Debt	12 Months Ended
Feb. 03, 2018
Debt
Debt	7. Debt Cerberus Credit Facility On December 7, 2016, in connection with the closing of the Hi-Tec Acquisition, the Company entered into a senior secured credit facility with Cerberus Business Finance, LLC (“Cerberus”), which was amended in August 2017 and November 2017 (the “Cerberus Credit Facility”) and provides a $45.0 million term loan and a revolving credit facility up to $5.0 million. The Company used a portion of the term loan proceeds to fund the Hi-Tec Acquisition, including the repayment of substantially all the outstanding indebtedness of Hi-Tec, and to repay all amounts owed under its previous credit facility. Proceeds from borrowings under the revolving credit facility were used for working capital purposes. Principal repayments of the term loan are required quarterly and interest is payable monthly. During the year ended February 3, 2018, the Company drew down $5.0 million under its revolving credit facility. The Cerberus Credit Facility is secured by substantially all the assets of the Company and is guaranteed by the Company’s subsidiaries. The Cerberus Credit Facility expires in December 2021 and bears interest based either on LIBOR or an alternate base rate plus a margin. The weighted-average interest rate at February 3, 2018 was 11.0%. The Cerberus Credit Facility contains customary restrictive covenants for facilities and transactions of this type, including, among other things, the maintenance of certain financial covenants, limitations on the payment of dividends, the requirement to meet certain revenue standards after the expiration or termination of any material contracts, and the requirement to obtain Cerberus’s consent before the Company can take certain specified actions. Events of default include, among other things, the occurrence of a change of control of the Company. The Cerberus Credit Facility was amended in August 2017 related to the Company’s noncompliance for the first quarter of Fiscal 2018 with certain reporting and financial covenants required by the Cerberus Credit Facility, including the required leverage ratio and the required fixed charge coverage ratio. This amendment waived these events of default, changed the level of these required financial covenants going forward, and added a new liquidity covenant requiring the Company to maintain a minimum level of cash and availability under the revolving credit facility. This amendment also required the Company to sell shares of the Company’s common stock in a private placement, which was completed in August 2017. (See Note 9.) The Cerberus Credit Facility was further amended in November 2017 related to the Company’s noncompliance for the second quarter of Fiscal 2018 with certain financial covenants required by the Cerberus Credit Facility, including the leverage ratio and the fixed charge coverage ratio. This amendment waived these events of default, changed the level and timing of these required financial covenants going forward, changed the level of required liquidity, and implemented a tiered interest rate structure whereby the Company’s borrowing rate under the Cerberus Credit Facility fluctuates based on the Company’s leverage ratio. This amendment also required that (i) new third-party investors acquire from Cerberus at least $10.0 million of junior participation interests in the Cerberus Credit Facility term loan and (ii) permitted the Company to repay the remaining balance of the unsecured receivables funding loan due to Mr. Ravich, a member of the Board of Directors (see below), by using proceeds from an additional $1.5 million participation by Mr. Ravich in the Cerberus Credit Facility term loan. The Company issued warrants to purchase up to 511,111 shares of the Company’s common stock at $2.25 per share to the third party investors that acquired participation interests in the Cerberus Credit Facility term loan. (See Note 9.) Outstanding borrowings under the Cerberus Credit Facility, including borrowings under the revolving credit facility, were $49.5 million and $44.6 million at February 3, 2018 and January 28, 2017, respectively. The unamortized deferred financing costs associated with these borrowings are $3.4 million and $3.7 million at February 3, 2018 and January 28, 2017, respectively. Borrowings under the Cerberus Credit Facility term loan and revolving credit facility comprise a series of recurring short-term obligations that bear interest rates based on varying LIBOR maturities which are selected at the Company’s option. These short term obligations that the Company has the intent and ability to refinance on a long-term basis are classified as long-term debt. As a result of anticipated noncompliance with certain covenants required by the Cerberus Credit Facility as further described in Note 1., the outstanding borrowings under the Cerberus Credit Facility are classified as current liabilities on the accompanying balance sheet. Related Party Ravich Loan On December 7, 2016, in connection with the closing of the Hi-Tec Acquisition, the Company obtained an unsecured receivables funding loan of $5.0 million from Jess Ravich (the “Ravich Loan”), a director of the Company. The Company used the Ravich Loan proceeds to fund a portion of the purchase price for the Hi-Tec Acquisition. The Ravich Loan bore interest at a rate of 9.5% per annum and was subject to a fee equal to 2.5% of the principal amount of the loan, which was paid upon funding. The Company repaid a portion of the Ravich Loan from operating cash flows, and in the 4th quarter of Fiscal 2018, the remaining $1.5 million outstanding was converted to a junior participating interest in the Cerberus Credit Facility term loan. JPMorgan Credit Agreement In 2012, the Company and JPMorgan entered into a credit agreement (the “JPMorgan Credit Agreement”) that provided the Company with a $2.0 million revolving line of credit and the capacity to finance certain trademark and business acquisitions. The Company borrowed $16.6 million under the JPMorgan Credit Agreement in 2012 to acquire rights related to the Cherokee brand in the school uniforms category. In January 2014, the Company borrowed an additional $19.0 to acquire the Hawk Signature and Tony Hawk brands, and in October 2015, borrowed an additional $6.0 million in connection with its acquisition of Flip Flop Shops. Quarterly principal repayments were required, and borrowings bore interest based either on LIBOR or an alternate base rate plus a margin. On December 7, 2016, all amounts owed under the JPMorgan Credit Agreement were repaid and the agreement was terminated.

