INFORMATION TO BE
INCLUDED IN THE REPORT
Item 5. Other Events.
New
Credit Facility
On
October 18, 2002 Footstar, Inc. (the “Company”) entered into a three year $325
million senior secured credit facility (the “Credit Facility”) with a syndicate
of banks led by Fleet National Bank. The Credit Facility is comprised of a $255 million
revolving credit facility and a $70 million term loan. The new asset-based Credit Facility
matures on October 17, 2005. The Credit Facility replaces the existing unsecured credit
facility in the same amount which was due to expire in May 2003.
The
Credit Facility is secured by all of the assets of the Company and its subsidiaries and
contains various obligations, affirmative and negative covenants, representations,
warranties and events of default to which the Company is subject, all as specified in the
Credit Facility, including, among other things, a leverage (debt-to-EBITDA) financial
ratio covenant and an interest coverage (EBITDAR-to-interest plus rent expense) financial
ratio covenant as well as limits and restrictions on additional indebtedness, other liens,
dividends, stock repurchases and capital expenditures. The Company’s performance
against the interest coverage ratio affects the cost of the Credit Facility to the
Company. The Credit Facility also includes representations and warranties that on an
ongoing basis there are no material adverse events affecting the Company’s business,
operations, financial condition, or certain projected financial results or financial
condition and that the master agreement underlying the agreements that the Company
maintains with Kmart is in full force and effect and not in default. A failure by the
Company to satisfy any of the covenants, representations or warranties under the Credit
Facility would result in default or other adverse impact under the Credit Facility.
Fleet Securities, Inc. acted as lead
arranger and syndication agent, with Fleet National Bank as administrative agent and swingline
lender, Congress Financial Corporation and Wells Fargo Retail Finance, LLC as syndication agents,
Fleet Retail Finance, Inc. as collateral agent and JPMorgan Chase Bank as documentation agent
for the lenders.
The foregoing description is not
intended to be complete and is subject to all of the terms, conditions, covenants and
restrictions of the Credit Facility, which is included as Exhibit 99.1 hereto.
Item 7. Financial
Statements, Pro Forma Financial Information and Exhibits.
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