Abercrombie & Fitch 2014 Annual Report Download - page 63

ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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12. BORROWINGS
In 2011, the Company entered into an unsecured credit agreement (the "2011 Credit Agreement") which, as amended most recently
on November 4, 2013, provided for a $350 million revolving credit facility. In 2012, the Company entered into a term loan agreement
(the "2012 Term Loan Agreement" and, together with the 2011 Credit Agreement, the "2011 and 2012 Credit Agreements") which,
as amended most recently on November 4, 2013, provided for a $150 million term loan facility. No borrowings were outstanding
under the 2011 Credit Agreement and $135.0 million in borrowings were outstanding under the 2012 Term Loan Agreement as of
February 1, 2014.
On August 7, 2014, in connection with the Company entering into new credit agreements, all amounts outstanding under the 2011
and 2012 Credit Agreements were repaid in full and the 2011 and 2012 Credit Agreements were terminated. The new credit
agreements are discussed below.
Asset-Based Revolving Credit Facility and Term Loan Facility
On August 7, 2014, A&F, through its subsidiary Abercrombie & Fitch Management Co. ("A&F Management") as the lead borrower
(with A&F and certain other subsidiaries as borrowers or guarantors), entered into an asset-based revolving credit agreement. The
agreement provides for a senior secured revolving credit facility of up to $400 million (the "ABL Facility"), subject to a borrowing
base, with a letter of credit sub-limit of $100 million and an accordion feature allowing A&F to increase the revolving commitment
by up to $100 million subject to specified conditions. The ABL Facility is available for working capital, capital expenditures and
other general corporate purposes.
A&F, through its subsidiary A&F Management as the borrower (with A&F and certain other subsidiaries as guarantors), also
entered into a term loan agreement on August 7, 2014, which provides for a term loan facility of $300 million (the "Term Loan
Facility" and, together with the ABL Facility, the "2014 Credit Facilities"). A portion of the proceeds of the Term Loan Facility
was used to repay the outstanding balance of approximately $127.5 million under the Company's 2012 Term Loan Agreement, to
repay outstanding borrowings of approximately $60 million under the Company's 2011 Credit Agreement and to pay fees and
expenses associated with the transaction.
Debt Discount and Deferred Financing Fees
The Term Loan Facility was issued at a 1.0% discount. In addition, the Company recorded deferred financing fees associated with
the issuance of the 2014 Credit Facilities of $5.8 million in aggregate, of which $3.2 million was paid to the lenders. The Company
is amortizing the debt discount and deferred financing fees over the respective contractual terms of the 2014 Credit Facilities. The
Company's Term Loan debt is presented in the Consolidated Balance Sheets, net of the unamortized discount and fees paid to
lenders. Net borrowings as of January 31, 2015 were as follows:
(in thousands) January 31, 2015
Borrowings, gross at carrying amount $ 299,250
Unamortized discount (2,786)
Unamortized fees paid to lenders (3,052)
Borrowings, net $ 293,412
Less: short-term portion of borrowings, net of discount and fees of $0.9M (2,102)
Long-term portion of borrowings, net $ 291,310
No borrowings were outstanding under the ABL Facility as of January 31, 2015.
Maturity, Amortization and Prepayments
The ABL Facility will mature on August 7, 2019. The Term Loan Facility will mature on August 7, 2021 and amortizes at a rate
equal to 0.25% of the original principal amount per quarter, beginning with the fourth quarter of Fiscal 2014. The Term Loan
Facility is subject to (a) beginning in 2016, an annual mandatory prepayment in an amount equal to 0% to 50% of the Company's
excess cash flows in the preceding fiscal year, depending on the Company's leverage ratio and (b) certain other mandatory
prepayments upon receipt by the Company of proceeds of certain debt issuances, asset sales and casualty events, subject to certain
exceptions specified therein, including reinvestment rights.