Abercrombie & Fitch 2015 Annual Report Download - page 59

Table of Contents ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
59
Term Loan Facility
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, as amended, 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.
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 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 30, 2016 and January 31, 2015 were as follows:
(in thousands) January 30, 2016 January 31, 2015
Borrowings, gross at carrying amount $ 293,250 $ 299,250
Unamortized discount (1,929) (2,786)
Unamortized fees paid to lenders (5,086) (3,052)
Borrowings, net 286,235 293,412
Less: short-term portion of borrowings, net of discount and fees — (2,102)
Long-term portion of borrowings, net $ 286,235 $ 291,310
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. The
Company was not required to make any mandatory prepayments under the Term Loan Facility in Fiscal 2016.
A summary of future minimum payments under the Term Loan facility is as follows:
(in thousands)
Fiscal 2016(1) $ —
Fiscal 2017 $ 3,000
Fiscal 2018 $ 3,000
Fiscal 2019 $ 3,000
Fiscal 2020 $ 3,000
Thereafter $ 281,250
(1) The Company prepaid its regularly scheduled Fiscal 2016 principal payments in January 2016.
All obligations under the Term Loan Facility are unconditionally guaranteed by A&F and certain of its subsidiaries. The Term
Loan Facility is secured by a first-priority security interest in certain property and assets of the borrowers and guarantors, including
certain fixed assets, intellectual property, stock of subsidiaries and certain after-acquired material real property. The Term Loan
Facility is also secured by a second-priority security interest in certain working capital of the borrowers and guarantors consisting
of inventory, accounts receivable and certain other assets, with certain exceptions.
At the Company's option, borrowings under the Term Loan Facility will bear interest at either (a) an adjusted LIBOR rate no lower
than 1.00% plus a margin of 3.75% per annum or (b) an alternate base rate plus a margin of 2.75% per annum. Customary agency
fees are also payable in respect of the Term Loan Facility. The interest rate on borrowings under the Term Loan Facility was 4.75%
as of January 30, 2016.