UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 26, 2005
Bluefly, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-14498 13-3612110
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
42 West 39th Street, New York, New York 10018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 944-8000
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On July 26, 2005, Bluefly, Inc. (the "Company") entered into a new three year
revolving credit facility (the "Credit Facility") with Wells Fargo Retail
Finance, LLC ("Wells Fargo"). The Credit Facility refinanced the Company's
previous credit facility (the "Rosenthal Facility") with Rosenthal & Rosenthal,
Inc. ("Rosenthal"). Under the terms of the Credit Facility, Wells Fargo provides
the Company with a revolving credit facility and issues letters of credit in
favor of suppliers or factors. The Credit Facility is secured by a lien on
substantially all of the Company's assets, as well as a $2,000,000 letter of
credit issued by Quantum Industrial Partners LDC, the Company's majority
shareholder ("Soros"), in favor of Wells Fargo (the "Soros LC"). Availability
under the Credit Facility is determined by a formula that takes into account the
amount of the Company's inventory and accounts receivable, as well as the Soros
LC. The maximum availability is currently $7,500,000 ($6,650,000 after giving
effect to a required $850,000 availability reserve), but can be increased to
$12,500,000 at the Company's request. As of July 26, 2005, total availability
under the Credit Facility, after giving effect to the required $850,000
availability reserve, was $6,000,000, of which approximately $2,300,000 was
committed, leaving approximately $3,700,000 available for further borrowings. As
a result of the refinancing of the Rosenthal Facility, the Company also regained
access to approximately $1,250,000 of cash that had previously been restricted
because it was being held as cash collateral by Rosenthal under the terms of the
Rosenthal Facility.
Interest accrues monthly on the average daily amount outstanding under the
Credit Facility during the preceding month at a per annum rate equal to the
prime rate plus a margin ranging from 0.50% to 0.75% or LIBOR plus a margin
ranging from 2.50% to 2.75%. The Company also pays a monthly commitment fee on
the unused portion of the facility (i.e., $7,500,000 less the amount of loans
outstanding) equal to 0.35%. In addition, the Company pays Wells Fargo certain
fees to open letters of credit and guarantees.
All indebtedness under the Credit Facility is due in July 2008, and is subject
to acceleration following an event of default.
Subject to certain conditions, if the Company defaults on any of its obligations
under the Credit Facility, Wells Fargo has the right to draw upon the Soros LC
to satisfy any such obligations. If Wells draws on the Soros LC, pursuant to the
terms of a reimbursement agreement between the Company and Soros (the
"Reimbursement Agreement"), the Company would have the obligation to, among
other things, reimburse Soros for any amounts drawn under the Soros LC plus
interest accrued thereon. In addition, the Company is required to pay Soros Fund
Management LLC an annual fee in connection with the issuance and maintenance of
the Soros LC in an amount equal to the fee that the Company would be required to
pay in order to have a similar letter of credit issued under the Credit
Facility. For the year beginning on the date of the closing of the Credit
Facility this formula requires an annual fee of $55,000. The Company is also
required to reimburse Soros for any costs and expenses associated with the
issuance and maintenance of the Soros LC.
Under the terms of the Credit Facility, Soros has the right to purchase all of
the Company's obligations from Wells at any time if the Company is then in
default under the Credit Facility.
Copies of the press release announcing the Credit Facility, the loan agreement
related to the facility, the Reimbursement Agreement and the fee letter signed
in connection with the Reimbursement Agreement have been filed as Exhibits 99.1,
99.2, 99.3 and 99.4, respectively, to this Current Report on Form 8-K.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The information contained in Item 1.01 of this Current Report on Form 8-K is
hereby incorporated herein by reference.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
99.1 Press Release Issued by the Company on July 27, 2005.
99.2 Loan and Security Agreement, dated July 26, 2005, by and between the
Company and Wells Fargo Retail Finance, LLC
99.3 Reimbursement Agreement, dated July 26, 2005, by and among the Company,
Quantum Industrial Partners LDC and Soros Fund Management, LLC
99.4 Fee Letter, dated July 26, 2005 by and between the Company and Soros
Fund Management LLC
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BLUEFLY, INC.
(Registrant)
Date: July 29, 2005 By: /s/ Patrick C. Barry
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Name: Patrick C. Barry
Title: Chief Operating Officer and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No.
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99.1 Press Release Issued by the Company on July 27, 2005.
99.2 Loan and Security Agreement, dated July 26, 2005, by and between
the Company and Wells Fargo Retail Finance, LLC
99.3 Reimbursement Agreement, dated July 26, 2005, by and among the
Company, Quantum Industrial Partners LDC and Soros Fund Management,
LLC
99.4 Fee Letter, dated July 26, 2005 by and between the Company and
Soros Fund Management LLC