Big Lots Convinces Banks to Suspend Key Debt Covenant

Retailer likely violated its credit agreement terms days before the quarter ended.

September 7, 2022

Three days before its quarter ended on July 30, 2022 Big Lots, Inc. (BIG), a discount retailer, convinced lenders not to test its Fixed Charge Coverage Ratio, which measures the firm’s ability to cover interest expense, mandatory debt repayment, and lease expenses. Big Lots also disclosed in its latest quarterly filing that it’s negotiating a new loan— under new terms— which should be in place no later than October 28, 2022.

The new $900 million loan from PNC Bank will be backed by Big Lots’ working capital assets and the interest on the loan will fluctuate based on a variety of factors. Notably, the only financial covenant under the new loan agreement will be a new Fixed Charge Coverage Ratio.

Big Lots also convinced the owner of its California distribution facility not to test the company’s ability to pay its fixed charges and plans to renegotiate the lease.

The short interest in Big Lots is now near 34%.

Related: ROST, BURL, OLLY, DG, DLTR, BJ, PSMT, FIVE, TJX

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