Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.22.2.2
Debt
 9 Months Ended
Sep. 29, 2022
Debt Disclosure [Abstract]  
Debt Debt
The following table summarizes the Company’s long-term debt as of September 29, 2022 and December 30, 2021:
in thousands Maturity Date Interest Rate Per Annum at 9/29/2022 (1) September 29, 2022 December 30, 2021
Credit Facilities:
Term Loan Facility February 14, 2027 4.53% Variable $ 205,025  $ 206,602 
Asset-based Loan Facility (“ABL”) August 4, 2027 3.92% Variable 176,400  — 
Total secured debt at par value 381,425  206,602 
Less: current maturities 2,103  2,103 
Long-term debt maturities 379,322  204,499 
Less: unamortized discount and debt issuance costs 7,468  8,737 
Total long-term debt $ 371,854  $ 195,762 
(1) The applicable interest rate for the Term Loan Facility does not include the effect of interest rate cap agreements.
Market risk associated with the Company’s long-term debt relates to the potential change in fair value and negative impact to future earnings, respectively, from a change in interest rates. The aggregate fair value of debt is based primarily on the Company’s estimates of interest rates, maturities, credit risk, and underlying collateral.
The estimated fair values and classifications within the fair value hierarchy of the Term Loan Facility and ABL were as follows as of September 29, 2022 and December 30, 2021:
in thousands Fair Value Hierarchy Classification September 29, 2022 December 30, 2021
Term Loan Facility Level 3 $ 199,899  $ 202,986 
ABL Facility Level 2 176,400  — 
Total $ 376,299  $ 202,986 
The following table summarizes scheduled maturities of the Company’s debt as of September 29, 2022:
in thousands Amount
Thirteen weeks ending December 29, 2022 $ 526 
2023 2,103 
2024 2,103 
2025 2,103 
2026 2,103 
Thereafter 372,487 
Total minimum debt payments $ 381,425 
Components of interest expense are as follows for the periods presented:
Thirteen Weeks Ended Thirty-nine Weeks Ended
in thousands September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021
Total interest costs $ 4,092  $ 1,906  $ 8,617  $ 5,737 
Interest capitalized 1,060  782  2,751  1,932 
Interest expense, net $ 3,032  $ 1,124  $ 5,866  $ 3,805 
Term Loan Facility
The Term Loan Facility provides a margin for loans of: (x) in the case of ABR Loans (as defined in the Term Loan Facility) 1.00% per annum (subject to a leverage-based step-up to 1.25% if Outlets exceeds certain leverage ratio tests), and (y) in the case of Eurodollar Loans (as defined in the Term Loan Facility) 2.00% per annum (subject to a leverage-based step-up to 2.25% if Outlets exceeds certain leverage ratio tests and a 0.00% floor on Eurodollar Loans).
All obligations under the Term Loan Facility are secured by (1) a first-priority security interest in substantially all of the property and assets of Outlets and the other guarantors under the Term Loan Facility, with certain exceptions, and (2) a second-priority security interest in the collateral securing the asset-based loan facility (“ABL” or “ABL Facility”).
ABL Facility
On August 4, 2022, the Company entered into a second amendment to the ABL Facility which, among other things, (a) increased the Company’s revolving commitments to a total aggregate principal amount of $800 million, (b) allows for the Company, under certain circumstances, to increase the size of the facility by an additional amount of up to $200 million, and (c) extended the stated maturity date of the ABL Facility to August 4, 2027.
As of September 29, 2022, the Company’s ABL Facility had a maximum availability of $800.0 million with actual available borrowings limited to the sum, at the time of calculation, of (a) eligible credit card receivables multiplied by the credit card advance rate, plus (b) the cost of eligible inventory, net of inventory reserves, multiplied by the applicable appraisal percentage, plus (c) 85% of eligible net trade receivables, plus (d) all eligible cash on hand, plus (e) 100% of the amount for which the eligible letter of credit must be honored after giving effect to any draws, minus certain Availability Reserves (each component as defined in the ABL Facility). The ABL Facility is available for issuance of letters of credit and contains a sublimit of $50.0 million for standby letters of credit and commercial letters of credit combined. Available borrowings under the facility are reduced by the face amount of outstanding letters of credit.
All obligations under the ABL Facility are secured by (1) a first-priority security interest in the cash and cash equivalents, accounts receivable, inventory, and related assets of Outlets and the other guarantors under the ABL Facility, with certain exceptions, and (2) a second-priority security interest in substantially all of the other property and assets of Outlets and the other guarantors under the Term Loan Facility.
Net availability under the ABL Facility, as reduced by outstanding borrowings of $176.4 million and letters of credit of $29.5 million, was $594.1 million based on financial data as of September 29, 2022.
Covenants
The credit agreements governing the Term Loan Facility and ABL Facility contain customary restrictive covenants, which, among other things and with certain exceptions, limit the Company’s ability to (i) incur additional indebtedness and liens in connection with such indebtedness, (ii) pay dividends and make certain other restricted payments, (iii) effect mergers or consolidations, (iv) enter into transactions with affiliates, (v) sell or dispose of property or assets, and (vi) engage in unrelated lines of business. In addition, these credit agreements subject the Company to certain reporting obligations and require that the Company satisfy certain financial covenants, including, among other things, a requirement that if borrowings under the ABL Facility exceed 90% of availability, the Company will maintain a certain fixed charge coverage ratio (defined as Consolidated EBITDA less non-financed capital expenditures and income taxes paid to consolidated fixed charges, in each case as more fully defined in the ABL Facility).
The Term Loan Facility has no financial maintenance covenants. The Company is currently in compliance with all material covenants under the credit agreements.