UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) July 28, 2005
CHARMING SHOPPES, INC.
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(Exact name of registrant as specified in its charter)
PENNSYLVANIA 000-07258 23-1721355
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
450 WINKS LANE, BENSALEM, PA 19020
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 245-9100
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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:
[ ] 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.
On July 28, 2005, Charming Shoppes, Inc. (the "Company"), together with
certain of its subsidiaries, including Charming Shoppes of Delaware, Inc., CSI
Industries, Inc., FB Apparel, Inc., Catherines Stores Corporation, Lane Bryant,
Inc., and Crosstown Traders, Inc. (collectively, the "Borrowers"), entered into
a Second Amended and Restated Loan and Security Agreement (the "Loan Agreement")
with Wachovia Bank, National Association, as Administrative Agent for itself and
the lenders that are parties to the Loan Agreement (the "Agent") and certain of
the Company's subsidiaries, as guarantors. The Loan Agreement amended and
restated the Amended and Restated Loan and Security Agreement (the "Existing
Agreement"), dated January 29, 2004, among the Borrowers (other than the
Crosstown Traders, Inc.), the Agent and the lenders party thereto. All
capitalized terms used herein without definition have the meanings ascribed to
such terms in the Loan Agreement.
The Loan Agreement, as amended, provides for, among other things: (i)
an increase in the maximum amount available under the Revolving Credit facility
from $300 million to $375 million, which is to be used for working capital
purposes as well as for other general corporate purposes (including the issuance
of letters of credit), (ii) a change in the Borrowing Base under the Existing
Agreement, (iii) an amendment to certain covenants under the Existing Agreement,
and (iv) the inclusion as parties to the Loan Agreement of Crosstown Traders,
Inc. and its subsidiaries, which were acquired by the Company on June 2, 2005
and which had joined the Existing Agreement pursuant to an Amendment and Joinder
dated as of June 2, 2005. The Loan Agreement provides for an increase in the
Lenders' Commitments from $300 million to $375 million. The Loan Agreement also
provides that up to $300 million of the $375 million aggregate Commitments may
be used for Letters of Credit. In addition, the Company may request, subject to
compliance with certain conditions, additional revolving credit commitments from
the lenders up to $500 million in the aggregate. The credit facility under the
Loan Agreement will be available to the Borrowers until July 28, 2010.
Prime Rate Loans will bear interest at the Agent's prime rate plus the
Applicable Margin; and (ii) Eurodollar Rate Loans will bear interest at LIBOR as
adjusted for the Reserve Percentage (as defined in the Loan Agreement) plus the
Applicable Margin. The Applicable Margin under the Loan Agreement will be
adjusted each fiscal month based on the Monthly Average Excess Availability (as
defined in the Loan Agreement).
The following financial institutions were parties to the Existing
Agreement in the following capacities: Congress Financial Corporation acted as
the administrative agent, collateral agent and joint bookrunner; J.P. Morgan
Business Credit Corp., acted as the co-documentation agent, joint lead arranger
and joint bookrunner; Wachovia Bank, National Association was joint lead
arranger: and Bank of America, N.A., and Fleet Retail Group, Inc., acted as
co-documentation agents. The following financial institutions are parties to the
Loan Agreement in the following capacities: Wachovia Bank, National Association,
as administrative agent; Wachovia Capital Markets LLC, J.P. Morgan Securities
Inc., and Banc of America Securities LLC, as joint lead arrangers and
bookrunners; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication
agents; and Wells Fargo Foothill LLC, as documentation agent. Certain of the
lenders under the Loan Agreement were also lenders under the Existing Agreement.
In addition, certain of the lenders under the Loan Agreement provide banking
services to the Borrowers not specifically outlined in the Loan Agreement.
