Unifi Inc (NYSE:UFI), a textile mill products manufacturer, has amended its credit agreement, impacting its financial structure. On Thursday, the company, through its subsidiary Unifi Manufacturing, Inc., and affiliates, revised the terms of its credit facility originally established on October 28, 2022.
The amendment permits the sale of a company-owned real estate asset in Yadkinville, North Carolina, with proceeds aimed at reducing the outstanding balance on its revolving credit facility, rather than applying it to the term loan as previously required. Consequently, the maximum revolver amount has been decreased from $115 million to $80 million.
Additionally, the amendment introduces changes to the interest rates on loans, with SOFR-based loans now ranging from 1.50% to 2.00% and Base Rate-based loans from 0.50% to 1.00%. These rates take effect immediately and will remain until Unifi achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better. Approval from lenders will now be required for any Term Loan Reset.
The updated agreement also includes modifications to the definitions and conditions related to swing loans, letters of credit sublimits, and collateral valuation costs for the Asset-Based Lending (ABL) Facility. The ABL Term Loan had an outstanding balance of $98.9 million as of the effective date of the amendment.
In connection with these changes, Unifi paid an aggregate fee of $195,000 to the lenders. The maturity date for the ABL Facility remains October 28, 2027.
In other recent news, Unifi, Inc., a global textile solutions provider, reported a mixed fiscal fourth quarter in 2024. Despite the slower recovery in the textile and apparel industry, the company's sales surpassed previous quarters and the same period last year.
Unifi's EBITDA reached $5.9 million, with the company expanding its market share in North America and entering new product categories.
The company's innovative products aimed at circularity and reducing carbon footprint are expected to drive sales in 2025 and 2026. Unifi projects a gradual recovery in early 2025, followed by a more substantial resurgence later in the year.
The company's outlook for the first quarter of fiscal 2025 includes expected net sales between $147 million and $153 million, a 10% growth year-over-year at the midpoint, and adjusted EBITDA between $1 million and $3 million.
As part of their strategic focus, Unifi is investing in leadership and innovation to drive sustainable profitable growth, with new products like white dyeable filament yarn and ThermaLoop expected to positively impact fiscal 2026.
InvestingPro Insights
Unifi Inc's recent amendment to its credit agreement reflects strategic financial management, but a glance at the company's real-time data from InvestingPro provides a broader context. Unifi operates with a significant debt burden, which is reflected in its negative P/E ratio of -2.67, indicating that the company has not been profitable over the last twelve months as of Q4 2023. This aligns with one of the InvestingPro Tips, which notes the company's struggle with profitability.
However, Unifi's liquid assets do exceed its short-term obligations, providing some financial flexibility. This is a crucial point given the company's efforts to reduce its outstanding balance on its revolving credit facility. Additionally, the company has seen a strong return over the last month, with a 22.54% price total return, suggesting a positive market response to its recent activities or other factors.
Investors considering Unifi should note that analysts predict the company will be profitable this year, which could signify a turnaround in its financial health. For a more comprehensive analysis and additional InvestingPro Tips, there are 7 more tips available on the InvestingPro platform for Unifi Inc, which can be accessed to gain deeper insights into the company's financials and performance prospects.
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