Fossil Group Secures $150 Million Credit Facility and Restructures Debt with Transaction Support Agreement

Fossil Group has refinanced its debts with a new $150 million credit facility set to mature in 2030. The company has also entered into a Transaction Support Agreement with holders of approximately 59% of its outstanding 7.00% Senior Notes due 2026, offering an exchange for new 9.5% Senior Secured Notes due 2029. This restructuring aims to bolster Fossil's financial standing and strengthen its balance sheet.

Fossil Group, Inc. (NASDAQ: FOSL) has announced a significant financial move to bolster its financial standing. The company has refinanced its debt with a new $150 million asset-based revolving credit facility, set to mature on August 13, 2030, priced at SOFR plus 500 basis points [1]. This refinancing is part of a broader effort to strengthen the company's balance sheet and position it for future growth.

In addition to the new credit facility, Fossil Group has entered into a Transaction Support Agreement with certain funds managed by HG Vora Capital Management, LLC and Nantahala Capital, which collectively own approximately 59% of the company's outstanding 7.00% Senior Notes due 2026 [2]. Under the agreement, Fossil will offer holders of its unsecured notes the opportunity to participate in a new money investment of up to $32.5 million for new 9.5% First-Out Senior Secured Notes due 2029. Noteholders can also tender their unsecured notes in exchange for either First-Out Notes or 7.5% Second-Out Senior Secured Notes due 2029, depending on their participation in the new money investment.

Participating noteholders will receive warrants to purchase Fossil common stock, with those joining the new money investment receiving additional common stock. If noteholders representing less than 90% of the outstanding principal amount tender their notes, Fossil may implement the restructuring through a proceeding under the Companies Act 2006 of England and Wales.

The company's move to restructure its debt comes amidst a period of financial challenges, including a decline in net sales and a negative earnings per share of -$0.33 for the first quarter of 2025. However, Fossil Group has also shown signs of improvement, such as an expansion of its gross margin and an increase in operating income. The company has also appointed Laks Lakshmanan as Chief Supply Chain Officer to enhance its global supply chain operations.

Maxim Group has initiated coverage on Fossil with a Buy rating, pointing to the company's early-stage turnaround strategy. This strategy includes refocusing on core analog watches, reducing $100 million in SG&A expenses, and strengthening the balance sheet.

The refinancing and restructuring efforts indicate Fossil Group's commitment to navigating its current challenges and positioning itself for future growth.

References:
[1] https://finance.yahoo.com/news/fossil-group-inc-announces-abl-200500687.html
[2] https://ca.investing.com/news/company-news/fossil-group-refinances-debt-with-new-150-million-credit-facility-93CH-4156891