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LONG-TERM DEBT | 12 Months Ended
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Aug. 03, 2024
Debt Disclosure [Abstract] |
LONG-TERM DEBT | NOTE 9—LONG-TERM DEBT The Company’s long-term debt consisted of the following:
(in millions) | Average Interest Rate at August 3, 2024 |  | Fiscal Maturity Year |  | August 3, 2024 |  | July 29, 2023
Term Loan Facility (1) | 10.09% |  | 2031 |  | $ | 499 |  |  | $ | 670 |
ABL Credit Facility (2) | 6.66% |  | 2027 |  | 1,113 |  |  | 812 |
Senior Notes (3) | 6.75% |  | 2029 |  | 500 |  |  | 500 |
Other secured loans | 4.43% |  | 2025 |  | 1 |  |  | 9 |
Debt issuance costs, net |  |  |  |  | (18) |  |  | (22) |
Original issue discount on debt |  |  |  |  | (10) |  |  | (6) |
Long-term debt, including current portion |  |  |  |  | 2,085 |  |  | 1,963 |
Less: current portion of long-term debt |  |  |  |  | (4) |  |  | (7) |
Long-term debt |  |  |  |  | $ | 2,081 |  |  | $ | 1,956 |
(1) Debt issuance costs of $6 million and $7 million, respectively and an original issue discount on debt of $10 million and $6 million, respectively. (2) Debt issuance costs of $7 million and $8 million, respectively. (3) Debt issuance costs of $5 million and $7 million, respectively. Future maturities of long-term debt, excluding debt issuance costs and original issue and purchase accounting discounts on debt, and contractual interest payments based on the face value and applicable interest rate as of August 3, 2024, consist of the following (in millions):
Fiscal Year |  | Long-term debt maturity |  | Interest on long-term debt
2025 |  | $ | 6 |  |  | $ | 159 |
2026 |  | 5 |  |  | 159 |
2027 |  | 1,118 |  |  | 147 |
2028 |  | 5 |  |  | 83 |
2029 |  | 505 |  |  | 65 |
2030 and thereafter |  | 474 |  |  | 85 |
|  | $ | 2,113 |  |  | $ | 698 |
Term Loan Facility On May 1, 2024, the Company entered into an amendment (the “Fourth Term Loan Amendment”) to its term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) with a group of lenders for which JPMorgan Chase Bank, N.A. acts as administrative agent. The Term Loan Agreement provides for a $500 million senior secured first lien term loan (the “Term Loan Facility”) which is scheduled to mature on May 1, 2031. The Fourth Term Loan Amendment, among other things, (i) reduced the principal amount of Term Loan Facility to $500 million, (ii) extended the maturity to May 1, 2031, but with a springing maturity of 91 days prior to the maturity of the Senior Notes, in the event that at least $100 million in principal amount outstanding of such Senior Notes remains outstanding on such date and (iii) changed the applicable margin over (a) a base rate from 2.25% to 3.75% per annum, or (b) a SOFR rate from 3.25% to 4.75% per annum. Under the Term Loan Agreement, the Company may, at its option, increase the amount of the Term Loan Facility or add one or more additional tranches of term loans or revolving credit commitments, without the consent of any lenders not participating in such additional borrowings, up to an aggregate amount of $520 million plus additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding. There can be no assurance that additional funding would be available. The obligations under the Term Loan Facility are guaranteed by most of the Company’s wholly-owned subsidiaries (collectively, the “Guarantors”), subject to customary exceptions and limitations. The Term Loan Facility is secured by (i) a first-priority lien on substantially all assets other than the ABL Assets (defined below) and (ii) a second-priority lien on substantially all of the ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property (other than distribution centers) with net book values of less than or equal to $10 million. As of August 3, 2024 and July 29, 2023, there was $686 million and $617 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Consolidated Balance Sheets. The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year. Based on the Company’s Excess Cash Flow for the fiscal year ended August 3, 2024, no such prepayment will be required under the Term Loan Facility in fiscal 2025. As of August 3, 2024, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either: (i) a base rate plus a margin of 3.75% or (ii) a SOFR rate plus a margin of 4.75%, provided that the SOFR rate shall never be less than 0.0%. On May 1, 2024, in conjunction with the Fourth Term Loan Amendment, the Company made a voluntary prepayment of $145 million on the Term Loan Facility with $130 million of proceeds from the ABL FILO Loan (described below) and incremental borrowings under the ABL Credit Facility. In connection with the Fourth Term Loan Amendment and prepayment, the Company incurred a loss on debt extinguishment of $10 million primarily related to unamortized debt issuance costs and unamortized original issue discount, which was recorded within Interest expense, net in the Consolidated Statements of Operations in the fourth quarter of fiscal 2024. ABL Credit Facility On