Crown Crafts Inc. (NASDAQ:CRWS), a manufacturer in the cotton fabric industry, has entered into a material agreement with The CIT Group/Commercial Services, Inc., modifying the terms of its existing financing agreement.
The new letter agreement, dated January 2, 2025, addresses the company's non-compliance with certain financial covenants.
According to the filing, CIT has waived Crown Crafts' non-compliance with the fixed charge coverage ratio for the fiscal quarters ending September 29, 2024, and December 29, 2024. This waiver provides Crown Crafts with immediate financial flexibility, alleviating potential covenant breach concerns for those periods.
Additionally, the agreement revises the Excess Availability condition in relation to Crown Crafts' revolving line of credit. The company is now required to maintain Excess Availability of $7 million, a change from the previous condition which was set at 50% of the outstanding balance of the company's term loan.
CIT retains the right to reverse this modification upon notice to Crown Crafts, suggesting a conditional and potentially temporary adjustment to the credit terms. This revision indicates a renegotiation of the terms under which Crown Crafts accesses its revolving credit, potentially impacting its liquidity and financial strategy.
The SEC filing, which provides the source of this information, confirms that the changes took effect immediately, with Crown Crafts and its subsidiaries adhering to the updated financial covenants of the financing agreement.
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