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Revolving Credit Facility
 3 Months Ended
Jul. 01, 2023
Revolving Credit Facility  
Revolving Credit Facility

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4. Revolving Credit Facility

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On June 29, 2015, the Company, as guarantor, and its wholly owned primary operating subsidiary, Boot Barn, Inc., refinanced a previous Wells Fargo credit facility with the $125.0 million syndicated senior secured asset-based revolving credit facility for which Wells Fargo Bank, National Association is agent (“Wells Fargo Revolver”).

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On May 26, 2017, the Company entered into an amendment to the Wells Fargo Revolver increasing the aggregate revolving credit facility to $135.0 million and extending the maturity date. On June 6, 2019, the Company entered into a further amendment to the credit agreement further increasing the aggregate revolving credit facility to $165.0 million and extending the maturity date. On July 26, 2021, the lenders under the Wells Fargo Revolver agreed to increase the aggregate revolving credit facility to $180.0 million. On July 11, 2022, the Company entered into a further amendment to the Wells Fargo Revolver (the “2022 Wells Amendment”) which amended and restated the credit agreement to, among other things, increase the aggregate revolving credit facility to $250.0 million, increase the sublimit for letters of credit to $10.0 million, and extend the maturity date to July 11, 2027. The 2022 Wells Amendment also replaced all London Inter-Bank Offered Rate (“LIBOR”) based provisions with provisions reflecting the Secured Overnight Financing Rate (“SOFR”), including without limitation, the use of Term SOFR as the benchmark rate.

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Following the 2022 Wells Amendment, revolving credit loans bear interest at per annum rates equal to, at the Company’s option, either (i) Adjusted Term SOFR (defined as Term SOFR for the applicable interest period plus a fixed credit spread adjustment of 0.10%) plus an applicable margin for Term SOFR loans, or (ii) the base rate plus an applicable margin for base rate loans. The base rate is calculated at the highest of (a) the federal funds rate plus 0.5%, (b) the Wells Fargo prime rate and (c) Term SOFR for a one-month tenor in effect on such day plus 1.0%. The applicable margin is calculated based on a pricing grid that in each case is linked to quarterly average excess availability. For Term SOFR loans, the applicable margin ranges from 1.00% to 1.25% and for base rate loans it ranges from 0.00% to 0.25%. The interest on base rate loans under the Wells Fargo Revolver is payable in quarterly installments ending on the maturity date and for Term SOFR loans is payable on the earlier of the last day of each interest period applicable thereto, or on each three-month interval of such interest period. The Company also pays a commitment fee of 0.25% per annum of the actual daily amount of the unutilized revolving loans.

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The borrowing base of the Wells Fargo Revolver is calculated on a monthly basis and is based on the amount of eligible credit card receivables, commercial accounts, inventory, and available reserves.

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The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of July 1, 2023 were $26.2 million and $0.8 million, respectively. The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of April 1, 2023 were $66.0 million and $0.8 million, respectively. Total interest expense incurred in the thirteen weeks ended July 1, 2023 on the Wells Fargo Revolver was $0.9 million and the weighted average interest rate for the thirteen weeks ended July 1, 2023 was 6.6%. Total interest expense incurred in the thirteen weeks ended June 25, 2022 on the June 2015 Wells Fargo Revolver was $0.5 million and the weighted average interest rate for the thirteen weeks ended June 25, 2022 was 2.3%.

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All obligations under the Wells Fargo Revolver are unconditionally guaranteed by the Company and each of its direct and indirect domestic subsidiaries (other than certain immaterial subsidiaries) which are not named as borrowers under the Wells Fargo Revolver.

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The Wells Fargo Revolver contains customary provisions relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and events of default. In addition, the terms of the Wells Fargo Revolver require the Company to maintain, on a consolidated basis, a Consolidated Fixed Charge Coverage Ratio (as defined in the Wells Fargo Revolver) of at least 1.00:1.00 during such times as a covenant trigger event shall exist. The Wells Fargo Revolver also requires the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the Company to pay a higher interest rate upon an event of default is an embedded derivative. As of July 1, 2023, the fair value of this embedded derivative was estimated and was not significant.

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As of July 1, 2023, the Company was in compliance with the Wells Fargo Revolver debt covenants.

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Debt Issuance Costs

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Debt issuance costs totaling $1.7 million were incurred under the Wells Fargo Revolver and subsequent amendments and are included as assets on the consolidated balance sheets in prepaid expenses and other current assets. Total unamortized debt issuance costs were $0.4 million and $0.5 million as of July 1, 2023 and April 1, 2023, respectively. These amounts are being amortized to interest expense over the term of the Wells Fargo Revolver.

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Total amortization expense of less than $0.1 million related to the Wells Fargo Revolver is included as a component of interest expense in both the thirteen weeks ended July 1, 2023 and June 25, 2022.