Loans, overdrafts and long-term debt



(in millions)	January 28, 2017			January 30, 2016
Debt:
Senior unsecured notes due 2024, net of unamortized discount	$	398.8		$	398.6
Securitization facility	600.0			600.0
Senior unsecured term loan	348.6			365.0
Revolving credit facility	56.0			—
Bank overdrafts	14.2			24.4
Capital lease obligations	—			0.2
Total debt	$	1,417.6		$	1,388.2
Less: Current portion of loans and overdrafts	(91.1		)	(57.7		)
Less: Unamortized capitalized debt issuance fees⁽¹⁾	(8.6		)	(9.5		)
Total long-term debt	$	1,317.9		$	1,321.0


⁽¹⁾	Presentation of capitalized debt issuance costs was revised during the first quarter of Fiscal 2017 upon adoption of ASU 2015-03. See Note 2 for additional information.

Revolving credit facility and term loan (the “Credit Facility”)

During the second quarter of Fiscal 2017, Signet amended and restated its Credit Facility agreement to (i) increase the borrowing capacity under the revolving credit facility from $400 million to $700 million and extend the maturity date to July 2021 and (ii) extend the maturity date of the term loan facility to July 2021 and revise the scheduled quarterly principal repayments to align with the July 2021 maturity date. The amendment of the Credit Facility was accounted for as a modification of existing debt in accordance with ASC Topic 470-50, “Debt Modifications and Extinguishments.”

In connection with the amendment of the revolving credit facility, incremental fees of $1.4 million were incurred and capitalized. Capitalized fees associated with the amended revolving credit facility as of January 28, 2017 total $2.6 million with the unamortized balance recorded as an asset within the consolidated balance sheets. Accumulated amortization related to these capitalized fees as of January 28, 2017 was $0.8 million (January 30, 2016: $0.4 million). Amortization relating to these fees of $0.4 million and $0.3 million was recorded as interest expense in the consolidated income statements for Fiscal 2017 and Fiscal 2016, respectively. As of January 28, 2017 and January 30, 2016, the Company had stand-by letters of credit outstanding of $15.3 million and $28.8 million, respectively, that reduce remaining borrowing availability. The revolving credit facility had a weighted average interest rate of 1.71% and 1.18% during Fiscal 2017 and Fiscal 2016, respectively.

The senior unsecured term loan had an outstanding principal balance of $357.5 million as of the amendment date. Beginning in October 2016, the Company is required to make scheduled quarterly principal payments equal to the amounts per annum of the outstanding principal balance as follows: 5% in the first year, 7.5% in the second year, 10% in the third year, 12.5% in the fourth year and 15% in the fifth year after the initial payment date, with the balance due in July 2021. Excluding the impact of the interest rate swap designated as a cash flow hedge discussed in Note 17, the term loan had a weighted average interest rate of 1.78% and 1.48% during Fiscal 2017 and Fiscal 2016, respectively.

In connection with the amendment of the term loan facility, incremental fees of $0.7 million were incurred and capitalized. Capitalized fees associated with the amended term loan facility as of January 28, 2017 total $6.2 million with the unamortized balance recorded as a direct deduction from the outstanding liability within the consolidated balance sheets. Accumulated amortization related to these capitalized fees as of January 28, 2017 was $2.7 million (January 30, 2016: $1.8 million). Amortization relating to these fees of $0.9 million and $1.0 million was recorded as interest expense in the consolidated income statements Fiscal 2017 and Fiscal 2016, respectively.

Borrowings under the Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Company’s option, either (a) a base rate or (b) a LIBOR rate. The Credit Facility provides that the Company may voluntarily repay outstanding loans at any time without premium or penalty other than reimbursement of the lender’s redeployment and breakage costs in certain cases. In addition, the Credit Facility contains various customary representations and warranties, financial reporting requirements and other affirmative and negative covenants. The Company is required to maintain at all times a leverage ratio of no greater than 2.50 to 1.00 and a fixed charge coverage ratio of no less than 1.40 to 1.00, both determined as of the end of each fiscal quarter for the trailing twelve months.

