Long-term Debt

3 Months Ended

Apr. 28, 2012

LONG-TERM DEBT



(In thousands)	April 28, 2012			January 28, 2012
1.125% Senior Convertible Notes, due May 1, 2014	$	140,451		$	140,451
6.07% mortgage note, due October 11, 2014	8,042			8,248
6.53% mortgage note, due November 1, 2012	700			1,050
Capital lease obligations	5,429			6,262
Total long-term debt principal	154,622			156,011
Less unamortized discount on 1.125% Senior Convertible Notes	(15,863		)	(17,690		)
Long-term debt – carrying value	138,759			138,321
Current portion	(4,050		)	(4,682		)
Net long-term debt	$	134,709		$	133,639

We have a loan and security agreement (the “Agreement”) for a $200,000,000 senior secured revolving credit facility (the “Facility”) that provides for committed revolving credit availability through July 14, 2016. The amount of credit available from time to time under the Facility is determined as a percentage of the value of eligible inventory, accounts receivable, and cash, as reduced by certain reserves (the “Borrowing Base.”). In addition, the Agreement includes an option allowing us to increase our credit facility to an amount not in excess of $300,000,000, based on certain terms and conditions. The Facility may be used for working capital and other general corporate purposes, and provides that up to $100,000,000 of the $200,000,000 may be used for letters of credit.

The Agreement provides for borrowings under “Base Rate” loans or “Eurodollar Rate” loans. Borrowings under Base Rate loans are variable and generally accrue interest at a margin ranging from 1.0% to 1.5% over the Base Rate (as defined in the Agreement). Eurodollar Rate loans generally accrue interest at a margin ranging from 2.0% to 2.5% over the London Interbank Offered Rate (“LIBOR”) as adjusted for reserves. The applicable margin is adjusted each fiscal month based on our Monthly Average Liquidity (as defined in the Agreement) for the preceding month. We are also required to pay a monthly unused line fee ranging from 0.375% to 0.5% of the amount by which the maximum credit available under the Facility exceeds the average daily principal balance of any outstanding revolving loans and letters of credit. As of April 28, 2012 the applicable rates under the Facility were 4.25% (Base Rate plus 1%) for Base Rate Loans and 2.24% (LIBOR plus 2%) for Eurodollar Rate Loans.

The Agreement provides for customary representations and warranties and affirmative covenants. The Agreement also contains customary negative covenants providing limitations, subject to negotiated exceptions, for sales of assets; encumbrances; indebtedness; loans, advances and investments; acquisitions; guarantees; new subsidiaries; dividends and redemptions; transactions with affiliates; changes in business; certain actions affecting subsidiaries; credit card agreements; private-label credit cards; and changes in control of certain of our subsidiaries. At all times we are required to maintain Excess Availability (as defined in the Agreement) of at least the greater of 10% of the Borrowing Base or $15,000,000. The Agreement also provides for certain rights and remedies if there is an occurrence of one or more events of default under the terms of the Agreement. Under certain conditions the maximum amount available under the Agreement may be reduced or terminated by the lenders and the obligation to repay amounts outstanding under the Agreement may be accelerated.

In connection with the Agreement we executed a guarantee (the “Guarantee”) pursuant to which we and most of our subsidiaries jointly and severally guarantee the borrowings and obligations under the Agreement, subject to standard insolvency limitations. In accordance with the Guarantee, collateral for the borrowings under the Agreement consists of pledges by us and certain of our subsidiaries of the capital stock of each such entity’s subsidiaries. The Agreement also provides for a security interest in substantially all of our assets excluding, among other things, equipment, real property, and stock or other equity and assets of excluded subsidiaries. Excluded subsidiaries are not Guarantors under the Agreement and Guarantee.

As of April 28, 2012 we had an aggregate total of $3,702,000 of unamortized deferred debt acquisition costs related to the Facility that will be amortized on a straight-line basis over the life of the Facility as interest expense. There were no borrowings outstanding under the Facility as of April 28, 2012.

CHARMING SHOPPES INC 10-Q