Entry into a Material Definitive Agreement.
As previously reported, on February 17, 2020 (the Petition Date), Pier 1 Imports, Inc. (Pier 1) and all of its subsidiaries
(together with Pier 1, the Debtors), filed voluntary petitions (the Chapter 11 Cases) for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the Bankruptcy Code) in the U.S. Bankruptcy Court for the
Eastern District of Virginia (the Bankruptcy Court). The Chapter 11 Cases are being jointly administered under the caption In re Pier 1 Imports, Inc., et al., No 20-30805 (KRH). Capitalized terms
used but not otherwise defined in this Current Report on Form 8-K will have the meaning given to them in the DIP Credit Agreement (as defined below).
Debtor-in-Possession Credit Facility
On February 20, 2020, Pier 1 entered into a Senior Secured Super-Priority Debtor in Possession Credit Agreement, by and among Pier 1 Imports (U.S.), Inc.,
as borrower, the guarantors party thereto, Bank of America, N.A., as administrative agent and collateral agent, Pathlight Capital LP (or an affiliated debt fund), as administrative agent for the ABL term lenders, and the lender parties thereto (the
DIP Credit Agreement).
The DIP Credit Agreement provides for approximately $256 million in superpriority secured debtor-in-possession credit facilities comprising of: (i) a superpriority revolving credit facility in an aggregate amount of $200 million (the Revolving
Facility); (ii) a superpriority FILO loan facility in an aggregate amount of $15 million (the FILO Facility); and (iii) a superpriority ABL term loan facility in an aggregate principal amount of approximately
$41 million (the ABL Term Loan Facility and, together with the Revolving Facility and the FILO Facility, the DIP Facilities), subject to the terms and conditions set forth therein.
The proceeds of the DIP Facilities will be used, in part, to refinance in full the Debtors prepetition ABL credit facility and provide incremental
liquidity for working capital and letters of credit, administrative costs, premiums, fees and expenses of administering the Chapter 11 Cases, payment of court approved prepetition obligations and other such purposes consistent with the DIP
Facilities and the budget or as otherwise approved by the agent and lenders.
The maturity date of the DIP Facilities is August 20, 2020. Loans under
the Revolving Facility will bear interest at: (1) 2.00% plus a base rate of the highest of (a) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its prime rate, (b) the
Federal Funds Effective Rate for such day, plus 0.50%, and (c) the LIBO Rate for a one month interest period as determined on such day, plus 1.00% (the Base Rate); or (2) 3.00% plus the LIBO Rate. Loans under the FILO Facility will
bear interest at (a) 3.50% plus the Base Rate, or (b) 4.50% plus the LIBO Rate. Loans under the ABL Term Loan Facility will bear interest at the 3 month LIBO Rate, plus 8.00%. From and after the Effective Date, a
non-refundable unused commitment fee will accrue at the rate of 0.375% per annum on the daily average unused portion of the Revolving Facility (whether or not then available).
The Debtors obligations under the DIP Credit Agreement are guaranteed by Pier 1 and each of the other Debtors and are secured by substantially all of
the real and personal property of the Debtors, subject to certain exceptions. The DIP Credit Agreement includes customary negative covenants for debtor-in-possession
loan agreements of this type, including covenants limiting Pier 1s and its subsidiaries ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers,
consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of junior or pre-petition indebtedness, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type.
The DIP Credit Agreement
also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations