Redeemable preferred shares

3 Months Ended

May 02, 2020

On October 5, 2016, the Company issued 625,000 shares of Series A Convertible Preference Shares (“Preferred Shares”) to certain affiliates of Leonard Green & Partners, L.P., for an aggregate purchase price of $625.0 million, or $1,000 per share (the “Stated Value”) pursuant to the investment agreement dated August 24, 2016. Preferred shareholders are entitled to a cumulative dividend at the rate of 5% per annum, payable quarterly in arrears either in cash or by increasing the stated value of the preferred shares. The Company declared the preferred share dividend during the first quarter of Fiscal 2021 payable “in-kind” by increasing the stated value of the preferred shares. The stated value of the preferred shares will increase by $12.50 per share during the second quarter of Fiscal 2021, and will become payable upon liquidation of the Preferred Shares. Refer to Note 7 for additional discussion of the Company’s dividends on Preferred Shares.



(in millions, except conversion rate and conversion price)	May 2, 2020		February 1, 2020		May 4, 2019
Conversion rate	12.2297		12.2297		11.5493
Conversion price	$	81.7682	$	81.7682	$	86.5853
Potential impact of preferred shares if-converted to common shares	7.6		7.6		7.2
Liquidation preference	$	632.8	$	632.8	$	632.8

In connection with the issuance of the preferred shares, the Company incurred direct and incremental expenses of $13.7 million. These direct and incremental expenses originally reduced the preferred shares carrying value and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date in November 2024. Accumulated accretion recorded in the condensed consolidated balance sheets was $6.1 million as of May 2, 2020 (February 1, 2020 and May 4, 2019: $5.7 million and $4.4 million, respectively).

Accretion of $0.4 million was recorded to preferred shares in the condensed consolidated balance sheets during the 13 weeks ended May 2, 2020 ($0.4 million for the 13 weeks ended May 4, 2019).