|12 Months Ended|
Dec. 26, 2019
The following table summarizes our long-term debt as of December 26, 2019 (dollars in thousands):
Repayment of Debt with Proceeds from Initial Public Offering
On May 2, 2017, the Company completed its initial public offering (“IPO”), pursuant to which it sold an aggregate of 10,147,025 shares of Class A common stock, par value $0.001 per share (after giving effect to the underwriters’ exercise in full of their option to purchase additional shares) at a price of $21.00 per share. The Company received aggregate net proceeds of approximately $192.0 million after deducting underwriting discounts and commissions and other offering expenses.
The Company used net proceeds from the IPO of approximately $192.0 million to repay a portion of the amounts outstanding under the Term Loan Facility, including accrued and unpaid interest. The partial paydown resulted in a loss on extinguishment of debt in the amount of approximately $5.4 million related to unamortized original issue discount and unamortized deferred debt issuance costs.
Term Loan Facility
As of December 26, 2019, the Term Loan Facility had an outstanding balance of $145.5 million, all due and payable at maturity. The Term Loan Facility matures on September 30, 2023.
As of December 26, 2019, the Term Loan Facility bore interest based on one of the following rates, at the Company’s option:
As of December 26, 2019, the ABL Facility had a maximum availability of $300.0 million with actual available borrowings limited to the sum, at the time of calculation, of eligible credit card receivables, plus the cost of eligible inventory, net of inventory reserves, multiplied by the product of an appraisal percentage multiplied by the appraised value of eligible inventory, plus 85% of eligible net trade receivables, plus all eligible cash on hand minus certain Availability Reserves (as defined in the credit agreement governing the ABL Facility). The ABL Facility is available for issuance of letters of credit and contains $30.0 million for standby letters of credit and commercial letters of credit. Available borrowings under the facility are reduced by the face amount of outstanding letters of credit. The ABL Facility matures on September 30, 2021. As of December 26, 2019, the borrowings bear interest at a floating rate, which is based on one of the following rates at the option of the Company:
As of December 26, 2019, the Company had net availability under the ABL Facility of $279,488 thousand, including outstanding letters of credit of $20,512 thousand. The total minimum debt payment of $145,500 thousand is due at maturity in 2023.
The credit agreements governing our Credit Facilities contain customary restrictive covenants that, among other things and with certain exceptions, limit the ability of the Company 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 us to certain reporting obligations and require that we satisfy certain financial covenants, including, among other things:
The Term Loan Facility has no financial maintenance covenants. As of December 26, 2019, we were in compliance with the covenants of the Credit Facilities.
Deferred Debt Issuance Cost and Original Issue Discount
Deferred debt issuance cost related to our ABL Facility and our prior asset-based revolving credit facility of $574 thousand and $902 thousand as of December 26, 2019 and December 27, 2018, respectively, are included in other assets on our Consolidated Balance Sheets. Deferred debt issuance cost and original issue discount related to our Term Loan Facility of $2,894 thousand and $3,666 thousand as of December 26, 2019 and December 27, 2018, respectively, are included in term loans on our Consolidated Balance Sheets. Amortization expense was $1,100 thousand, $1,045 thousand, and $1,205 thousand for the years ended December 26, 2019, December 27, 2018, and December 28, 2017, respectively.
Fair Value of Debt
The fair values of certain of the Company’s debt instruments have been determined by utilizing Level 3 inputs, such as available market information and appropriate valuation methodologies, including the rates for similar instruments and the discounted cash flows methodology. Market risk associated with our fixed and variable rate 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 was based primarily on discounted cash flows utilizing estimated interest rates, maturities, credit risk, and underlying collateral and is classified primarily as Level 3 within the fair value hierarchy. At December 26, 2019 and December 27, 2018, the fair values of the Company’s debt are as follows (in thousands):
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef