form8koct172007.htm
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): October 17,
2007
______________
Charming
Shoppes, Inc.
(Exact
name of registrant as specified in its charter)
______________
Pennsylvania
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000-07258
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23-1721355
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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450
Winks Lane, Bensalem, Pa 19020
(Address
of principal executive offices, including Zip Code
(215)
245-9100
Registrant’s
telephone number, including area code
Not
applicable
(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:
o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01. Entry Into a Material Definitive
Agreement.
Charming
Shoppes, Inc. and its subsidiaries (collectively, “Charming”) use asset
securitization to fund the credit card receivables generated by their FASHION
BUG®,
CATHERINES®,
PETITE SOPHISTICATE®, and CROSSTOWN
TRADERS proprietary credit card programs. These credit cards are
issued by Spirit of America National Bank (the “Bank”), a wholly-owned
subsidiary of Charming. The receivables from the FASHION BUG,
CATHERINES, and PETITE SOPHISTICATE credit card programs are transferred by
the
Bank to Charming Shoppes Receivables Corp. (“CSRC”), a wholly-owned subsidiary
of Charming. In turn, CSRC transfers such receivables to the Charming
Shoppes Master Trust (the “Trust”). U.S. Bank National Association
acts as Trustee of the Trust pursuant to the Second Amended and Restated Pooling
and Servicing Agreement, dated as of November 25, 1997 and heretofore amended
(the “Pooling Agreement”), among CSRC, the Trustee, and Spirit of America, Inc.
(“SOAI”) as Servicer. SOAI is also a wholly-owned subsidiary of
Charming.
On
October 17, 2007, the Trustee, CSRC, and SOAI entered into an Amendment to
the
Pooling Agreement (the “Amendment”). Among other things, the
Amendment expands the eligibility of receivables for the Trust. The
amendment also requires CSRC to follow procedures for modifying the Trust or
its
assets which are intended to facilitate the maintenance of the Trust as a
Qualified Special Purpose Entity (a “QSPE”) within the meaning of Statement of
Financial Accounting Standards No. 140, “Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities–a
replacement of FASB Statement No. 125.”
On
October 17, 2007, the Trust issued $320 million of five-year asset-backed
certificates (“Series 2007-1”) in a private placement under Rule
144A. Of the $320 million of certificates issued, $289.6 million were
sold to investors, and CSRC held $30.4 million as a retained certificated
interest. CSRC may in the future sell all or a portion of such
retained certificate. Of the certificates sold to investors, $203.5
million pay interest on a floating rate basis tied to one-month LIBOR, while
the
remaining $86.1 million of certificates were issued at fixed
rates. Concurrently with the issuance of Series 2007-1, the trust
entered into a series of fixed-rate interest-rate swap agreements with respect
to $174.7 million of the floating-rate certificates sold to
investors. The blended weighted-average interest rate on the swapped
certificates is 6.39%. The Trust also acquired an interest-rate cap
with respect to $28.8 million of floating-rate certificates sold to
investors. The cap counterparty will make payments to the Trust when
one-month LIBOR exceeds 10%. The fixed-rate certificates were sold at
a discount and carry a blended weighted average-yield of 6.43% and a blended
weighted average coupon of 6.34%.
At
the
closing, the Trust used $35 million of the proceeds to fund receivables and
to
pay down other securitization series and placed the remaining proceeds of $285
million into a pre-funding cash account.
Charming
currently has an agreement under which a third party provides a proprietary
credit card sales accounts receivable funding facility for LANE BRYANT retail
and outlet stores. Upon termination of this agreement, Charming has
the right to purchase the receivables allocated to the LANE BRYANT stores under
such agreement and the related credit card accounts (the “LANE BRYANT
Portfolio”). Charming currently plans to exercise the option to
purchase the LANE BRYANT Portfolio and assign the right to purchase the LANE
BRYANT Portfolio to the Bank with closing on the purchase to occur on November
1, 2007 or as soon thereafter as is practicable.
Concurrently
with the Bank’s acquisition of the LANE BRYANT Portfolio, it will sell the
receivables therein to CSRC, and CSRC will transfer the receivables to the
Trust. The Trust will pay for the receivables by withdrawing proceeds
of the Series 2007-1 Certificates from the pre-funding cash
account. It is estimated that approximately $220 million of such
proceeds will be used for this purpose. The remainder of the funds in
the pre-funding cash account will provide financing for additional receivables,
including receivables made available for financing by the amortization of the
Series 2002-1 certificates issued by the Trust. Series 2002-1 has
been in amortization since July 2007 and is currently expected to be repaid
in
full by May 2008.
If
the
receivables included in the LANE BRYANT Portfolio are not transferred to the
Trust prior to January 31, 2008, or if SOAI determines that the Bank’s
acquisition of the LANE BRYANT Portfolio will not occur prior to such date,
funds will be withdrawn from the pre-funding cash account in an amount equal
to
the lesser of $220 million or the amount remaining in the pre-funding cash
account. The funds withdrawn will be paid to the holders of the
Series 2007-1 certificates as a principal repayment.
