Debt

The following table summarizes credit facility debt, less current portion at August 29, 2018 and August 30, 2017.




	August 29, 2018			August 30, 2017
	(In thousands)
Long-Term Debt
2016 Credit Agreement - Revolver	20,000			4,400
2016 Credit Agreement - Term Loan	19,506			26,585
Total credit facility debt	39,506			30,985
Less unamortized debt issue costs	(168		)	(287		)
Total credit facility debt, less unamortized debt issuance costs	39,338			30,698
Current portion of credit facility debt	39,338			—
Total Credit facility debt, less current portion	$	—		$	30,698

Senior Secured Credit Agreement

On November 8, 2016, the Company entered into a $65.0 million Senior Secured Credit Facility with Wells Fargo Bank, National Association, as Administrative Agent and Cadence Bank, NA and Texas Capital Bank, NA, as lenders (“2016 Credit Agreement”). The 2016 Credit Agreement, prior to the amendments discussed below, is comprised of a $30.0 million 5-year Revolver (the “Revolver”) and a $35.0 million 5-year Term Loan (the “Term Loan”). The maturity date of the 2016 Credit Agreement is November 8, 2021. For this section of the form 10-K, capitalized terms that are used but not otherwise defined shall have the meanings give to such terms in the 2016 Credit Agreement.

The Term Loan and/or Revolver commitments may be increased by up to an additional $10.0 million in the aggregate.

The 2016 Credit Agreement also provides for the issuance of letters of credit in an aggregate amount equal to the lesser of $5.0 million and the Revolving Credit Commitment, which was $30.0 million as of November 8, 2016. The 2016 Credit Agreement is guaranteed by all of the Company’s present subsidiaries and will be guaranteed by the Company's future subsidiaries.

At any time throughout the term of the 2016 Credit Agreement, the Company has the option to elect one of two bases of interest rates. One interest rate option is the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) 30-day LIBOR plus 1.00%, plus, in each case, the Applicable Margin, which ranges from 1.50% to 2.50% per annum. The other interest rate option is LIBOR plus the Applicable Margin, which ranges from 2.50% to 3.50% per annum. The Applicable margin under each option is dependent upon the Company's Consolidated Total Lease Adjusted Leverage Ratio ("CTLAL") at the most recent quarterly determination date.

The Term Loan amortizes 7.00% per year (35% in 5 years) which includes the quarterly payment of principal. On December 14, 2016, The Company entered into an interest rate swap with a notional amount of $17.5 million, representing 50% of the initial outstanding Term Loan.

The Company is obligated to pay to the Administrative Agent for the account of each lender a quarterly commitment fee based on the average daily unused amount of the commitment of such lender, ranging from 0.30% to 0.35% per annum depending on the CTLAL at the most recent quarterly determination date.

The proceeds of the 2016 Credit Agreement are available for the Company to (i) pay in full all indebtedness outstanding under the 2013 Credit Agreement as of November 8, 2016, (ii) pay fees, commissions, and expenses in connection with the Company's repayment of the 2013 Credit Agreement, initial extensions of credit under the 2016 Credit Agreement, and (iii) for working capital and general corporate purposes of the Company.

The 2016 Credit Agreement, as amended, contains the following covenants among others:


•	CTLAL of not more than (i) 5.00 to 1.00 at all times through and including the third fiscal quarter of the Borrower’s fiscal 2018, and (ii) 4.75 to 1.00 at all times thereafter,


•	Consolidated Fixed Charge Coverage Ratio of not less than 1.25 to 1.00, at the end of each fiscal quarter,


•	Limit on Growth Capital Expenditures so long as the CTLAL is at least 0.25x less than the then-applicable permitted maximum CTLAL,


•	restrictions on mergers, acquisitions, consolidations and asset sales,


•	restrictions on the payment of dividends, redemption of stock and other distributions,


•	restrictions on incurring indebtedness, including certain guarantees and capital lease obligations,


•	restrictions on incurring liens on certain of our property and the property of our subsidiaries,


•	restrictions on transactions with affiliates and materially changing our business,


•	restrictions on making certain investments, loans, advances and guarantees,


•	restrictions on selling assets outside the ordinary course of business,


•	prohibitions on entering into sale and leaseback transactions, and


•	restrictions on certain acquisitions of all or a substantial portion of the assets, property and/or equity interests of any person, including share repurchases and dividends.

