal quarter ending Jan. 31.
