Long-Term Debt

12 Months Ended

Feb. 29, 2020

Note 16 - Long Term Debt

As of February 29, 2020, we had a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provided for an unsecured total revolving commitment of $1.0 billion. Borrowings accrued interest under one of two alternative methods (based upon a base rate or LIBOR) as described in the Credit Agreement. With each borrowing against our credit line, we could elect the interest rate method based on our funding needs at the time. We also incurred loan commitment and letter of credit fees under the Credit Agreement. Outstanding letters of credit reduced the borrowing availability under the Credit Agreement on a dollar-for-dollar basis. We may repay amounts borrowed at any time without penalty. As of February 29, 2020, the outstanding revolving loan principal balance was $320.0 million (excluding prepaid financing fees) and the balance of outstanding letters of credit was $9.0 million. As of February 29, 2020, the amount available for borrowings under the Credit Agreement was $671.0 million. Covenants in the Credit Agreement limit the amount of total indebtedness we could incur. As of February 29, 2020, these covenants did not limit our ability to incur $671.0 million of additional debt under the Credit Agreement.

On March 13, 2020, we entered into an amendment to the Credit Agreement. The amendment extended the maturity of the commitment under the Credit Agreement from December 7, 2021 to March 13, 2025. Further, the amendment increased the unsecured revolving commitment from $1.0 billion to $1.25 billion. The accordion was amended to increase it from $200 million to $300 million and to include the ability to use it for term loan commitments. The accordion permits the Company to request to increase its borrowing capacity, not to exceed the $300 million commitment in the aggregate, provided certain conditions are met, including lender approval. Any increase to term loan commitments and revolving loan commitments must be made on terms identical to the revolving loans under the Credit Agreement and must have a maturity date of no earlier than March 13, 2025. Following the amendment, borrowings under the Credit Agreement bear interest at either the base rate or LIBOR, plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.0% and 1.0% to 2.0%, respectively, for base rate and LIBOR borrowings.

On March 24, 2020, we borrowed approximately $200 million under the Credit Agreement as part of a comprehensive precautionary approach to increase our cash position and maximize our financial flexibility in light of the current volatility in the global markets resulting from the COVID-19 outbreak. After giving effect to the borrowing, the remaining amount available for borrowings under the Credit Agreement was $536.4 million and our cash and cash equivalents on hand was approximately $393.0 million. As described above, covenants in our debt agreements can limit the amount of indebtedness we can incur. We may repay amounts borrowed at any time without penalty.

A summary of our long-term debt follows:



(dollars in thousands)	February 29, 2020			February 28, 2019
Mississippi Business Finance Corporation Loan (the "MBFC Loan") (1)	$	20,451		$	22,335
Credit Agreement (2)	318,854			298,449
Total long-term debt	339,305			320,784
Less current maturities of long-term debt	(1,884		)	(1,884		)
Long-term debt, excluding current maturities	$	337,421		$	318,900

(1)

The MBFC Loan is unsecured and bears floating interest based on either LIBOR plus a margin of up to 2.0%, or a Base Rate plus a margin of up to 1.0%, as determined by the interest rate elected and the leverage ratio defined in the loan agreement. Since March 2018, the loan may be called by the holder at anytime. The loan can be prepaid without penalty. The remaining principal balance is payable as follows: $1.9 million annually on March 1, 2020 through 2022; and $14.8 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.


(2)	The Credit Agreement's floating interest rates are hedged with interest rate swaps to effectively fix interest rates on $225 million of the outstanding principal balance under the Credit Agreement (see Notes 17 and 18 regarding interest rate swaps).

At February 29, 2020 and February 28, 2019 our long-term debt has floating interest rates, and its book value approximates its fair value.

All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of its subsidiaries. Our debt agreements require the maintenance of certain financial covenants, including maximum leverage ratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms is defined in the various agreements). Our debt agreements also contain other customary covenants. We were in compliance with the terms of these agreements as of February 29, 2020.

The following table contains information about interest rates on our Credit Agreement and the related weighted average borrowings outstanding for the periods covered by our consolidated statements of income:



	Fiscal Years Ended Last Day of February,
(in thousands)	2020			2019			2018
Average borrowings outstanding (1)	$	286,640		$	290,860		$	382,960
Average interest rate during each year (2)	3.2		%	3.2		%	2.7		%
Interest rate range during each year	2.6% - 5.5%			2.8% - 5.5%			2.3 - 4.8%
Weighted average interest rates on borrowings outstanding at year end	2.7		%	3.6		%	2.9		%


(1)	Average borrowings outstanding is computed as the average of the current and four prior quarters ending balances of our credit facility.


(2)	The average interest rate during each year is computed by dividing the total interest expense associated with the Credit Agreement for a fiscal year by the average borrowings outstanding for the same fiscal year.

The following table contains a summary of the components of our interest expense for the periods covered by our consolidated statements of income:



	Fiscal Years Ended Last Day of February,
(in thousands)	2020			2019			2018
Interest and commitment fees	$	10,970		$	11,366		$	13,084
Deferred finance costs	1,620			1,015			887
Interest rate swap settlements, net	262			(515		)	54
Cross-currency debt swap	(147		)	(147		)	(74		)
Total interest expense	$	12,705		$	11,719		$	13,951