The Loan Agreement provides for customary representations and
warranties and affirmative covenants. The Loan Agreement also contains customary
negative covenants providing limitations, subject to negotiated exceptions, for:
sales of assets; encumbrances; indebtedness; loans, advances and investments;
acquisitions; guarantees; new subsidiaries; dividends and redemptions;
transactions with affiliates; maintenance of the end of fiscal years and fiscal
quarters; change in business; limitation of restrictions affecting subsidiaries;
credit card agreements; private label credit cards; and change in control of the
Company's Subsidiaries. If at any time the Excess Availability is less than ten
percent of the Borrowing Base, then the Parent and its Subsidiaries, on a
consolidated basis, will, when measured as of the fiscal quarter most recently
ended for which the Agent has received financial statements, for the four
immediately preceding consecutive fiscal quarters then ended, be required to
maintain a Fixed Charge Coverage Ratio of not less than 1.00 to 1.00.
The Loan Agreement provides the Agent with certain rights and remedies
if there is an occurrence of one or more Events of Default under the Loan
Agreement. Under certain conditions, the Commitments may be reduced or
terminated by the Lenders and the obligation by the Borrowers to repay amounts
outstanding under the Loan Agreement may be accelerated. Such Events of Default
include, among other things: failure to pay any principal, interest or other
Obligations when due or after the expiration of any applicable cure and grace
periods; a material breach of any representation or warranty or a statement of
fact that is false or misleading in any material respect; any Guarantor revokes
or terminates its guaranty in favor of the Agent; bankruptcy, insolvency,
written admission of an inability to pay debts, material judgments rendered
against any Obligor; certain ERISA events; or a Change of Control.
In connection with the Loan Agreement, the Borrowers and the subsidiaries
of Charming Shoppes, Inc. executed and delivered to the Agent a Second Amended
and Restated Guaranty (the "Guaranty"). Pursuant to the Guaranty, the Borrowers
and most of the subsidiaries of Charming Shoppes, Inc., jointly and severally
guaranteed the borrowings and obligations under the Loan Agreement, subject to
the standard insolvency limitations. Under the Guaranty, collateral for the
borrowings under the Loan Agreement consist of pledges by the Company and its
subsidiaries of the capital stock of each such entity's subsidiaries. The Loan
Agreement also provides that the Agent will have a security interest in
substantially all assets of the Borrowers and their direct and indirect
subsidiaries but excluding, among other things, Equipment, Real Property, stock
or other equity of Excluded Subsidiaries, and assets of Excluded Subsidiaries.
Excluded Subsidiaries are not Guarantors under the Loan Agreement and the
Guaranty. While Fashion Services Corp. is an Excluded Subsidiary and is not
party to the Guaranty, its shares of capital stock have been pledged by the
Company to the Agent.
The foregoing description of the material terms and conditions of the
Loan Agreement is only a summary of such terms and conditions and is qualified
in its entirety by reference to the full text of the Loan Agreement, a copy of
which is filed as Exhibit 10.1 to this Report on Form 8-K and 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. Entry Into a Material
Definitive Agreement" of this Report on Form 8-K is incorporated by reference
into this Item 2.03 as if fully set forth herein.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
10.1 Second Amended and Restated Loan and Security Agreement, dated
July 28, 2005, by and among Charming Shoppes, Inc., Charming
Shoppes of Delaware, Inc., CSI Industries, Inc., FB Apparel,
Inc., Catherines Stores Corporation, Lane Bryant, Inc., and
Crosstown Traders, Inc. as borrowers; a syndicate of banks and
other financial institutions as lenders, including Wachovia Bank,
National Association as agent for the lenders; and certain of the
Company's subsidiaries as guarantors.
SIGNATURES
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.
CHARMING SHOPPES, INC.
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(Registrant)
Date: August 3, 2005 By: /S/ ERIC M. SPECTER
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Eric M. Specter
Executive Vice President
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Second Amended and Restated Loan and Security Agreement, dated
July 28, 2005, by and among Charming Shoppes, Inc., Charming
Shoppes of Delaware, Inc., CSI Industries, Inc., FB Apparel,
Inc., Catherines Stores Corporation, Lane Bryant, Inc., and
Crosstown Traders, Inc. as borrowers; a syndicate of banks and
other financial institutions as lenders, including Wachovia
Bank, National Association as agent for the lenders; and
certain of the Company's subsidiaries as guarantors.