XML 25 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Debt
6 Months Ended
Aug. 04, 2018
Debt Disclosure [Abstract]  
Debt
Debt
On July 15, 2015, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into a Second Amended and Restated Credit Agreement among VBD, the lenders from time to time party thereto, JPMorgan Chase Bank, National Association, as administrative agent; Wells Fargo Bank, National Association, as syndication agent; and KeyBank National Association, as documentation agent (the “Prior Credit Agreement”). The Prior Credit Agreement provided for certain credit facilities to VBD in an aggregate principal amount not to initially exceed $125.0 million, the proceeds of which could be used for general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC and Vera Bradley Sales, LLC (collectively, the “Named Subsidiaries”). On October 20, 2017, VBD entered into Amendment No. 2 to the Prior Credit Agreement to modify certain financial and restrictive covenants.
Amounts outstanding under the Prior Credit Agreement bore interest, at VBD's option, at a per annum rate equal to either (A) the Alternate Base Rate (“ABR”) plus the Applicable Margin, where the ABR was the highest of (i) the prime rate, (ii) the federal funds rate plus 0.5%, and (iii) Adjusted LIBOR for a one-month interest period plus 1%, and the Applicable Margin is a percentage ranging from 0.00% to 0.70% depending upon the Company's leverage ratio or (B) Adjusted LIBOR plus the Applicable Margin, where Adjusted LIBOR meant LIBOR, as adjusted for statutory reserve requirements for eurocurrency liabilities, and Applicable Margin is a percentage ranging from 1.00% to 1.70% depending upon the Company's leverage ratio. Any loans made, or letters of credit issued, pursuant to the Prior Credit Agreement was to mature on July 15, 2020.
VBD's obligations under the Prior Credit Agreement were guaranteed by the Company and the Named Subsidiaries. The obligations of VBD under the Prior Credit Agreement were secured by first priority security interests in all of the respective assets of VBD, the Company, and the Named Subsidiaries and a pledge of the equity interests of VBD and the Named Subsidiaries.
The Prior Credit Agreement, as amended, contained various restrictive covenants, including restrictions on the Company's ability to dispose of assets, make acquisitions or investments, incur debt or liens, make distributions to stockholders or repurchase outstanding stock, enter into related party transactions and make capital expenditures, other than upon satisfaction of the conditions set forth in the Prior Credit Agreement. The Company was also required to comply with certain financial and non-financial covenants, including maintaining a maximum leverage ratio, a minimum ratio of EBITDAR to the sum of interest expense plus rentals (as defined in the Prior Credit Agreement), and a limit on capital expenditures. Upon an event of default, which included certain customary events such as, among other things, a failure to make required payments when due, a failure to comply with covenants, certain bankruptcy and insolvency events, a material adverse change (as defined in the Prior Credit Agreement), defaults under other material indebtedness, and a change in control, the lenders could accelerate amounts outstanding, terminate the agreement and foreclose on all collateral.
As of August 4, 2018 and February 3, 2018, the Company had no borrowings outstanding and availability of $125.0 million under its Prior Credit Agreement.
Subsequent to the end of the quarter, VBD entered into an asset based revolving credit agreement. Concurrently with entering into the new credit agreement, the Prior Credit Agreement detailed above was terminated. Refer to Note 14 herein for additional information regarding the new credit agreement.