Belk Cleanses Restructuring Terms Including New $225M FLFO Loan, Conversion of 1L TL Into New FLSO Loan, Partial Equitization, Partial Swap of 2L TL Into New FLSO Loan, New 2L TL

Belk has cleansed a presentation providing details about its upcoming chapter 11 filing, according to a copy of the document reviewed by Reorg. Key details of the restructuring include:

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• A new $225 million first lien first-out, or FLFO, term loan fully backstopped by the first lien and second lien term lenders and sponsor Sycamore Partners:
  
  
  
  • Facility open to all term loan lenders;
  
  
  • Early consent deadline of joinder to RSA is Feb. 2 at 5 p.m. ET;
  
  
  • First lien lenders who agree to participate in the new-money investment by the early consent deadline will receive their pro rata share of a par rollup into the new FLFO of $45 million of the old first lien term loan, a commitment fee of 25% in the form of new first lien second-out, or FLSO, term loan, and their pro rata share of about 10% of the company’s reorganized equity;
  
  
  
  


• Conversion of the existing first lien term loan at a discount into the new FLSO term loan;


• Partial equitization and partial conversion of the second lien term loan at a discount to par into the new FLSO loan as well a new second lien term loan;


• General unsecured creditors, including trade creditors, will be unimpaired; and


• Existing shareholders will retain 50.1% of the company’s reorganized equity.

The pro forma capital structure includes a $259 million L+150 bps ABL facility due August 2024, a $300 million L+750 bps FLFO term loan due July 2025, an $815 million 10% FLSO term loan due July 2025, and a $110 million 10% PIK second lien term loan due July 2025, the presentation shows. Belk would have $33 million of pro forma cash and $1.54 billion of net debt, which is 9.6x the $160 million of projected adjusted EBITDA for fiscal year 2022.

A representative for Belk’s sponsor, Sycamore Partners, declined to comment.

--Harvard Zhang