Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.22.2
Debt
 6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Debt Debt
The following table summarizes the Company’s long-term debt as of June 30, 2022 and December 30, 2021:
in thousands Maturity Date Interest Rate Per Annum at June 30, 2022 June 30, 2022 December 30, 2021
Credit Facilities:
Term Loan Facility February 14, 2027 3.06% Variable $ 205,025  $ 206,602 
Asset-based Loan Facility (“ABL”) February 14, 2025 2.87% Variable 68,600  — 
Total secured debt at par value 273,625  206,602 
Less: current maturities 1,577  2,103 
Long-term debt maturities 272,048  204,499 
Less: unamortized discount and debt issuance costs 7,891  8,737 
Total long-term debt $ 264,157  $ 195,762 
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 June 30, 2022 and December 30, 2021:
in thousands Fair Value Hierarchy Classification June 30, 2022 December 30, 2021
Term Loan Facility Level 3 $ 191,698  $ 202,986 
ABL Facility Level 2 68,600  — 
Total $ 260,298  $ 202,986 
The following table summarizes scheduled maturities of the Company’s debt as of June 30, 2022:
in thousands Amount
Twenty-six weeks ending December 29, 2022 $ 526 
2023 2,103 
2024 2,103 
2025 70,703 
2026 2,103 
Thereafter 196,087 
Total minimum debt payments $ 273,625 
Components of interest expense are as follows for the periods presented:
Thirteen Weeks Ended Twenty-six Weeks Ended
in thousands June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021
Total interest costs $ 2,650  $ 1,862  $ 4,525  $ 3,831 
Interest capitalized 978  569  1,691  1,150 
Interest expense, net $ 1,672  $ 1,293  $ 2,834  $ 2,681 
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
As of June 30, 2022, the Company’s ABL Facility had a maximum availability of $400.0 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 $68.6 million and letters of credit of $22.5 million, was $308.9 million based on financial data as of June 30, 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.