The Helen of Troy Credit Agreement: Understanding the Fine Print
When it comes to financing a business, securing a credit agreement can be a critical component to success. For many companies, the Helen of Troy Credit Agreement may be a viable option. But what is it exactly, and what should you know before signing on the dotted line?
First, let`s discuss who Helen of Troy is. The company is a designer, developer, and marketer of consumer products ranging from household appliances to personal care products. They are based in El Paso, Texas, and are publicly traded on the NASDAQ stock exchange.
The Helen of Troy Credit Agreement is a loan facility that the company entered into in June 2019. The agreement provides Helen of Troy with a $400 million revolving credit facility, which can be used for various purposes including working capital, capital expenditures, and acquisitions.
One important aspect of the credit agreement is the interest rate. Helen of Troy`s credit facility is based on a borrowing rate that fluctuates depending on the company`s credit rating. The credit agreement also includes a commitment fee, which is a fee that the company pays to its lenders for the unused portion of the credit facility.
Another key feature of the Helen of Troy Credit Agreement is its financial covenants. A covenant is a promise that the borrower makes to the lender to maintain a certain level of financial performance. In the case of Helen of Troy`s credit agreement, the financial covenants relate to the company`s debt-to-EBITDA ratio, which is a measure of the company`s leverage or indebtedness.
It`s important for borrowers to understand the financial covenants in their credit agreements because failing to meet them can trigger penalties, fees, and potential default. If a borrower is in violation of a covenant, they may be required to pay down debt, raise additional equity, or seek a waiver from their lenders.
While the Helen of Troy Credit Agreement may be a viable option for many businesses seeking financing, it`s important to carefully review the terms and conditions of the agreement before signing on. Understanding the interest rate, commitment fee, and financial covenants is critical to avoiding potential pitfalls down the line.
In addition to reviewing the credit agreement itself, borrowers should also consider the reputation and stability of the lender. In the case of Helen of Troy, the company secured its credit facility from a group of lenders including Bank of America, JPMorgan Chase, and Wells Fargo.
Finally, it`s always advisable to consult with legal and financial professionals before entering into any significant contracts. A competent advisor can help reduce the risk of potential issues and ensure that the borrower fully understands the obligations and responsibilities associated with their credit agreement.
In conclusion, the Helen of Troy Credit Agreement can be an excellent financing option for businesses seeking to expand or invest in their operations. However, it`s important to carefully review the terms and conditions of the credit facility before signing on, including the interest rate, commitment fee, and financial covenants. Working with a reputable lender and seeking the advice of professionals can help businesses ensure a successful and mutually beneficial partnership.