7. Debt

Cerberus Credit Facility

On December 7, 2016, in connection with the closing of the Hi-Tec Acquisition, the Company entered into a senior secured credit facility with Cerberus Business Finance, LLC (“Cerberus”), which was amended in August 2017 and November 2017 (the “Cerberus Credit Facility”) and provides a $45.0 million term loan and a revolving credit facility up to $5.0 million. The Company used a portion of the term loan proceeds to fund the Hi-Tec Acquisition, including the repayment of substantially all the outstanding indebtedness of Hi-Tec, and to repay all amounts owed under its previous credit facility. Proceeds from borrowings under the revolving credit facility were used for working capital purposes. Principal repayments of the term loan are required quarterly and interest is payable monthly. During the year ended February 3, 2018, the Company drew down $5.0 million under its revolving credit facility.

The Cerberus Credit Facility is secured by substantially all the assets of the Company and is guaranteed by the Company’s subsidiaries. The Cerberus Credit Facility expires in December 2021 and bears interest based either on LIBOR or an alternate base rate plus a margin. The weighted-average interest rate at February 3, 2018 was 11.0%. The Cerberus Credit Facility contains customary restrictive covenants for facilities and transactions of this type, including, among other things, the maintenance of certain financial covenants, limitations on the payment of dividends, the requirement to meet certain revenue standards after the expiration or termination of any material contracts, and the requirement to obtain Cerberus’s consent before the Company can take certain specified actions. Events of default include, among other things, the occurrence of a change of control of the Company.

The Cerberus Credit Facility was amended in August 2017 related to the Company’s noncompliance for the first quarter of Fiscal 2018 with certain reporting and financial covenants required by the Cerberus Credit Facility, including the required leverage ratio and the required fixed charge coverage ratio. This amendment waived these events of default, changed the level of these required financial covenants going forward, and added a new liquidity covenant requiring the Company to maintain a minimum level of cash and availability under the revolving credit facility. This amendment also required the Company to sell shares of the Company’s common stock in a private placement, which was completed in August 2017. (See Note 9.)

The Cerberus Credit Facility was further amended in November 2017 related to the Company’s noncompliance for the second quarter of Fiscal 2018 with certain financial covenants required by the Cerberus Credit Facility, including the leverage ratio and the fixed charge coverage ratio. This amendment waived these events of default, changed the level and timing of these required financial covenants going forward, changed the level of required liquidity, and implemented a tiered interest rate structure whereby the Company’s borrowing rate under the Cerberus Credit Facility fluctuates based on the Company’s leverage ratio. This amendment also required that (i) new third-party investors acquire from Cerberus at least $10.0 million of junior participation interests in the Cerberus Credit Facility term loan and (ii) permitted the Company to repay the remaining balance of the unsecured receivables funding loan due to Mr. Ravich, a member of the Board of Directors (see below), by using proceeds from an additional $1.5 million participation by Mr. Ravich in the Cerberus Credit Facility term loan. The Company issued warrants to purchase up to 511,111 shares of the Company’s common stock at $2.25 per share to the third party investors that acquired participation interests in the Cerberus Credit Facility term loan. (See Note 9.)

Outstanding borrowings under the Cerberus Credit Facility, including borrowings under the revolving credit facility, were $49.5 million and $44.6 million at February 3, 2018 and January 28, 2017, respectively. The unamortized deferred financing costs associated with these borrowings are $3.4 million and $3.7 million at February 3, 2018 and January 28, 2017, respectively.

Borrowings under the Cerberus Credit Facility term loan and revolving credit facility comprise a series of recurring short-term obligations that bear interest rates based on varying LIBOR maturities which are selected at the Company’s option. These short term obligations that the Company has the intent and ability to refinance on a long-term basis are classified as long-term debt. As a result of anticipated noncompliance with certain covenants required by the Cerberus Credit Facility as further described in Note 1., the outstanding borrowings under the Cerberus Credit Facility are classified as current liabilities on the accompanying balance sheet.

Related Party Ravich Loan

On December 7, 2016, in connection with the closing of the Hi-Tec Acquisition, the Company obtained an unsecured receivables funding loan of $5.0 million from Jess Ravich (the “Ravich Loan”), a director of the Company. The Company used the Ravich Loan proceeds to fund a portion of the purchase price for the Hi-Tec Acquisition. The Ravich Loan bore interest at a rate of 9.5% per annum and was subject to a fee equal to 2.5% of the principal amount of the loan, which was paid upon funding. The Company repaid a portion of the Ravich Loan from operating cash flows, and in the 4th quarter of Fiscal 2018, the remaining $1.5 million outstanding was converted to a junior participating interest in the Cerberus Credit Facility term loan.

JPMorgan Credit Agreement

In 2012, the Company and JPMorgan entered into a credit agreement (the “JPMorgan Credit Agreement”) that provided the Company with a $2.0 million revolving line of credit and the capacity to finance certain trademark and business acquisitions. The Company borrowed $16.6 million under the JPMorgan Credit Agreement in 2012 to acquire rights related to the Cherokee brand in the school uniforms category. In January 2014, the Company borrowed an additional $19.0 to acquire the Hawk Signature and Tony Hawk brands, and in October 2015, borrowed an additional $6.0 million in connection with its acquisition of Flip Flop Shops. Quarterly principal repayments were required, and borrowings bore interest based either on LIBOR or an alternate base rate plus a margin. On December 7, 2016, all amounts owed under the JPMorgan Credit Agreement were repaid and the agreement was terminated.