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Long-Term Debt
 3 Months Ended
May 31, 2022
Debt Disclosure [Abstract]  
Long-Term Debt
Note 9 - Long-Term Debt
A summary of our long-term debt follows:
(in thousands)May 31, 2022February 28, 2022
Mississippi Business Finance Corporation Loan (the “MBFC Loan”) (1)
$14,807 $16,707 
Credit Agreement (2)1,093,500 799,500 
Subtotal1,108,307 816,207 
Unamortized prepaid financing fees(2,738)(2,991)
Total long-term debt1,105,569 813,216 
Less: current maturities of long-term debt(14,622)(1,884)
Long-term debt, excluding current maturities$1,090,947 $811,332 
(1)The MBFC Loan is unsecured and, at May 31, 2022 and February 28, 2022, bore floating interest based on either the London Interbank Offered Rate (“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 Net Leverage Ratio defined in the loan agreement. The weighted average interest rates on borrowings outstanding were 2.4% and 1.2% at May 31, 2022 and February 28, 2022, respectively.
(2)The Credit Agreement (defined below) is unsecured and, at May 31, 2022 and February 28, 2022, bore floating 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% for Base Rate and LIBOR borrowings, respectively. These floating interest rates are hedged with interest rate swaps to effectively fix interest rates on $125 million of the outstanding principal balance under the Credit Agreement as of both May 31, 2022 and February 28, 2022 (see Notes 10, 11, and 12 for additional information regarding interest rate swaps). The weighted average interest rates on borrowings outstanding as of May 31, 2022 and February 28, 2022 were 2.4% and 1.2%, respectively.

Capitalized Interest

During the first quarter of fiscal 2023, we incurred interest costs totaling $5.1 million, of which we capitalized $0.7 million as part of property and equipment in connection with the construction of a new distribution center. During the first quarter of fiscal 2022, we incurred interest costs totaling $3.0 million, of which none was capitalized.

Credit Agreement

We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $1.25 billion and matures on March 13, 2025. On June 28, 2022, we entered into an amendment to the Credit Agreement to, among other things, replace LIBOR with Term SOFR (as defined in the Credit Agreement) as the reference interest rate. Accordingly, we are updating our interest rate swap contracts associated with our revolving borrowings to replace LIBOR with Term SOFR as the reference interest rate. In connection with the amendment, we also (i) exercised the accordion under the Credit Agreement and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The term loans will be payable at the end of each fiscal quarter in equal installments of 0.625% of the terms loans made with the remaining balance due at the maturity date. The maturity date of the term loans is March 13, 2025, which is the same maturity date as the revolving loans under the Credit Agreement. The proceeds from the term loans were used to repay revolving loans under the Credit Agreement. We may prepay the term loans, in whole or in part, at any time without premium or penalty. Following the amendment, borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR, 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% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings. As a result of the notice for the qualified acquisition, the maximum leverage ratio is 4.25 to
1.00 through May 31, 2022, 4.00 to 1.00 through February 28, 2023, 3.75 to 1.00 through May 31, 2023 and 3.50 to 1.00 thereafter.

As of May 31, 2022, the balance of outstanding letters of credit was $32.7 million and the amount available for revolving borrowings under our Credit Agreement was $123.8 million. After giving effect to the term loan borrowings and application of those loans to repay revolving borrowings under the Credit Agreement, the remaining amount available for revolving borrowings under our Credit Agreement would have been $373.8 million as of May 31, 2022.

Debt Covenants

As of May 31, 2022, we were in compliance with all covenants as defined under the terms of the Credit Agreement and our other debt agreements.