The 2016 Credit Agreement is secured by substantially all of the Company’s personal property, including without limitation the equity interest in each subsidiary of the Company. The 2016 Credit Agreement also includes customary events of default. If a default occurs and is continuing, the lenders’ commitments under the 2016 Credit Agreement may be immediately terminated and/or the Company may be required to repay all amounts outstanding under the 2016 Credit Agreement.

Second Amendment to 2016 Credit Agreement

On April 20, 2018, the Company entered into the Second Amendment to the 2016 Credit Agreement, effective as of March 14, 2018 (as amended, the "Credit Agreement). The amendment accelerates the maturity date of the Credit Agreement to May 1, 2019, approximately 9 months after the balance sheet date, August 29, 2018. The amendment included the following changes:


•	Aggregate commitments under the senior secured revolving credit facility (“Revolver”) were reduced from $30.0 million to $27.0 million beginning August 29, 2018.


•	Changed the maturity date of the Revolver and Term Loan to May 1, 2019.


•	Reduced the letter of credit sub-limit from $5.0 million to $2.0 million.


•	Interest rate on LIBOR Rate Loans (LIBOR + Applicable Margin) changed to the following:


◦	LIBOR + 4.50% April 20, 2018 - June 30, 2018


◦	LIBOR + 4.75% July 1, 2018 - September 30, 2018


◦	LIBOR + 5.00% October 1, 2018 - December 31, 2018


◦	LIBOR + 5.25% January 1, 2019 - March 31, 2019


◦	LIBOR + 5.50% April 1, 2019 - Maturity Date


•	Interest rate margin on Base Rate Loans changed to the following:


◦	100 basis points less than the Applicable Margin for LIBOR Rate Loans


•	Maximum Consolidated Total Lease-Adjusted Leverage Ratio (“CTLAL”) is changed to 6.50 to 1.00 at March 14, 2018; 6.75 to 1.00 at June 6, 2018 and August 29, 2018; and 6.50 to 1.00 at each measurement period in fiscal 2019.


•	Minimum Consolidated EBITDA covenant required at $7.0 million (thirteen consecutive accounting periods) tested monthly, prior to the second fiscal quarter fiscal 2019 and $7.5 million for each fiscal quarter thereafter (consisting of thirteen consecutive accounting periods).


•	Minimum liquidity covenant requiring for at least $2.0 million in liquidity at all times.


•	Maximum annual maintenance capital expenditures not to exceed $9.6 million for the fiscal year ending August 29, 2018 and $8.5 million in fiscal 2019.


•	Within 30 days of the date of amendment, a senior security interest in and lien on any of the Company's real estate properties identified by the Administrative Agent and loan to value ratio of 0.50 to 1.00 on collateral real estate.


•	Excess liquidity provision requiring any consolidated cash balances of the Borrower and its Subsidiaries in excess of $1.0 million, as reported in the 13-week cash flow reports, used to repay Revolving Credit Loans.

Management has identified approximately 14 owned properties inclusive of assets currently classified as Assets related to discontinued operations and Property held for sale on the Company’s Balance Sheet, as of June 6, 2018, as part of a limited asset disposal plan to accelerate repayment of its outstanding term loans. The Board approved the limited asset sales plan on April 18, 2018. The Company estimates that such additional limited asset sales plan will be implemented over the course of the next 18 months. These asset disposal plans, in conjunction with other operational changes, are designed to lower the outstanding debt and to improve the Company’s financial condition as the Company pursues a new credit facility.

