Long Term Debt | 6 Months Ended |
Aug. 02, 2014 |
Long Term Debt | ' |
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3. Long Term Debt |
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Long term debt consists of: |
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| | August 2, | | | February 1, | | | August 3, | |
2014 | 2014 | 2013 |
$1,000,000 Senior Secured Term Loan Facility, LIBOR (with a floor of 1.0%) plus 3.25%, matures on February 23, 2017 | | $ | 825,828 | | | $ | 828,839 | | | $ | 862,018 | |
$450,000 Senior Notes, 10%, due at maturity on February 15, 2019, semi-annual interest payments on August 15 and February 15, from August 15, 2014 to February 15, 2019 | | | 450,000 | | | | 450,000 | | | | 450,000 | |
$350,000 Senior Notes, 9% / 9.75%, due at maturity on February 15, 2018, semi-annual interest payments on February 15 and August 15, from August 15, 2014 to February 15, 2018 | | | 69,226 | | | | 126,147 | | | | 343,655 | |
$600,000 ABL Senior Secured Revolving Facility, LIBOR plus spread based on average outstanding balance, expires September 2, 2016 | | | — | | | | — | | | | 15,000 | |
Capital Lease Obligations | | | 28,015 | | | | 23,199 | | | | 23,665 | |
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Total debt | | | 1,373,069 | | | | 1,428,185 | | | | 1,694,338 | |
Less: current maturities | | | (1,250 | ) | | | (59,026 | ) | | | (9,663 | ) |
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Long-term debt, net of current maturities | | $ | 1,371,819 | | | $ | 1,369,159 | | | $ | 1,684,675 | |
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$1 Billion Senior Secured Term Loan Facility (Term Loan Facility) |
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On February 15, 2013, BCFWC entered into Amendment No. 2 (Second Amendment) to the credit agreement governing its $1,000.0 million Senior Secured Term Loan Facility (Term Loan Credit Agreement). The Second Amendment created a restricted payments basket of $25.0 million and permitted Burlington Coat Factory Investments Holdings, Inc. (the parent of BCFWC and indirect subsidiary of Burlington Stores, Inc.) and all of its subsidiaries to use the “available amount” to make restricted payments (which basket included retained excess cash flow, in an amount not to exceed 50% of BCFWC’s consolidated net income (as defined in the indenture governing the 10% Senior Notes due 2019) since the second quarter of Fiscal 2011), in each case so long as certain conditions were satisfied. In connection with the Second Amendment, the Company incurred a $1.6 million amendment fee that was capitalized and included in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheets. Additionally, the Company incurred $8.9 million of additional fees, inclusive of an $8.6 million fee payable to Bain Capital, for various consulting and advisory services. These fees were included in the line item “Costs Related to Debt Amendments, Secondary Offering and Other” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). |
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On May 17, 2013, BCFWC entered into Amendment No. 3 (Third Amendment) to the Term Loan Credit Agreement, in order to, among other things, reduce the interest rates applicable to the Term Loan Facility by 100 basis points (provided that such interest rates would have been further reduced by 25 basis points if BCFWC’s consolidated secured leverage ratio was less than or equal to 2.25:1) and to reduce the LIBOR floor by 25 basis points. The Third Amendment was accomplished by replacing the outstanding $871.0 million principal amount of term B-1 loans (the Term B-1 Loans) with a like aggregate principal amount of term B-2 loans (the Term B-2 Loans). The Term B-2 Loans had the same maturity date that was applicable to the Term B-1 Loans. The Term Loan Credit Agreement provisions relating to the representations and warranties, covenants and events of default applicable to the Company and the guarantors were not modified by the Third Amendment. |
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In connection with the Third Amendment, the Company paid an $8.7 million prepayment premium. In accordance with ASC Topic No. 470-50, “Debt Modifications and Extinguishments” (Topic No. 470), $8.6 million of this prepayment premium was capitalized and included in the line item “Other Assets” in the Company’s Condensed Consolidated Balance Sheet. In addition, third party fees of $2.6 million were recorded in the line item “Costs Related to Debt Amendments, Secondary Offering and Other” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during the second quarter of Fiscal 2013. In accordance with Topic 470, the Company recognized a loss on the extinguishment of debt of $0.6 million, which was recorded in the line item “Loss on Extinguishment of Debt” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during the second quarter of Fiscal 2013. |
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As a result of the Third Amendment, mandatory quarterly payments of $2.2 million were payable as of the last day of each quarter. In January 2014, the Company elected to make a prepayment of $30.0 million, which offset the mandatory quarterly payments through the maturity date. |
