| Debt | 4. Debt
On February 3, 2015, we entered into a $250 million senior
secured revolving credit facility pursuant to a second amended and
restated credit agreement with Wells Fargo Bank (the “Credit
Agreement”) that will mature in February 2020 and a secured
$25 million master loan agreement with Wells Fargo Equipment
Finance, Inc. (the “Equipment Term Loan” and, together
with the Credit Agreement, the “Credit Facilities”)
that will mature in February 2018. The Credit Facilities replace
the Company’s former $100 million senior secured revolving
credit facility which was set to mature on February 28, 2017.
Borrowings under the Credit Facilities were initially used for a
special dividend, but subsequently may be used for working capital,
capital expenditures and other general corporate purposes. During
2015, debt issuance costs associated with the Credit Facilities
were capitalized in the amount of $0.4 million and will be
amortized over their respective terms.
Long-term debt consisted of the following at August 1,
2015:
Revolving credit facility $ 145,200
Equipment term loan 25,000
Total debt 170,200
Current maturities (9,167 )
Long-term debt $ 161,033
The aggregate maturities of long-term debt subsequent to
August 1, 2015 for the following fiscal years:
2015 $ 4,167
2016 10,000
2017 10,833
2018
—
2019
—
Thereafter 145,200
Total $ 170,200
The total amount available under the Credit Agreement is the lesser
of the Aggregate Commitment or 100% of eligible credit card
receivables and the Net Recovery Percentage of inventories less
reserves. At August 1, 2015, the Company had $145.2 million of
outstanding borrowings under the Credit Agreement and $6.4 million
of outstanding letters of credit, which reduced the Company’s
availability under the Credit Agreement to $98.4 million.
The Credit Facilities contain customary representations and
warranties, affirmative and negative covenants (including, in the
Credit Agreement, the requirement of a 1 to 1 consolidated fixed
charge coverage ratio upon the occurrence and during the
continuance of any Covenant Compliance Event, as defined in the
Credit Agreement), and events of default for facilities of this
type, and are cross-collateralized and cross-defaulted. Collateral
for the Credit Facilities consist of substantially all of our
personal property. Wells Fargo Bank has a first lien on all
collateral other than equipment, and Wells Fargo Equipment Finance
has a first lien on equipment. At August 1, 2015, the Company
was in compliance with all debt covenants.
Borrowings under the Credit Agreement shall be either Base Rate
Loans or LIBO Rate Loans. LIBO Rate Loans bear interest equal to
the Adjusted LIBO Rate plus the Applicable Margin (125 to 175 basis
points) depending on the Quarterly Average Excess Availability.
Base Rate Loans bear interest equal to the highest of (a) the
Federal Funds Rate plus one-half of one percent (0.50%),
(b) the Adjusted LIBO Rate plus one percent (1.00%), or
(c) the Wells Fargo “prime rate,” plus the
Applicable Margin (25 to 75 basis points).
Borrowings under the Equipment Term Loan shall be LIBO Rate plus
2%.
The weighted average interest rate for amounts outstanding under
the Credit Agreement and Equipment Term Loan were 1.74 percent and
2.19 percent, respectively, as of August 1, 2015. |