The
Pooling Agreement and the 2007-1 Supplement thereto dated October 17, 2007
provide, among other things, that any receivables that fail to meet the
eligibility requirements when transferred must be repurchased from the
Trust. Such documents also provide for customary representations and
warranties, covenants, and indemnities, including provisions regarding the
preservation of the interest of the Trustee in the receivables, the absence
of
adverse claims on the receivables, and the accuracy of information provided
to
investors. The documents also provide for customary early
amortization events that would require collection on the receivables to be
allocated to the repayment of the Series 2007-1 certificates prior to the time
originally scheduled for amortization. The trustee may also sell
receivables or exercise any other creditor’s remedies upon certain early
amortization events, including insolvency of Charming, the Bank, CSRC or
SOAI. In addition, certain other events would cause the Trustee to
hold proceeds of receivables which would otherwise be paid to CSRC as additional
enhancement for Series 2007-1 certificateholders. These events
include failure of the Trust to meet certain financial performance
standards. As of October 17, 2007, the Trust was in compliance with
all applicable financial performance standards. These
representations, warranties, covenants, indemnities, and other provisions are
not intended to protect investors in the Trust against credit-related losses
on
the receivables.
Barclays
Capital, Inc. (“Barclays”) was the initial purchaser of $260.8 million of the
senior Series 2007-1 certificates pursuant to a Class A, Class M, and Class
B
Certificate Purchase Agreement among Barclays, CSRC, SOAI and Fashion Service
Corp., the corporate parent of CSRC, the Bank, and SOAI. This
agreement provides for customary representations, warranties, covenants and
indemnities by FSC and its subsidiaries. Barclays from time to time
engages in other transactions with, and provides investment banking services
to,
Charming and its affiliates, and is paid market fees in connection
therewith. In addition, Barclays, its affiliates, or funds,
investment vehicles or other accounts advised by Barclays, own and may from
time
to time acquire or sell securities issued by Charming and its
affiliates.
$28.8
million of mezzanine certificates were purchased pursuant to a Class C
Certificate Purchase Agreement among the purchasers, CSRC, SOAI, and the
Trustee. This agreement contains customary provisions for agreements
of this type, including provisions requiring the funding of a spread account
from collections that would otherwise be available to CSRC, as well as customary
representations, warranties, covenants, and indemnities.
Item
9.01. Financial Statements and Exhibits.
Exhibit
No.
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Description
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10.1
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Amendment
dated as of October 17, 2007 to Second Amended and Restated Pooling
and
Servicing Agreement dated as of November 25, 1997 and heretofore
amended
among Charming Shoppes Receivables Corp. (“CSRC”), Spirit of America, Inc.
(“SOAI”), and U.S. Bank National Association, as Trustee
(“Trustee”).
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10.2
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Series
2007-1 Supplement dated as of October 17, 2007 to the Second Amended
and
Restated Pooling and Servicing Agreement dated as of November 25,
1997 and
heretofore amended among CSRC, SOAI and Trustee.
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10.3
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Class
A, Class M, and Class B Certificate Purchase Agreement dated as of
October
10, 2007 among CSRC, SOAI, Barclays Capital, Inc. and Fashion Service
Corp.
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10.4
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Class
C Purchase Agreement dated as of October 17, 2007 among CSRC, SOAI,
Trustee, Galleon Capital, LLC, and Clipper Receivables Company,
LLC.
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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.
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CHARMING
SHOPPES, INC.
(Registrant)
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Date:
October 22, 2007
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/S/
ERIC M. SPECTER
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Eric
M. Specter
Executive
Vice President
Chief
Financial Officer
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EXHIBIT
INDEX
Exhibit
No.
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Description
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10.1
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Amendment
dated as of October 17, 2007 to Second Amended and Restated Pooling
and
Servicing Agreement dated as of November 25, 1997 and heretofore
amended
among Charming Shoppes Receivables Corp. (“CSRC”), Spirit of America, Inc.
(“SOAI”), and U.S. Bank National Association, as Trustee
(“Trustee”).
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10.2
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Series
2007-1 Supplement dated as of October 17, 2007 to the Second Amended
and
Restated Pooling and Servicing Agreement dated as of November 25,
1997 and
heretofore amended among CSRC, SOAI and Trustee.
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10.3
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Class
A, Class M, and Class B Certificate Purchase Agreement dated as of
October
10, 2007 among CSRC, SOAI, Barclays Capital, Inc. and Fashion Service
Corp.
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10.4
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Class
C Purchase Agreement dated as of October 17, 2007 among CSRC, SOAI,
Trustee, Galleon Capital, LLC, and Clipper Receivables Company,
LLC.
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