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Based on the Company’s excess cash flow calculation as of February 1, 2014, the Company was required to make an additional payment of $4.0 million on the Term Loan Facility during the first quarter of Fiscal 2014. In accordance with Topic No. 470, the Company recognized a loss on the extinguishment of debt of $0.1 million, representing the write off of deferred financing costs and unamortized original issue discount, which was recorded in the line item “Loss on Extinguishment of Debt” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). |
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On August 13, 2014, BCFWC entered into Amendment No. 4 to the Term Loan Credit Agreement (the Fourth Amendment). Refer to Note 14, “Subsequent Events,” for further details. |
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Prior to the Fourth Amendment, the Term Loan Facility contained financial covenants and required that BCFWC, exclusive of subsidiaries (referred to herein as BCFW), among other things, maintained on the last day of each fiscal quarter a consolidated leverage ratio not to exceed a maximum amount and maintain a consolidated interest coverage ratio of at least a certain amount. |
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Prior to the Fourth Amendment, the interest rates for the Term Loan Facility were based on: (i) for LIBO rate loans for any interest period, at a rate per annum equal to the greater of (x) the LIBO rate, as determined by the Term Loan Facility Administrative Agent, for such interest period multiplied by the Statutory Reserve Rate (as defined in the Term Loan Credit Agreement) and (y) 1.00% (the Term Loan Adjusted LIBO Rate), plus an applicable margin; and (ii) for prime rate loans, a rate per annum equal to the highest of (a) the variable annual rate of interest then announced by JPMorgan Chase Bank, N.A. at its head office as its “prime rate,” (b) the federal funds rate in effect on such date plus 0.50% per annum, and (c) the Term Loan Adjusted LIBO Rate for the applicable class of term loans for one-month plus 1.00%, plus, in each case, an applicable margin. At August 2, 2014 and August 3, 2013, the Company’s borrowing rates related to the Term Loan Facility were 4.25%. |
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$450 Million Senior Notes |
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On February 24, 2011, BCFW issued $450.0 million aggregate principal amount of 10% Senior Notes due 2019 at an issue price of 100% (the Senior Notes). The Senior Notes were issued pursuant to an indenture, dated February 24, 2011, among BCFWC, the guarantors signatory thereto, and Wilmington Trust FSB. |
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On August 13, 2014, the Company redeemed all indebtedness outstanding under the Senior Notes. Refer to Note 14, “Subsequent Events,” for further details. |
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The Senior Notes were senior unsecured obligations of BCFW and were guaranteed on a senior basis by Burlington Coat Factory Investments Holdings, Inc. and each of BCFW’s U.S. subsidiaries to the extent such guarantor was a guarantor of BCFW’s obligations under the Term Loan Facility. Interest was payable on the Senior Notes on each February 15 and August 15. |
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$350 Million Senior Notes |
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On February 20, 2013, Burlington Holdings, LLC (Holdings LLC) and Burlington Holdings Finance, Inc. (collectively the Issuers), completed the offering of $350.0 million aggregate principal amount of Senior Notes due 2018 (Holdco Notes) at an issue price of 98.00%. The Holdco Notes were issued pursuant to an indenture dated February 20, 2013 among the Issuers and Wilmington Trust, National Association. |
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The Holdco Notes were senior unsecured obligations of the Issuers, which were not obligors or guarantors under the Term Loan Facility or the indenture governing the Senior Notes. |
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The Holdco Notes were scheduled to mature on February 15, 2018. Interest on the Holdco Notes was payable entirely in cash, unless certain conditions are satisfied, in which case the Issuers would have been entitled to pay, to the extent described in the indenture governing the Holdco Notes, interest by increasing the principal amount or by issuing new notes (such increase being referred to herein as PIK interest). Cash interest accrued at the rate of 9.00% per annum and PIK interest accrued at the rate of 9.75% per annum and was payable semi-annually in arrears on February 15 and August 15 of each year. Interest was computed on the basis of a 360-day year comprised of twelve 30-day months. |
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The indenture governing the Holdco Notes contained covenants that, among other things, restricted the ability of Holdings LLC and certain of its subsidiaries to (i) incur, assume or guarantee additional indebtedness; (ii) pay dividends or redeem or repurchase capital stock; (iii) make other restricted payments; (iv) incur liens; (v) redeem debt that is junior in right of payment to the notes; (vi) sell or otherwise dispose of assets, including capital stock of subsidiaries; (vii) enter into mergers or consolidations; and (viii) enter into transactions with affiliates. These covenants were subject to a number of important exceptions and qualifications. In addition, in certain circumstances, if the Issuers sold assets or experienced certain changes of control, they were required to offer to purchase the Holdco Notes. |
