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Long Term Debt | 9 Months Ended
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Oct. 30, 2021
Debt Disclosure [Abstract] |
Long Term Debt | 4. Long Term Debt Long term debt consists of:
|  | (in thousands) |
|  | October 30, |  |  | January 30, |  |  | October 31, |
|  | 2021 |  |  | 2021 |  |  | 2020 |
Senior secured term loan facility (Term B-6 Loans), LIBOR (with a floor of 0.00%) plus 2.00%, matures on June 24, 2028 |  | $ | 952,841 |  |  | $ | — |  |  | $ | — |
Senior secured term loan facility (Term B-5 Loans), LIBOR (with a floor of 0.00%) plus 1.75%, repaid in full on June 24, 2021 |  |  | — |  |  |  | 958,418 |  |  |  | 958,222 |
$805,000 convertible senior notes, 2.25%, matures on April 15, 2025 |  |  | 644,627 |  |  |  | 648,311 |  |  |  | 640,618 |
$300,000 senior secured notes, 6.25%, redeemed in full on June 11, 2021 |  |  | — |  |  |  | 300,000 |  |  |  | 300,000 |
$600,000 ABL senior secured revolving facility, LIBOR plus spread based on average outstanding balance, matures on June 29, 2023 |  |  | — |  |  |  | — |  |  |  | 250,000 |
Finance lease obligations |  |  | 45,039 |  |  |  | 47,664 |  |  |  | 48,351 |
Unamortized deferred financing costs |  |  | (13,638 | ) |  |  | (22,724 | ) |  |  | (23,881 | )
Total debt |  |  | 1,628,869 |  |  |  | 1,931,669 |  |  |  | 2,173,310 |
Less: current maturities |  |  | (14,224 | ) |  |  | (3,899 | ) |  |  | (3,815 | )
Long term debt, net of current maturities |  | $ | 1,614,645 |  |  | $ | 1,927,770 |  |  | $ | 2,169,495 |
Term Loan Facility On February 26, 2020, BCFWC entered into Amendment No. 8 (the Eighth Amendment) to the Term Loan Credit Agreement governing its senior secured credit term loan facility (Term Loan Facility). The Eighth Amendment, among other things, reduced the interest rate margins applicable to the Term Loan Facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to 1.75%, in the case of LIBOR loans, with the LIBOR floor remaining at 0.00%. In connection with the execution of the Eighth Amendment, the Company incurred fees of $1.1 million, primarily related to legal and placement fees, which were recorded in the line item “Costs related to debt issuances and amendments” in the Company’s Condensed Consolidated Statement of Income (Loss). Additionally, the Company recognized a non-cash loss on the extinguishment of debt of $0.2 million, representing the write-off of unamortized deferred financing costs and original issue discount, which was recorded in the line item “Loss on extinguishment of debt” in the Company’s Condensed Consolidated Statement of Income (Loss). On June 24, 2021, BCFWC entered into Amendment No. 9 (the Ninth Amendment) to the Term Loan Credit Agreement governing the Term Loan Facility. The Ninth Amendment, among other things, extended the maturity date from November 17, 2024 to June 24, 2028, and changed the interest rate margins applicable to the Term Loan Facility from 0.75% to 1.00%, in the case of prime rate loans, and from 1.75% to 2.00%, in the case of LIBOR loans, with a 0.00% LIBOR floor. This amendment also requires quarterly principal payments of $2.4 million. In connection with the execution of the Ninth Amendment, the Company incurred fees of $3.3 million, primarily related to legal and placement fees, which were recorded in the line item “Costs related to debt issuances and amendments” in the Company’s Condensed Consolidated Statement of Income (Loss). Additionally, the Company recognized a loss on the extinguishment of debt of $1.2 million, representing the write-off of unamortized deferred financing costs and original issue discount, which was recorded in the line item “Loss on extinguishment of debt” in the Company’s Condensed Consolidated Statement of Income (Loss). At October 30, 2021 and October 31, 2020, the interest rate related to the Term Loan Facility was 2.1% and 1.9%, respectively. Convertible Notes On April 16, 2020, the Company issued $805.0 million of Convertible Notes. The Convertible Notes are general unsecured obligations of the Company. The Convertible Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears, on April 15 and October 15 of each year, beginning on October 15, 2020. The Convertible Notes will mature on April 15, 2025, unless earlier converted, redeemed or repurchased. During the third quarter of Fiscal 2021, the Company entered into separate, privately negotiated exchange agreements (Exchange Agreements) with certain holders of the Convertible Notes. Under the terms of the Exchange Agreements, the holders exchanged $160.4 million in aggregate principal amount of Convertible Notes held by them for a combination of an aggregate of $90.8 million in cash and 513,991 shares of the Company's common stock. This exchange resulted in a pre-tax debt extinguishment charge of $86.4 million in the three month period ended October 30, 2021. Prior to the close of business on the business day immediately preceding January 15, 2025, the Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of the Company’s common stock), subject to adjustment if certain events occur. The initial conversion price represents a conversion premium of approximately 32.50% over $166.17 per share, the last reported sale price of the Company’s common stock on April 13, 2020 (the pricing date of the offering) on the New York Stock Exchange. During the first quarter of Fiscal 2021, the Company made an irrevocable settlement election for any conversions of the Convertible Notes. Upon conversion, the Company will pay cash for the principal amount. For any excess above principal, the Company will deliver shares of its common stock. The Company may not redeem the Convertible Notes prior to April 15, 2023. On or after April 15, 2023, the Company will be able to redeem for cash all or any