On February 19, 2014, Signet entered into a definitive agreement to acquire Zale Corporation and concurrently received commitments for an $800 million 364-day unsecured bridge facility to finance the transaction. The bridge facility contained customary fees and incurred interest on any borrowings drawn on the facility. In May 2014, Signet executed its Zale Acquisition financing as described in Note 3, replacing the bridge facility commitments in addition to amending its Credit Facility as outlined above, issuing senior unsecured notes and securitizing credit card receivables. No amounts were drawn on the bridge facility commitments prior to replacement by the issuances of long-term debt listed below. Fees of $4.0 million relating to this unsecured bridge facility were incurred and capitalized during Fiscal 2015. The capitalized fees of $4.0 million were fully expensed in Fiscal 2015.

Senior unsecured notes due 2024

On May 19, 2014, Signet UK Finance plc (“Signet UK Finance”), a wholly owned subsidiary of the Company, issued $400 million aggregate principal amount of its 4.700% senior unsecured notes due in 2024 (the “Notes”). The Notes were issued under an effective registration statement previously filed with the SEC. Interest on the notes is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2014. The Notes are jointly and severally guaranteed, on a full and unconditional basis, by the Company and by certain of the Company’s wholly owned subsidiaries (such subsidiaries, the “Guarantors”). See Note 26 for additional information. The Notes were issued pursuant to a base indenture among the Company, Signet UK Finance, the Guarantors and Deutsche Bank Trust Company Americas as trustee, with the indenture containing customary covenants and events of default provisions. The Company received proceeds from the offering of approximately $393.9 million, which were net of underwriting discounts, commissions and offering expenses.

Capitalized fees relating to the senior unsecured notes total $7.0 million. Accumulated amortization related to these capitalized fees as of January 28, 2017 was $1.9 million (January 30, 2016: $1.2 million). The remaining unamortized capitalized fees are recorded as a direct deduction from the outstanding liability within the consolidated balance sheets. Amortization relating to these fees of $0.7 million and $0.7 million was recorded as interest expense in the consolidated income statements for Fiscal 2017 and Fiscal 2016, respectively.

Asset-backed securitization facility

The Company sold an undivided interest in certain credit card receivables to Sterling Jewelers Receivables Master Note Trust (the “Issuer”), a wholly-owned Delaware statutory trust and a wholly-owned indirect subsidiary of the Company and issued two-year revolving asset-backed variable funding notes to unrelated third party conduits pursuant to a master indenture dated as of November 2, 2001, as supplemented by the Series 2014-A indenture supplement dated as of May 15, 2014 among the Issuer, Sterling Jewelers Inc. (“SJI”) and Deutsche Bank Trust Company Americas, the indenture trustee. During the second quarter of Fiscal 2017, Signet amended the note purchase agreement associated with the asset-backed securitization facility to extend the term of the facility by one year to May 2018 with remaining terms substantially consistent with the existing agreement. The amendment was accounted for as a modification of existing debt in accordance with ASC 470-50. In connection with the amendment of the note purchase agreement, incremental fees of $0.6 million million were incurred and capitalized.

Under terms of the notes, the Issuer has obtained $600 million of financing from the unrelated third party commercial paper conduits sponsored by JPMorgan Chase Bank, N.A., which indebtedness is secured by credit card receivables originated from time to time by SJI. The credit card receivables will ultimately be transferred to the Issuer and are serviced by SJI. Signet guarantees the performance by SJI of its obligations under the agreements associated with this financing arrangement. Borrowings under the asset-backed variable funding notes bear interest at a rate per annum equal to LIBOR plus an applicable margin. Payments received from customers for balances outstanding on securitized credit card receivables are utilized to repay amounts outstanding under the facility each period, while proceeds from the facility are received for incremental credit card receivables originated when the receivables are pledged to the Issuer. Such payments received from customers and proceeds from the facility are reflected on a gross basis in the consolidated statements of cash flows. As of January 28, 2017 and January 30, 2016, $600.0 million remained outstanding under the securitization facility with a weighted average interest rate of 2.05% and 1.61% during Fiscal 2017 and Fiscal 2016, respectively.

Capitalized fees relating to the asset-backed securitization facility total $3.4 million. Accumulated amortization related to these capitalized fees as of January 28, 2017 was $3.1 million (January 30, 2016: $2.4 million). Amortization relating to these fees of $0.7 million and $1.5 million was recorded as interest expense in the consolidated income statements for Fiscal 2017 and Fiscal 2016, respectively.

Other

As of January 28, 2017 and January 30, 2016, the Company was in compliance with all debt covenants.

As of January 28, 2017 and January 30, 2016, there were $14.2 million and $24.4 million in overdrafts, which represent issued and outstanding checks where no bank balances exist with the right of offset.