Myer has signed an agreement to refinance its existing credit facilities with J.P. Morgan and Gordon Brothers.
The new agreement sees Myer sign up to a four-year Asset Based Loan (ABL) funding package consisting of a secured revolving credit and term loan facility with the investment firms.
The action comes ahead of the renewal of its existing arrangements, which were due for renewal in November 2022.
Myer CEO John King said the move affirms the direction the retailer is moving in.
"This is a strong vote of confidence in Myer’s strategic direction and achievements to date by the management team and Board," he said.
"Under the facility, we have further confidence and ability to execute on our growth plans, particularly to accelerate our online and loyalty initiatives and ultimately pay dividends to our shareholders as soon as it is prudent to do so," he said.
The new package has been sized to reflect Myer's overall funding requirements given the successes of its capital management plan and cash flow generation.
The facility size fluctuates depending on Myer’s asset base with a maximum facility size of $215 million.
This provides plenty of liquidity, given Myer’s positive net cash position of $112 million at the end of July 2021 and future requirements.
"This funding package provides Myer with an innovative funding solution that allows us to efficiently draw liquidity to primarily fund working capital in advance of peak trading periods," Myer CFO Nigel Chadwick said.
"By drawing on financing structures that are frequently used in international markets, including specifically in the retail sector, we have extended the life of our financing program, secured liquidity to invest in growth opportunities including our online business, and maximised our financial flexibility in the most efficient manner for shareholders.
"We look forward to working with our new banking partners as we continue to execute on our strategy," he said.
The four-year duration and covenant-light nature of the package provides significant long term stability to Myer’s balance sheet.
The primary financial covenant is a liquidity covenant and dividends are allowed, subject to available liquidity.
There is no minimum Shareholders’ Equity or leverage covenant.
Myer was advised on the transaction by Houlihan Lokey and Clayton Utz.