LEVI STRAUSS & CO - 10-Q filing on 2014-07-08

Debt

6 Months Ended

May 25, 2014



	May 25, 2014		November 24, 2013
	(Dollars in thousands)

Long-term debt
Unsecured:
4.25% Yen-denominated Eurobonds due 2016	$	39,320	$	39,545
7.75% Euro senior notes due 2018	204,825		404,430
7.625% senior notes due 2020	525,000		525,000
6.875% senior notes due 2022	534,267		535,041
Total unsecured	1,303,412		1,504,016
Total long-term debt	$	1,303,412	$	1,504,016
Short-term debt
Secured:
Senior revolving credit facility	$	100,000	$	—
Unsecured:
Short-term borrowings	37,927		41,861
Total short-term debt	$	137,927	$	41,861
Total long-term and short-term debt	$	1,441,339	$	1,545,877

Senior Revolving Credit Facility

On March 21, 2014, the Company amended and restated its senior secured revolving credit facility to extend the term through March 2019, subject to shortening if obligations under the Company's 7.75% Euro senior notes due 2018 (the "2018 Euro Notes") are outstanding on February 13, 2018. The terms of the amended and restated credit facility are similar to the terms under the original credit facility, except that of the maximum availability of $850.0 million, $350.0 million is secured by the U.S. Levi's^® trademarks, an increase from the $250.0 million in the original credit facility. The interest rate for borrowings under the credit facility was reduced from LIBOR plus 150 – 275 basis points to LIBOR plus 125 – 200 basis points, depending on borrowing base availability, and the range of the rate for undrawn availability was reduced from 37.5 – 50 basis points to 25 – 30 basis points (depending on the Company's credit ratings). All other terms of the original credit agreement, including, without limitation, guarantees and security, covenants, events of default, have not been materially changed as a result of the amended and restated credit agreement and remain in full force and effect. During the three months ended May 25, 2014, the Company recorded a loss of $1.0 million on early extinguishment of debt related to the write-off of unamortized debt issuance costs.

The Company’s unused availability under its senior secured revolving credit facility was $625.3 million at May 25, 2014, as the Company’s total availability of $693.4 million was reduced by $68.1 million of letters of credit and other credit usage allocated under the credit facility.

Redemption of Euro Senior Notes due 2018

On May 15, 2014, the Company redeemed €150.0 million in aggregate principal amount of its 2018 Euro Notes at a redemption price specified in the indenture governing the 2018 Euro Notes of 103.875% of the principal amount redeemed, plus accrued and unpaid interest to the date of redemption. The Company used borrowings of $100.0 million from its senior secured revolving credit facility and cash on hand to fund the redemption. During the three months ended May 25, 2014, the Company recorded a loss of $10.2 million on early extinguishment of debt, which was comprised of redemption premiums of $8.0 million and the write-off of $2.2 million of unamortized debt issuance costs.

Interest Rates on Borrowings

The Company’s weighted-average interest rate on average borrowings outstanding during the three and six months ended May 25, 2014, was 7.93% and 7.89%, respectively, as compared to 7.70% and 7.29%, respectively, in the same periods of 2013.