XML 29 R16.htm IDEA: XBRL DOCUMENT v3.21.2
DEBT
 9 Months Ended
Oct. 30, 2021
Debt Disclosure [Abstract]  
DEBT DEBT
Revolving Credit Facility
The Company and certain of its subsidiaries maintain an asset-based revolving credit facility (the “ABL Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A., as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent, and Swing Line Lender.
The ABL Credit Facility, which expires in May 2024, consists of a $360 million asset-based revolving credit facility that was increased from $325 million as a result of finalizing an amendment with the Lenders on April 24, 2020 to secure the Company an additional $35 million available under the accordion feature for a period of one year. The ABL Credit Facility includes a $25 million Canadian sublimit and a $50 million sublimit for standby and documentary letters of credit. On October 5, 2020, the Company further amended the ABL Credit Facility to provide for certain changes that permitted the issuance of an $80 million term loan (the “Term Loan”) on that date and align certain terms of the ABL Credit Facility to those of the Term Loan. The Term Loan is discussed in more detail below. On April 23, 2021, the Company and its Lenders extended the $35 million of additional availability for an additional year until April 23, 2022.
Borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at:
(i)the prime rate, plus a margin of 1.75% to 1.88% based on the amount of the Company’s average excess availability under the facility; or
(ii)the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, two, three, or six months, as selected by the Company, plus a margin of: a) 2.50% to 2.75% and b) 1.00%, based on the amount of the Company’s average excess availability under the facility.
The Company is charged a fee of 0.25% on the unused portion of the commitments. Letter of credit fees range from 1.25% to 1.38% for commercial letters of credit and from 2.00% to 2.25% for standby letters of credit. Letter of credit fees are determined based on the amount of the Company’s average excess availability under the facility. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables and certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves.
The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods. The Company is not subject to any early termination fees. 
The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of its business.
Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets, excluding intellectual property, software, equipment, and fixtures. In connection with the Term Loan, the Lenders under the ABL Credit Facility entered into an intercreditor agreement with the Term Loan lender and were granted a second priority security interest in the Term Loan collateral, which includes the Company’s intellectual property, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock.
As of October 30, 2021 the Company has capitalized an aggregate of approximately $6.3 million in deferred financing costs related to the ABL Credit Facility. The unamortized balance of deferred financing costs as of October 30, 2021 was approximately $1.0 million. Unamortized deferred financing costs are amortized over the remaining term of the ABL Credit Facility.
The table below presents the components of the Company’s ABL Credit Facility:
 October 30,
2021		January 30,
2021		October 31,
2020
(in millions)
Credit facility maximum$360.0 $360.0 $360.0 
Borrowing base (1)
360.0 282.2 360.0 
Outstanding borrowings174.4 169.8 179.4 
Letters of credit outstanding—standby7.4 8.2 7.8 
Utilization of credit facility at end of period181.8 178.0 187.2 
Availability (2)
$178.2 $104.2 $172.8 
Interest rate at end of period3.8 %4.2 %3.9 %
 Year-To-Date 2021Fiscal 2020Year-To-Date 2020
Average end of day loan balance during the period$195.0 $216.2 $233.2 
Highest end of day loan balance during the period$269.7 $275.6 $275.6 
Average interest rate3.8 %3.8 %3.7 %
____________________________________________
(1)Lower of the credit facility maximum or the total borrowing base collateral.
(2)The sub-limit availability for letters of credit was $42.6 million as of October 30, 2021, $41.8 million as of January 30, 2021, and $42.2 million as of October 31, 2020.
Long-Term Debt
Long-term debt was solely comprised of the Term Loan transaction completed during the third quarter of 2020, as discussed below.
On October 5, 2020, the Company and certain of its subsidiaries entered into a loan agreement (the “Loan Agreement”) dated October 5, 2020 with SLR Credit Solutions (formerly known as Crystal Financial LLC), as Lender, Administrative Agent, and Collateral Agent, providing for an $80 million Term Loan. The net proceeds from the Term Loan, after deducting related fees and expenses, were used to repay borrowings under the Company’s ABL Credit Facility.
The Term Loan: (i) matures on the earlier of October 5, 2025 or the maturity date under the ABL Credit Facility, currently in May 2024; (ii) bears interest, payable monthly, at the greater of (a) the three month LIBOR Rate published in the Wall Street Journal, and (b) 1.00%, plus 7.75% or 8.00% depending on the average excess availability of credit under the ABL Credit Facility, adjusted quarterly; and (iii) amortizes by (x) 5.00% per annum payable quarterly beginning with the fiscal quarter ending on or around July 31, 2021 through the fiscal quarter ending on or around April 30, 2022, (y) 7.50% per annum payable quarterly beginning with the fiscal quarter ending on or around July 31, 2022 through the fiscal quarter ending on or around April 30, 2023, and (z) 10.00% per annum payable quarterly thereafter. For the Third Quarter 2021 and Year-To-Date 2021, the Company recognized $1.9 million and $5.5 million, respectively, within interest expense related to the Term Loan.
The Term Loan is secured by a first priority security interest in the Company’s intellectual property, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility. The Term Loan is guaranteed, subject to certain exceptions, by each of the Company’s subsidiaries that guarantees the ABL Credit Facility.
The Term Loan is, in whole or in part, pre-payable any time and from time to time, subject to certain prepayment premiums specified in the Loan Agreement, plus accrued and unpaid interest.
Among other covenants, the Loan Agreement limits the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, including under the ABL Credit Facility, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business. These covenants are substantially the same covenants as provided in the ABL Credit Facility.
The Loan Agreement contains customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of other covenants in the Loan Agreement, failure to pay certain other indebtedness, including under the ABL Credit Facility, and certain events of bankruptcy, insolvency or reorganization.
The following table summarizes the current and long-term portion of the long-term debt:
October 30,
2021
(in thousands)
Term Loan principal$79,000 
Less: Unamortized discount, net(877)
Less: Unamortized debt issuance costs, net(961)
Term Loan, net 77,162 
Less: Current portion, net (1)
(28,270)
Long-term debt, net$48,892 
____________________________________________
(1)Includes principal of $29.0 million that was repaid in connection with the refinancing of the Term Loan in November 2021 (see Note 14 - Subsequent Events for further information).

Future principal payments of long-term debt due subsequent to October 30, 2021 are as follows:
Period
Future Principal Payments (1)
(in thousands)
Remainder of 2021$1,000 
20225,500 
20237,500 
202465,000 
Total future principal payments$79,000 
____________________________________________
(1)Future principal payments do not give effect to the refinancing of the Term Loan in November 2021 (see Note 14 - Subsequent Events for further information).
On November 16, 2021, the Company completed the refinancing of the ABL Credit Facility and Term Loan with a new lending group led by an affiliate of Wells Fargo by entering into a fourth amendment to its Credit Agreement, dated as of May 9, 2019, with the lenders party thereto. At the same time, the Company repaid outstanding principal of $79.0 million under the Term Loan. The new debt consists of a revolving credit facility with $350.0 million of maximum availability and a $50.0 million term loan (see Note 14 - Subsequent Events for further information).