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Debt | 3 Months Ended
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Apr. 30, 2021
Debt Disclosure [Abstract] |
Debt | NOTE 5. DEBT ABL Facility During Fiscal 2020, the Company exercised the “accordion” feature under the ABL Facility increasing the maximum borrowings available under the facility from $175 million to $275 million, subject to a borrowing base (the “Loan Cap”). This was completed in two separate transactions. The first was a $25 million increase effective March 19, 2020 and the second was a $75 million increase effective September 9, 2020. The latter was completed through the Second Amendment to the ABL Facility executed on August 12, 2020. The ABL Facility includes a $70 million sublimit for letters of credit and is available for working capital and other general corporate liquidity needs. The balance outstanding on April 30, 2021 and May 1, 2020 was $80 million and $75 million, respectively. The balance of outstanding letters of credit was $16.9 million and $8.7 million on April 30, 2021 and May 1, 2020, respectively. Long-Term Debt On September 9, 2020, the Company entered into the Current Term Loan Facility which provides a term loan facility of $275 million, the proceeds of which were used, along with borrowings of $125 million under the ABL Facility, to repay all of the indebtedness under the Former Term Loan Facility and to pay fees and expenses in connection with the financing. Origination costs, including an Original Issue Discount (“OID”) of 3% and $5.0 million in debt origination fees, were paid upon entering into the Current Term Loan Facility. The OID and the debt origination fees are presented as a direct deduction from the carrying value of the Current Term Loan Facility and are amortized over the term of the loan to Interest expense in the Condensed Consolidated Statements of Operations. The Company's long-term debt consisted of the following:
|  |  | April 30, 2021 |  |  | May 1, 2020 |  |  | January 29, 2021 |
(in thousands) |  |  | Amount |  |  |  | Interest Rate |  |  | Amount |  |  |  | Interest Rate |  |  | Amount |  |  |  | Interest Rate |
Former Term Loan Facility |  |  | $ | — |  |  |  |  | — | % |  | $ | 384,100 |  |  |  |  | 4.25 | % |  | $ | — |  |  |  |  | — | %
Current Term Loan Facility, maturing September 9, 2025 |  |  |  | 268,125 |  |  |  |  | 10.75 | % |  |  | — |  |  |  |  | — | % |  |  | 271,563 |  |  |  |  | 10.75 | %
|  |  |  | 268,125 |  |  |  |  |  |  |  |  | 384,100 |  |  |  |  |  |  |  |  | 271,563 |  |  |  |  |  |
Less: Current portion of long-term debt |  |  |  | 13,750 |  |  |  |  |  |  |  |  | 382,858 |  |  |  |  |  |  |  |  | 13,750 |  |  |  |  |  |
Less: Unamortized debt issuance costs |  |  |  | 11,585 |  |  |  |  |  |  |  |  | 1,242 |  |  |  |  |  |  |  |  | 12,181 |  |  |  |  |  |
Long-term debt, net |  |  | $ | 242,790 |  |  |  |  |  |  |  | $ | — |  |  |  |  |  |  |  | $ | 245,632 |  |  |  |  |  |
The following table summarizes the Company's borrowing availability under the ABL Facility:
|  | April 30, 2021 |  |  | May 1, 2020 |  |  | January 29, 2021 |
(in thousands) |  | Amount |  | Interest Rate |  |  | Amount |  | Interest Rate |  |  | Amount |  | Interest Rate |
ABL Facility maximum borrowing |  | $ | 275,000 |  |  |  |  |  | $ | 200,000 |  |  |  |  |  | $ | 275,000 |  |  |  |
Less: Outstanding borrowings |  |  | 80,000 |  | 2.75% |  |  |  | 75,000 |  | 2.07% |  |  |  | 25,000 |  | 3.00% |
Less: Outstanding letters of credit |  |  | 16,920 |  |  |  |  |  |  | 8,656 |  |  |  |  |  |  | 27,131 |  |  |  |
Borrowing availability under ABL Facility |  | $ | 178,080 |  |  |  |  |  | $ | 116,344 |  |  |  |  |  | $ | 222,869 |  |  |  |
Interest; Fees The borrowing margin under the ABL Facility is subject to adjustment based on the average daily total loans outstanding under the ABL Facility for the preceding fiscal quarter. For LIBOR loans, the interest rate is LIBOR (subject to an interest rate floor of 0.75%) plus a borrowing margin which is, where the average daily total loans outstanding for the previous quarter are (i) less than $50.0 million, 1.75%, (ii) equal to or greater than $50.0 million but less than $100.0 million, 2.00%, (iii) equal to or greater than $100.0 million but less than $200.0 million, 2.25%, and (iv) greater than $200.0 million, 3.50%. For Base Rate loans, the borrowing margin is, where the average daily total loans outstanding for the previous quarter are (i) less than $50.0 million for the previous quarter, 1.00%, (ii) equal to or greater than $50.0 million but less than $100.0 million, 1.25%, (iii) equal to or greater than $100.0 million but