Summary of UNIFI INC - Yahoo! Finance

Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreem

1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On May 24, 2012 (the "Closing Date"), Unifi, Inc. (the "Registrant") and its subsidiary Unifi Manufacturing, Inc. ("UMI" and together with the Registrant, the "Borrowers"), as borrowers, entered into a Credit Agreement (the "ABL Credit Agreement") with Wells Fargo Bank, N.A. ("Wells Fargo"), as agent, as lead arranger, as book runner and as a lender, Bank of America, N.A., as a lender, and the lenders party thereto, for a $150 million senior secured credit facility (the "ABL Facility"). The ABL Facility consists of a $100 million revolving credit facility (the "ABL Revolver") and a $50 million term loan (the "ABL Term Loan"), subject to the limitations described below. In addition, on the Closing Date, the Registrant and UMI, as borrowers, entered into a Credit Agreement (the "Term B Credit Agreement") with Wilmington Trust, National Association, as administrative agent (the "Term Agent") and MacKay Shields LLC, a Delaware limited liability company, solely in its capacity as investment advisor or subadviser with investment authority for certain discretionary client accounts, for a secured term loan in the aggregate principal amount of $30 million (the "Term B Loan"). With the funding of the ABL Facility and the Term B Loan, the Registrant refinanced its existing indebtedness through the redemption of the Registrant's outstanding 11.5% Senior Secured Notes due 2014 (the "2014 Notes"), and the repayment in full and termination of the Registrant's current Amended and Restated Credit Agreement with Bank of America, N.A. (the "Existing Credit Agreement").

Unifi Sales & Distribution, Inc., a North Carolina corporation, Spanco International, Inc. a North Carolina corporation, and Unifi Equipment Leasing, LLC, a North Carolina limited liability company (collectively, the "Guarantors" and together with the Borrowers, the "Loan Parties") are guarantors pursuant to the ABL Facility. The ABL Facility became effective and the ABL Term Loan and initial advance under the ABL Revolver occurred on the Closing Date. The ABL Revolver and the ABL Term Loan have a maturity date of May 24, 2017.

In connection with the ABL Facility, UMI entered into a Deposit Account Control Agreement with Wells Fargo and Bank of America, N.A. (the "Deposit Account Control Agreement") dated as of May 24, 2012. The Loan Parties also entered into the following additional agreements, all of which are dated as of May 24, 2012:

(1) Guaranty and Security Agreement, among the Loan Parties and Wells Fargo (the "ABL Guaranty and Security Agreement");

(2) Trademark Security Agreement, among the Loan Parties and Wells Fargo (the "ABL Trademark Security Agreement");

(3) Patent Security Agreement, among the Loan Parties and Wells Fargo (the "ABL Patent Security Agreement"); and

(4) Intercreditor Agreement, by and between Wells Fargo and the Term Agent, as acknowledged by the Loan Parties (the "Intercreditor Agreement" and collectively with the ABL Credit Agreement, the Deposit Account Control Agreement, the ABL Guaranty and Security Agreement, the ABL Trademark Security Agreement, and the ABL Patent Security Agreement, the "ABL Facility Documents").

Borrowings under the ABL Revolver bear interest at rates per annum at either the Base Rate plus an Applicable Margin of 0.75% to 1.25% or LIBOR Rate plus an Applicable Margin of 1.75% to 2.25%. The "Base Rate" means the greatest of (i) the prime lending rate as publicly announced from time to time by Wells Fargo Bank, N.A., (ii) the Federal Funds Rate plus 0.5%, and (iii) the LIBOR rate plus 1.0%. The "LIBOR Rate" is available for interest periods of one, two, three or six months. The "Applicable Margin" is based on the average quarterly excess availability under the ABL Revolver. Under the terms of the ABL Facility, the Company is required to hedge at least $50 million of the variable interest rate exposure (so long as funded debt with variable interest rates exceeds $75 million). The unused revolver fee is 0.25% to 0.375% of the unused Maximum Revolver Amount (as defined below).

The maximum availability under the ABL Revolver at any one time (the "Maximum Revolver Amount") is $100 million, with the ability to request increases to the Maximum Revolver Amount, at the discretion of the participating lenders thereunder, of up to $50 million, all of which are subject to the limitation that advances under the ABL Revolver cannot exceed the Borrowing Base. The "Borrowing Base" equals (i) 85% of the amount of the Borrowers' eligible accounts not older than 90 days from the invoice date, plus (ii) the lesser of
(a) 50% of the Maximum Revolver Amount and (b) the lesser of (1) 65% of eligible inventory and (2) 85% of the net orderly liquidation value of eligible inventory (subject to a $5,000,000 limit for eligible work-in-process inventory), minus
(iii) customary reserves as determined by the ABL Agent. The Borrowing Base as of the Closing Date was approximately $93 million.

The ABL Term Loan is in the amount of $50 million and principal is repayable in quarterly installments of $1,800,000 commencing on September 1, 2012 and continuing on the first day of each December, March, June and September thereafter, together with a final installment of all remaining unpaid principal . . .

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits.

EXHIBIT NO. DESCRIPTION OF EXHIBIT

4.1 Credit Agreement, by and among Wells Fargo Bank, N.A., as administrative agent, sole lead arranger, and sole book runner, the lenders that are parties thereto, as the lenders, and Unifi, Inc. and certain of its domestic subsidiaries, as borrowers, dated as of May 24, 2012.
4.2 Guaranty and Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent.
4.3 Trademark Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells Fargo Bank, N.A., as agent.

4.4 Patent Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells Fargo Bank, N.A., as agent.
4.5 Intercreditor Agreement, dated as of May 24, 2012, by and between Wells Fargo Bank, N.A., in its capacity as agent, and Wilmington Trust, National Association, as administrative agent, as acknowledged by Unifi, Inc., Unifi Manufacturing, Inc., Unifi Sales & Distribution, Inc., Spanco International, Inc., and Unifi Equipment Leasing,
LLC.
4.6 Credit Agreement, by and among Wilmington Trust, National Association, as administrative agent, the lenders that are party thereto, as the lenders, and Unifi, Inc. and certain of its domestic subsidiaries, as borrowers, dated as of May 24, 2012.
4.7 Guaranty and Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wilmington Trust, National Association, as administrative agent.
4.8 Trademark Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wilmington Trust, National Association, as agent.
4.9 Patent Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wilmington Trust, National Association, as agent.
10.1 Deposit Account Control Agreement, dated as of May 24, 2012, among Unifi Manufacturing, Inc., Wells Fargo Bank, N.A., and Bank of America, N.A.
99.1 Press release of Unifi, Inc. dated May 24, 2012