SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) November 23, 2004
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LINENS 'N THINGS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 1-12381 22-3463939
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(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
6 Brighton Road, Clifton, New Jersey 07015
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (973) 778-1300
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instructions A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Linens 'n Things, Inc., a Delaware corporation (the "Company"), and certain
wholly-owned subsidiaries entered into a $250,000,000 5-Year Revolving Credit
Agreement (the "Credit Agreement"), effective as of November 23, 2004, among the
Company, each subsidiary of the Company that becomes a borrower thereunder, Bank
of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer
(the "Agent") and each other lender from time to time party thereto.
The Credit Agreement provides for a 5-year senior unsecured revolving credit
facility and allows for up to $50 million of borrowings from additional lines of
credit outside of the Credit Agreement. The additional lines of credit include
committed facilities of approximately Canadian $35 million that expire on
December 31, 2004 and June 15, 2005 and are subject to annual renewal
arrangements. Interest on all borrowings under the Credit Agreement is
determined based upon several alternative rates, including a fixed margin above
LIBOR.
The Credit Agreement contains customary affirmative and negative covenants and
also contains certain financial covenants, including those relating to (a) the
maintenance of a minimum tangible net worth in an amount not less than the sum
of (i) $559,347,000 (which represents 75% of tangible net worth as of July 3,
2004), (ii) 50% of cumulative consolidated net income (without giving effect to
any net losses) for each fiscal quarter commencing with the fiscal quarter
ending September 30, 2004, and (iii) 100% of the cumulative net proceeds
received by the Company from any sale to the public of its capital stock for the
period commencing after the closing date, (b) a minimum fixed charge coverage
ratio (EBITDAR/interest expense plus rents) of not less than 1.50: 1.00, and (c)
a maximum leverage ratio (total funded debt/EBITDA) of not more than 1.75: 1.00.
The Credit Agreement limits, among other things, the Company's indebtedness and
the amount of cash dividends the Company may pay. In addition to borrowings
under the Credit Agreement, the Company's indebtedness is limited to $50 million
on capitalized lease and real estate mortgages and $50 million of other
unsecured debt. In addition, certain payments, such as for the payment of
dividends and/or repurchases of the Company's shares of stock, may not exceed,
in aggregate, the sum of $50 million plus on a cumulative basis an amount equal
to 25% of the consolidated net income for each fiscal quarter, commencing with
the fiscal quarter ending April 3, 2004. The Company has never paid cash
dividends and does not currently anticipate paying cash dividends in the future.
The Credit Agreement includes usual and customary events of default (subject to
applicable grace periods) for facilities of this nature and provides that, upon
the occurrence of an event of default, payment of all amounts payable under the
Credit Agreement may be accelerated and/or the lenders' commitments may be
terminated. In addition, upon the occurrence of certain insolvency or bankruptcy
related events of default, all amounts payable under the Credit Agreement shall
automatically become immediately due and payable, and the lenders' commitments
shall automatically terminate.
As of November 23, 2004, there are no loans outstanding and there was $25.3
million in letters of credit outstanding under the Credit Agreement.
The foregoing summary of the Credit Agreement is qualified in its entirety by
reference to the Credit Agreement, which is attached as Exhibit 10.19 to this
Form 8-K.
The Credit Agreement replaces the amended $150 million senior revolving credit
agreement dated June 21, 2002 among the Company and Fleet Bank and the lenders
signatory thereto (the "Fleet Credit Agreement"), which agreement was terminated
on November 23, 2004 in connection with the execution of the Credit Agreement.
The Fleet Credit Agreement allowed for up to $40 million of borrowings from
additional lines of credit outside of the Fleet Credit Agreement. Interest on
all borrowings was determined based upon several alternative rates, including a
fixed margin above LIBOR. The Fleet Credit Agreement contained certain financial
covenants, including those relating to the maintenance of a minimum tangible net
worth, a minimum fixed charge coverage ratio, and a maximum leverage ratio.
Under the Fleet Credit Agreement, the amount of dividends that the Company could
pay could not exceed the sum of $25 million plus, on a cumulative basis, an
amount equal to 50% of the consolidated net income for each fiscal quarter. The
Company was required under the Fleet Credit Agreement to reduce the balance of
outstanding domestic borrowings to zero for 30 consecutive days during each
period beginning on December 1st of any fiscal year and ending on March 15th of
the following fiscal year.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
The information provided under Item 1.01 of this report 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 provided under Item 1.01 of this report is incorporated herein
by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.19 - Credit Agreement dated as of November 23, 2004 with Bank of America,
N.A., as administrative agent, swing line lender and an L/C issuer and
the lenders signatory thereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LINENS 'N THINGS, INC.
DATED: November 29, 2004 BY: /s/ William T. Giles
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NAME: William T. Giles
TITLE: Executive Vice President,
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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10.19 Credit Agreement dated as of November 23, 2004 with Bank of
America, N.A., as administrative agent, swing line lender and an
L/C issuer and the lenders signatory thereto.