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The Company used the net proceeds from the offering of the Holdco Notes to pay, in February 2013, a special cash dividend of $336.0 million, in the aggregate, payable in accordance with the Company’s charter to the then-current holders of the Company’s Class L and Class A common stock. |
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On November 7, 2013, the Issuers redeemed $221.8 million aggregate principal amount of the Holdco Notes. |
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On April 4, 2014, the Issuers redeemed $58.0 million aggregate principal amount of the Holdco Notes. In accordance with ASC Topic No. 405-20, “Extinguishments of Liabilities,” the Company recognized a loss on the extinguishment of long-term debt of $3.6 million representing $1.2 million in redemption premiums and the write off of $1.5 million and $0.9 million in deferred financing costs and unamortized original issue discount, respectively, which was recorded in the line item “Loss on Extinguishment of Debt” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). |
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On August 13, 2014, the Company redeemed all indebtedness outstanding under the Holdco Notes. Refer to Note 14, “Subsequent Events,” for further details. |
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ABL Line of Credit |
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On September 2, 2011, the Company completed an amendment and restatement of the credit agreement governing the Company’s $600.0 million ABL Line of Credit (the ABL Credit Agreement), which, among other things, extended the maturity date to September 2, 2016. The aggregate amount of commitments under the amended and restated credit agreement was $600.0 million and, subject to the satisfaction of certain conditions, the Company could have increased the aggregate amount of commitments up to $900.0 million. Interest rates under the amended and restated credit agreement were based on LIBO rates as determined by the administrative agent plus an applicable margin of 1.75% to 2.25% based on daily availability, or various prime rate loan options plus an applicable margin of 0.75% to 1.25% based on daily availability. The fee on the average daily balance of unused loan commitments was 0.375%. The ABL Line of Credit was collateralized by a first lien on the Company’s inventory and receivables and a second lien on the Company’s real estate and property and equipment. |
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At August 2, 2014, the Company had $447.6 million available under the ABL Line of Credit and no outstanding borrowings. The maximum borrowings under the facility during the six and three month periods ended August 2, 2014 amounted to $75.0 million and $60.0 million, respectively. Average borrowings during the six and three month periods ended August 2, 2014 amounted to $12.4 million and $15.9 million, respectively, at average interest rates of 1.9%. |
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At August 3, 2013, the Company had $447.5 million available under the ABL Line of Credit and $15.0 million outstanding borrowings. The maximum borrowings under the facility during the six and three month periods ended August 3, 2013 amounted to $125.0 million and $75.0 million, respectively. Average borrowings during the six and three month periods ended August 3, 2013 amounted to $23.4 million and $22.4 million, respectively, at average interest rates of 2.2% and 2.4%, respectively. There was no outstanding balance under the ABL Line of Credit at February 1, 2014. |
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On August 13, 2014, BCFWC entered into a First Amendment (the ABL Amendment) to the ABL Credit Agreement. Refer to Note 14, “Subsequent Events,” for further details. |
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The Company had $24.4 million, $30.1 million and $42.1 million in deferred financing costs, net of accumulated amortization, as of August 2, 2014, February 1, 2014 and August 3, 2013, respectively, related to its debt instruments recorded in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheets. Amortization of deferred financing costs amounted to $4.4 million and $2.2 million for the six and three month periods ended August 2, 2014, respectively and $4.6 million and $2.5 million for the six and three month periods ended August 3, 2013, respectively, and is included in the line item “Interest Expense” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the six months ended August 2, 2014, the Company wrote off $1.5 million of deferred financing costs related to the April 4, 2014 redemption of the Holdco Notes and $0.1 million related to the $4.0 million excess cash flow Term Loan Repayment. During the second quarter of Fiscal 2014, the Company incurred new deferred financing fees of $0.3 million as a result of the refinancing transactions that were completed on August 13, 2014. Refer to Note 14, “Subsequent Events,” for further details. |