May 1, 2024, the Company entered into an amendment (the “First ABL Amendment”) to its revolving credit agreement dated as of June 3, 2022, (as amended, the “ABL Loan Agreement”) with a group of lenders for which Wells Fargo Bank, N.A. acts as administrative agent. Pursuant to the First ABL Amendment, the ABL Loan Agreement provides for a secured asset-based revolving credit facility (the “ABL Credit Facility”) with an aggregate principal amount available of up to $2,730 million, including Revolver Loans (as defined in the ABL Loan Agreement) of up to $2,600 million and a First In, Last Out (“FILO”) tranche of incremental ABL loans of $130 million (the “ABL FILO Loan”). The ABL Credit Facility is scheduled to mature on June 3, 2027. Under the ABL Loan Agreement, the aggregate amount of the ABL Credit Facility may be increased in an amount of up to $620 million without the consent of any lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding. There can be no assurance that additional funding would be available. The ABL Loan Agreement utilizes Term SOFR and Prime rates as the benchmark interest rates. Revolver Loans and ABL FILO Loans under the ABL Credit Facility bear interest at rates that, at the Company’s option, can be either at a base rate or Term SOFR plus an applicable margin. The applicable interest rates and letter of credit fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily average Availability (as defined in the ABL Loan Agreement), and were as follows:
| Range of Facility Rates and Fees (per annum) | August 3, 2024
Applicable margin for revolver base rate loans | 0.00% - 0.25% | 0.00 | %
Applicable margin for revolver SOFR and BA loans(1) | 1.00% - 1.25% | 1.00 | %
Applicable margin for FILO base rate loans | 1.50% | 1.50 | %
Applicable margin for FILO SOFR loans | 2.50% | 2.50 | %
Unutilized commitment fees | 0.20% | 0.20 | %
Letter of credit fees | 1.125% - 1.375% | 1.125 | %
(1) The Company utilizes SOFR-based loans and UNFI Canada utilizes bankers’ acceptance rate-based loans. The ABL Credit Facility is guaranteed by the Guarantors, subject to customary exceptions and limitations. The ABL Credit Facility is secured by (i) a first-priority lien on certain accounts receivable, inventory and certain other assets (collectively, the “ABL Assets”) and (ii) a second-priority lien on all other assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations. Availability under the ABL Credit Facility is subject to a borrowing base consisting of specified percentages of the value of eligible accounts receivable, credit card receivables, inventory, pharmacy receivables and pharmacy prescription files, after adjusting for customary reserves, but at no time shall exceed the aggregate commitments plus the outstanding ABL FILO Loans under the ABL Credit Facility (currently $2,730 million). The assets included in the Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis were as follows:
(in millions) | August 3, 2024 |  | July 29, 2023
Certain inventory assets included in Inventories, net | $ | 1,915 |  |  | $ | 1,861 |
Certain receivables included in Accounts receivable, net | 611 |  |  | 571 |
Pharmacy prescription files included in Intangible assets, net | 6 |  |  | 11 |
Total | $ | 2,532 |  |  | $ | 2,443 |
As of August 3, 2024, the borrowing base was $2,524 million, reflecting the advance rates described above and $101 million of reserves, which is below the $2,730 million limit of availability. This resulted in total availability of $2,524 million for loans and letters of credit under the ABL Credit Facility. The Company’s unused credit under the ABL Credit Facility was as follows:
(in millions) | August 3, 2024
Total availability for ABL loans and letters of credit | $ | 2,524 |
ABL loans outstanding | 1,113 |
Letters of credit outstanding | 176 |
Unused credit | $ | 1,235 |
Senior Notes On October 22, 2020, the Company issued $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”). The Senior Notes are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility or the Term Loan Facility (defined above). Debt Covenants Our debt agreements contain certain customary operational and informational covenants. These include, among other things, restrictions on our ability to incur additional indebtedness, create liens on assets, make loans or investments, or return capital to stockholders through share repurchases or paying dividends. If the Company fails to comply with any of these covenants, it may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and payable. The ABL Loan Agreement also subjects the Company to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of the Company’s fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $220 million, or $210 million if no ABL FILO Loans are then outstanding at such time, and (ii) 10% of the borrowing base. The Term Loan Agreement and Senior Notes do not include any financial maintenance covenants.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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