As of March 14, 2018, the Company would not have been in compliance with the Company’s Lease Adjusted Leverage Ratio and Fixed Charge Coverage Ratio covenants of the Credit Agreement prior to the Second Amendment thereto, which became effective on March 14, 2018. At any determination date, if the results of the Company's covenants exceed the maximums or minimums permitted under its 2016 Credit Agreement, the Company would be considered in default under the terms of the agreement which could cause a substantial financial burden by requiring the Company to repay the debt earlier than otherwise anticipated. Due to negative results in the first three quarters of fiscal 2018, continued under performance in the current fiscal year could cause the Company's financial ratios to exceed the permitted limits under the terms of the Credit Agreement.

Third Amendment to 2016 Credit Agreement

On August 24, 2018, the Company entered into the Third Amendment to Credit Agreement (the “Third Amendment”) amending the Credit Agreement dated as of November 8, 2016, as amended by the Second Amendment to Credit Agreement dated as of April 20, 2018 (together, with the Third Amendment, the “Credit Agreement”), by and among the Company, the other credit parties party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent for the lenders (the “Administrative Agent”).

The Third Amendment amended the interest rate on LIBOR rate loans (LIBOR + applicable margin) to (i) LIBOR + 6.50% from the effective date of the Third Amendment through the date the term loan has been paid in full in cash and (ii) LIBOR + 5.50% from the date following the date the term loan has been paid in full in cash and thereafter. The interest rate on base rate loans is 100 basis points less than the applicable margin for LIBOR rate loans.

Pursuant to the Third Amendment, the lenders agreed to waive the existing events of default as of the effective date of the Third Amendment resulting from any breach of certain financial covenants or the limitation on maintenance capital expenditures, in each case that may have occurred during the period from and including May 9, 2018 until the effective date of the Third Amendment, and any related events of default. Additionally, the lenders agreed to waive the requirements that the Company comply with certain financial covenants until December 31, 2018, at which time the Company will be in default without an additional waiver or alternative financing.

The Third Amendment requires the Company to make mandatory principal prepayments upon certain asset dispositions as follows: (i) 50% of the first $12.0 million of net cash proceeds from asset dispositions received by the Company; (ii) 75% of the next $8.0 million of net cash proceeds from asset dispositions received by the Company; and (iii) 100% of all net cash proceeds in excess of the first $20.0 million of net cash proceeds from asset dispositions received by the Company, in each case from and after the effective date of the Third Amendment.

Additionally, the Company agreed to grant liens on additional properties of the Company to secure borrowings under the Credit Agreement.

At August 29, 2018, the Company had approximately $8.5 million available to borrow under the Revolver in the 2016 Credit Agreement.

As of August 29, 2018, under the 2016 Credit Agreement, the Company had $39.5 million in total outstanding loans and approximately $1.3 million committed under letters of credit, which is used as security for the payment of insurance obligations, and approximately $0.2 million in other indebtedness.

2013 Credit Agreement

We were party to a revolving credit agreement with Wells Fargo Bank, National Association, as Administrative Agent, and ZB, N.A. dba Amegy Bank (formerly Amegy Bank, N.A.), as Syndication Agent (the “2013 Credit Facility”). The 2013 Credit Facility matured and was refunded on November 8, 2016, through the entering of the 2016 Credit Agreement, and there were no amounts outstanding under the 2013 Credit Facility at August 30, 2017.

Interest Expense

Total interest expense incurred for fiscal 2018, 2017, and 2016 was approximately $3.3 million, $2.4 million, and $2.2 million, respectively. Interest paid was approximately $2.5 million, $1.8 million, and $1.9 million in fiscal 2018, 2017, and 2016, respectively. No interest expense was allocated to discontinued operations in fiscal 2018, 2017, or 2016. No interest was capitalized on properties in fiscal 2018, 2017, or 2016.