Warby Parker (WRBY) Enters $120M Credit Agreement

On February 21, 2024, Warby Parker (NYSE: WRBY), a Delaware public benefit corporation, and Warby Parker Retail, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (together, the “Borrowers”), entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., Citibank, N.A., the other lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Agent”).

The Credit Agreement provides for a revolving credit facility with borrowing capacity up to $120,000,000 at any time outstanding. The Credit Agreement also contains an uncommitted accordion feature pursuant to which the Borrowers can expand their borrowing capacity by $55,000,000 for maximum borrowings of $175,000,000, subject to certain conditions. The Credit Agreement matures on February 21, 2029 (the “Maturity Date”), and the Borrowers may borrow, repay and reborrow amounts under the revolving credit facility until the Maturity Date. At closing, there were no borrowings under the Credit Agreement.

Proceeds of the borrowings under the Credit Agreement are intended to be used for working capital and other general corporate purposes in the ordinary course of business. Borrowings under the Credit Agreement are secured and will bear interest at a rate equal to, at the Borrowers’ option, either (a) the greater of the prime rate (as defined in the Credit Agreement) or 2.5%, plus an applicable margin of 0.65% to 0.90% or (b) adjusted SOFR (as defined in the Credit Agreement), plus an applicable margin of 1.65% to 1.90%. The applicable margin shall be determined based on the Borrowers’ consolidated senior net leverage ratio. The Borrowers are also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee of 0.20% to 0.25% per annum, depending on the Borrowers’ consolidated senior net leverage ratio, and fees associated with letters of credit. In connection with the Credit Agreement, the Borrowers also paid the lenders certain upfront fees.

The obligations of the Borrowers under the Credit Agreement are secured by first-lien security interests in substantially all of the assets of the Borrowers. In addition, the obligations are required to be guaranteed in the future by certain additional domestic subsidiaries of the Company.

The Credit Agreement contains a financial maintenance covenant, which only applies while borrowings exceed $30 million, and requires the Borrowers to maintain a maximum consolidated senior net leverage ratio of 3.00:1.00, which will be tested on the last day of each fiscal quarter.

In addition, the Credit Agreement contains customary affirmative and negative covenants for a transaction of this type, including covenants that limit indebtedness, liens, capital expenditures, asset sales, investments and restricted payments, in each case subject to negotiated exceptions and baskets. The Credit Agreement also contains representations, warranties and event of default provisions customary for a transaction of this type.

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