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Debt
 6 Months Ended
Jul. 31, 2021
Debt Disclosure [Abstract]  
Debt

3. Debt

Credit Agreement with Bank of America, N.A.

On May 24, 2018, the Company entered into the Seventh Amended and Restated Credit Agreement, as amended, with Bank of America, N.A., as agent, providing for a secured $125.0 million revolver facility and a $15.0 million “first-in, last-out” (FILO) term facility (the “existing FILO loan”).  On March 16, 2021, the Company entered into the Fourth Amendment to the Seventh Amended and Restated Credit Facility, as amended (the “Fourth Amendment”) to allow for the refinancing of the “existing FILO loan”, which is discussed further under “Long-Term Debt” (as amended, the “Credit Facility”).  The Fourth Amendment did not impact the terms to the Company’s $125.0 million revolver facility.

The Credit Facility provides maximum committed borrowings of $125.0 million in revolver loans, with the ability, pursuant to an accordion feature, to increase the Credit Facility by an additional $50.0 million upon the request of the Company and the agreement of the lender(s) participating in the increase (the “Revolving Facility”). The Revolving Facility provides for a sublimit of $20.0 million for commercial and standby letters of credit and up to $15.0 million for swingline loans. The Company’s ability to borrow under the Revolving Facility (the “Loan Cap”) is determined using an availability formula based on eligible assets. Pursuant to the Third Amendment, the excess availability under the Credit Facility cannot be less than the greater of (i) 10% of the Revolving Loan Cap (calculated without giving effect to the FILO (first-in, last-out) Push Down Reserve) or (ii) $10.0 million.  The maturity date of the Credit Facility is May 24, 2023. The Company’s obligations under the Credit Facility are secured by a lien on substantially all of its assets.

At July 31, 2021, the Company had no outstanding borrowings under the Revolving Facility. At July 31, 2021, outstanding standby letters of credit were $2.7 million and there were no outstanding documentary letters. Unused excess availability was $65.1 million at July 31, 2021. Average monthly borrowings outstanding under the Revolving Facility during the first six months of fiscal 2021 were $32.7 million, resulting in an average unused excess availability of approximately $42.5 million. The Company’s ability to borrow under the Revolving Facility was determined using an availability formula based on eligible assets, with increased advance rates based on seasonality.

Borrowings made pursuant to the Revolving Facility bear interest, calculated under either the Federal Funds rate or the LIBOR rate, at a rate equal to the following: (a) the Federal Funds rate plus a varying percentage based on the Company’s excess availability, of either 1.75% or 2.00%, or (b) the LIBOR rate (the Company being able to select interest periods of 1 week, 1 month, 2 months, 3 months or 6 months) plus a varying percentage based on the Company’s excess availability, of either 2.75% or 3.00%. The Company was also subject to an unused line fee of 0.25%. At July 31, 2021, the Company’s prime-based interest rate was 5.25%.

Borrowings and repayments under the Revolving Facility for the first six months ended July 31, 2021 and August 1, 2020 were as follows:

 

 

For the six months ended

 

(in thousands)

 

July 31, 2021

 

 

August 1, 2020

 

Borrowings

 

$

33,696

 

 

$

53,471

 

Repayments

 

 

(93,429

)

 

 

(26,246

)

Net borrowings (repayments)

 

$

(59,733

)

 

$

27,225

 

 

 

Long-Term Debt

Long-term debt at July 31, 2021 and January 30, 2021 is as follows:

(in thousands)

 

July 31, 2021

 

 

January 30, 2021

 

FILO Loan - existing

 

 

—

 

 

$

15,000

 

FILO Loan - new

 

$

17,500

 

 

 

—

 

Less: unamortized debt issuance costs

 

 

(666

)

 

 

(131

)

Total long-term debt

 

 

16,834

 

 

 

14,869

 

Less: current portion of long-term debt, net of debt issuance costs

 

 

(293

)

 

 

—

 

Long-term debt, net of current portion

 

$

16,541

 

 

$

14,869

 

 

On March 16, 2021, the Company refinanced its existing $15.0 million FILO loan and entered into a new $17.5 million FILO loan (the “new FILO loan”).  The total borrowing capacity under the new FILO loan is based on a borrowing base, generally defined as a specified percentage of the value of eligible accounts (including certain trade names) that step down over time, plus a specified percentage of the value of eligible inventory that steps down over time.  

 

The new FILO loan will be subject to quarterly principal repayments of $218,750 beginning December 31, 2021.  The new FILO loan is subject to a prepayment penalty, if any portion of the principal for the new FILO Loan is prepaid during the initial two-year period, equal to the greater of (i) the incremental interest that would have been incurred with respect to that principal repayment during the two year period and (ii) 3% of the principal prepayment, unless the prepayment occurs after March 16, 2022 in connection with the Company’s renegotiation of its Credit Agreement in which case the prepayment premium would be equal to 1% of the principal prepayment.  The new FILO loan expires on May 24, 2023, but may be automatically extended in connection with any extension of the revolving facility under the Credit Agreement, but no later than March 16, 2026, without approval from the FILO lender.

 

Borrowings made under the new FILO loan bear interest, at the LIBOR rate (with a LIBOR floor of 1.0%) plus an applicable margin rate of 7.50% through September 16, 2021.  Thereafter, the applicable margin rate will be 7.50% for so long as the Company’s 12-month trailing consolidated EBITDA (as defined in the Credit Facility, as amended) measured as of the end of each month is less than $18.0 million, or 7.00% when the 12-month trailing consolidated EBITDA is equal to or greater than $18.0 million. Accordingly, the interest rate at July 31, 2021 was 8.50%.

The Company paid interest and fees totaling $1.7 million and $1.6 million for the six months ended July 31, 2021 and August 1, 2020, respectively.