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Credit Facility
 3 Months Ended
Apr. 02, 2022
Debt Disclosure [Abstract]  
Credit Facility
15. Credit Facility
Until April 11, 2022 the Company maintained a credit agreement (Credit Facility) with JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender, and Bank of the West, a Lender (collectively, the Lenders). The Credit Facility provided for up to $150.0 million of unsecured borrowings, with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity up to $550.0 million in the future with the Lenders and additional lenders, as required. The Credit Facility also provided for a sublimit of up to $25.0 million for the issuance of letters of credit and a sublimit of $75.0 million for borrowings in specified foreign currencies. As of April 2, 2022 and January 1, 2022, the Credit Facility had no outstanding draws and $1.9 million and $1.7 million of outstanding letters of credit, respectively. The Company was in compliance with all covenants under the Credit Facility as of April 2, 2022 and January 1, 2022.
For each of the three months ended April 2, 2022 and April 3, 2021, the Company incurred total interest expense of $0.1 million under the Credit Facility.
On April 11, 2022, the Company paid off all obligations owing under, and terminated the Credit Facility.
Also, on April 11, 2022, in connection with the closing of the Sound United acquisition, as disclosed in Note 21, the Company entered into a credit agreement (New Credit Facility) with financial institutions party thereto as initial lenders (collectively, the Initial Lenders), Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., Bank of the West and BofA Securities, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., Bank of the West and BofA Securities, Inc., as co-syndication agents. The Credit Facility was terminated in connection with the entry into the New Credit Facility.
The New Credit Facility provides for an unsecured term loan of $300.0 million (Term Loan) and $500.0 million of ongoing unsecured revolving commitments (Revolver), with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity by an additional $400.0 million (plus additional unlimited amounts if certain incurrence tests are met) in the future with the Initial Lenders and additional lenders, as required.
The New Credit Facility also provides for a sublimit of up to $50.0 million for the issuance of letters of credit. All unpaid principal under the Credit Facility will become due and payable on April 12, 2027. Proceeds from the Term Loan and a portion of the Revolver were to be used to consummate the acquisition of Sound United and the remainder of the proceeds from the Revolver are expected to be used for general corporate, capital investment and working capital needs.
Borrowings under the New Credit Facility will be deemed, at the Company’s election, either: (a) an Alternate Base Rate (ABR) Loan, which bears interest at the ABR, plus a spread of 0.000% to 0.750% based upon a Company leverage ratio, or (b) a Term SOFR Loan, which bears interest at the Adjusted Term SOFR Rate (as defined below), plus a spread of 1.000% to 1.750% based upon a Company net leverage ratio. Pursuant to the terms of the New Credit Facility, the ABR is equal to the greatest of (i) the prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50%, and (iii) the one-month Adjusted Term SOFR plus 1.0%. The Adjusted Term SOFR Rate is equal to the Term SOFR Rate (as defined in the New Credit Facility) for the applicable interest period plus a spread adjustment of 0.10%, 0.15% and 0.25% for the interest periods ending one, three and six months, respectively.
The Company is also obligated under the New Credit Facility to pay an unused fee ranging from 0.150% to 0.275% per annum, based upon a Company leverage ratio, with respect to any un-utilized portion of the New Credit Facility.
The Company is subject to certain covenants, including financial covenants related to a net leverage ratio and an interest charge coverage ratio, and other customary negative covenants. The New Credit Facility also includes customary events of default which, upon the occurrence of any such event of default, provide the Initial Lenders (and any additional lenders) with the right to take either or both of the following actions: (a) immediately terminate the commitments, and (b) declare the loans then outstanding immediately due and payable in full.