less than $200.0 million, 1.50%, and (iv) greater than $200.0 million, 2.75%. The interest rates per annum applicable to the loans under the Current Term Loan Facility are based on a fluctuating rate of interest measured by reference to, at the borrowers’ election, either (1) an adjusted LIBOR rate (with a minimum rate of 1%) plus 9.75%, or (2) an alternative base rate (which is the greater of (i) the prime rate published in the Wall Street Journal, (ii) the federal funds rate, which shall be no lower than 0% plus ½ of 1%, and (iii) the one month LIBOR rate plus 1% per annum) plus 8.75%. The ABL Facility fees also include (i) commitment fees which range from 0.25% to 0.375% based upon the average daily unused commitment (aggregate commitment less loans and letter of credit outstanding) under the ABL Facility for the preceding fiscal quarter and (ii) customary letter of credit fees. As of the end of First Quarter 2021 the Company had borrowings of $80.0 million on the ABL Facility. Customary agency fees are payable in respect of the Debt Facilities. Maturity; Amortization and Prepayments The ABL Facility matures on November 16, 2022, subject to customary extension provisions provided for therein. The Current Term Loan Facility matures on September 9, 2025 and amortizes at a rate equal to 1.25% per quarter. It is subject to mandatory prepayments in an amount equal to a percentage of the borrower’s excess cash flows in each fiscal year, ranging from 0% to 75% depending on the Company’s total leverage ratio, and with the proceeds of certain asset sales, casualty events and extraordinary receipts. The loan may not be voluntarily prepaid during the first two years of its term, without significant penalties. A prepayment premium is applicable to voluntary prepayments and certain mandatory prepayments made prior to the fourth anniversary of the closing date of the Current Term Loan Facility. Guarantees; Security All obligations under the Debt Facilities are unconditionally guaranteed by Lands’ End, Inc. and, subject to certain exceptions, each of its existing and future direct and indirect subsidiaries. The ABL Facility is secured by a first priority security interest in certain working capital of the borrowers and guarantors consisting primarily of accounts receivable and inventory. The Current Term Loan Facility is secured by a second priority security interest in the same collateral with certain exceptions. The Current Term Loan Facility is secured by a first priority security interest in certain property and assets of the borrowers and guarantors, including certain fixed assets such as real estate, stock of the subsidiaries and intellectual property, in each case, subject to certain exceptions. The ABL Facility is secured by a second priority interest in the same collateral, with certain exceptions. Representations and Warranties; Covenants Subject to specified exceptions, the Debt Facilities contain various representations and warranties, and restrictive covenants that, among other things and subject to specified exceptions, restrict Lands’ End, Inc.’s and its subsidiaries’ ability to incur indebtedness (including guarantees), grant liens, make investments, make dividends or distributions with respect to capital stock, make prepayments on other indebtedness, engage in mergers or change the nature of their business. The Current Term Loan Facility is subject to certain financial covenants, including a quarterly maximum total leverage ratio test, a weekly minimum liquidity test and an annual maximum capital expenditure amount. If excess availability under the ABL Facility falls below the greater of 10% of the Loan Cap amount or $15.0 million, the Company will be required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0. The ABL Facility also has a cash maintenance provision which applies a limit of $75 million on the amount of cash and cash equivalents (subject to certain exceptions) that the Company may hold when outstanding loans under the ABL Facility are equal to or exceed $125 million. The Debt Facilities contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance, and providing additional guarantees and collateral in certain circumstances. As of April 30, 2021, the Company was in compliance with all of its covenants in the Debt Facilities. Events of Default The Debt Facilities include customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross defaults related to certain other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, and material judgments and change of control.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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