Leslie's, Inc., the Phoenix-based pool and spa retailer that filed for chapter 11 on September 30, told the SEC on October 5 that a bankruptcy court approved its new loans on an interim basis and that it has already drawn on one.
The two loans
On October 2, Leslie's and its subsidiaries signed two debtor-in-possession credit agreements — loans made to a company while it is in chapter 11 — after the U.S. Bankruptcy Court for the Southern District of Texas gave interim approval October 1. A $90.0 million super-priority term loan is available in two draws of $45 million; the company borrowed the first $45.0 million on October 2, at SOFR plus 6.50% a year. A separate asset-based revolving line, $225.0 million in commitments, was not drawn on October 2; it carries SOFR plus 3.25%. The 8-K says both mature six months from October 2, 2026, subject to milestones in the case and to earlier maturity if the reorganization plan takes effect first. The agreements print that date as April 2, 2027, extendable.
The old revolving loan
As of October 2, about $50 million of revolving loans was outstanding under Leslie's prior credit line, alongside about $11.145 million in issued and undrawn letters of credit. Those loans are subject to a dollar-for-dollar "creeping roll-up" into the new line. The asset-based agreement says they are the only prepetition obligations the roll-up covers: the letters of credit are not included. Term loan lenders also earn an upfront premium equal to 9.50% of what each actually funds, paid in additional term loans rather than cash. Prepetition term lenders that were not party to the company's restructuring support agreement on the filing date have ten business days after the first business day following the October 2 funding to join the new term loan, in proportion to their existing holdings.
Interim, not final
The court's October 1 approval is interim. The filing describes the second $45 million draw as available only on conditions that include the entry of a final order, and says any old revolving loans still outstanding when a final order is entered are then refinanced as loans under the new line. The 8-K does not say whether a final order had been entered, or give a date for one.
Nasdaq and the stock
Leslie's received a second Nasdaq notice on October 5: Nasdaq had determined to delist the common stock as a result of the chapter 11 cases, under listing rules 5101, 5110(b) and IM-5101-1. It follows a September 25 notice on a different ground: the bid price had closed below $1.00 for 30 straight business days. That earlier notice, the 8-K says, advises Nasdaq will suspend trading at the opening of business October 6 and file a Form 25 with the SEC, unless the company requested a hearing by October 2. It did not. Leslie's expects the stock to trade afterward on an OTC Markets Group market, with no assurance that it will.