portion of the Convertible Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the principal aggregate amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Holders of the Convertible Notes may require the Company to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or during the relevant redemption period for such Convertible Notes. The Convertible Notes contain a cash conversion feature, and as a result, the Company initially separated it into liability and equity components. The Company valued the liability component based on its borrowing rate for a similar debt instrument that does not contain a conversion feature. The equity component, which was recognized as a debt discount, was valued as the difference between the face value of the Convertible Notes and the fair value of the liability component. As a result of adopting ASU 2020-06, the Company is no longer separating the Convertible Notes into debt and equity components, and is instead accounting for it wholly as debt. In connection with the Convertible Notes issuance, the Company incurred deferred financing costs of $21.0 million, primarily related to fees paid to the bookrunners of the offering, as well as legal, accounting and rating agency fees. These costs were initially allocated on a pro rata basis, with $16.4 million allocated to the debt component and $4.6 million allocated to the equity component. As a result of adopting ASU 2020-06, all unamortized deferred financing costs related to the Convertible Notes are now allocated to debt. Prior to adoption of ASU 2020-06, the debt discount and the debt portion of the deferred costs were being amortized to interest expense over the term of the Convertible Notes at an effective interest rate of 8.2%. The effective interest rate after adoption of ASU 2020-06 is 2.8%. The Convertible Notes consist of the following components as of the dates indicated:
|  | (in thousands) |
|  | October 30, |  |  | January 30, |  |  | October 31, |
|  | 2021 |  |  | 2021 |  |  | 2020 |
Liability component: |  |  |  |  |  |  |  |  |
Principal |  | $ | 644,627 |  |  | $ | 805,000 |  |  | $ | 805,000 |
Unamortized debt discount |  |  | — |  |  |  | (156,689 | ) |  |  | (164,382 | )
Unamortized deferred debt costs |  |  | (11,845 | ) |  |  | (14,191 | ) |  |  | (14,888 | )
Net carrying amount |  | $ | 632,782 |  |  | $ | 634,120 |  |  | $ | 625,730 |
Equity component, net |  | $ | — |  |  | $ | 131,916 |  |  | $ | 131,916 |
Interest expense related to the Convertible Notes consists of the following as of the periods indicated:
|  | (in thousands) |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | October 30, 2021 |  |  | October 31, 2020 |  |  | October 30, 2021 |  |  | October 31, 2020 |
Coupon interest |  | $ | 3,967 |  |  | $ | 4,508 |  |  | $ | 12,988 |  |  | $ | 9,864 |
Amortization of debt discount |  |  | — |  |  |  | 7,542 |  |  |  | — |  |  |  | 16,295 |
Amortization of deferred debt costs |  |  | 941 |  |  |  | 683 |  |  |  | 2,948 |  |  |  | 1,476 |
Convertible Notes interest expense |  | $ | 4,908 |  |  | $ | 12,733 |  |  | $ | 15,936 |  |  | $ | 27,635 |
Secured Notes On April 16, 2020, BCFWC issued $300.0 million of 6.25% Senior Secured Notes due 2025 (Secured Notes). The Secured Notes were senior, secured obligations of BCFWC, and interest was payable semiannually in cash, in arrears, at a rate of 6.25% per annum on April 15 and October 15 of each year, beginning on October 15, 2020. The Secured Notes were guaranteed on a senior secured basis by Burlington Coat Factory Holdings, LLC, Burlington Coat Factory Investments Holdings, Inc. and BCFWC’s subsidiaries that guarantee the loans under the Term Loan Facility. In connection with the Secured Notes issuance, the Company incurred deferred financing costs of $7.9 million, primarily related to fees paid to the bookrunners of the offering, as well as legal fees. These costs are being amortized to interest expense over the term of the Secured Notes. The Company incurred additional costs of $2.5 million, primarily related to legal fees, which are recorded in the line item, “Costs related to debt issuances and amendments” in the Company’s Condensed Consolidated Statement of Income (Loss). On June 11, 2021, BCFWC redeemed the full $300.0 million aggregate principal amount of the Secured Notes. The redemption price of the Secured Notes was $323.7 million, plus accrued and unpaid interest to, but not including, the date of redemption. This redemption resulted in a pre-tax debt extinguishment charge of $30.2 million in the three month period ended July 31, 2021. ABL Line of Credit On March 17, 2020, the Company borrowed $400.0 million on its existing $600.0 million senior secured asset-based revolving credit facility (the ABL Line of Credit) as a precautionary measure in order to increase the Company’s cash position and facilitate financial flexibility in light of the uncertainty resulting from COVID-19. The Company repaid $150.0 million of this amount during the second quarter of Fiscal 2020, and the remaining $250.0 million during the fourth quarter of Fiscal 2020. At October 30, 2021, the Company had $541.0 million available under the ABL Line of Credit. There were no borrowings under the ABL Line of Credit during the three and nine month periods ended October 30, 2021. At October 31, 2020, the Company had $292.4 million available under the ABL Line of Credit. The maximum borrowings under the ABL Line of Credit during the three and nine month periods ended October 31, 2020 amounted to $250.0 million and $400.0 million, respectively. Average borrowings during the three and nine month periods ended October 31, 2020 amounted to $250.0 million and $276.2 million, respectively, at an average interest rate of 1.6% and 2.0%, respectively.

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