Debt

9 Months Ended

Oct. 29, 2011

Debt

Debt

Note 3.  Debt

Our outstanding debt is detailed in the table below.  We were in compliance with the terms and conditions of all debt agreements for all periods presented.

	October 29, 2011		January 29, 2011		October 30, 2010		Interest Rate
			(in millions)
Senior secured term loan	$	1,996	$	2,046	$	2,156	Variable
Senior notes	795		794		794		7.750%
Senior subordinated notes	393		400		400		11.375%
Subordinated discount notes	327		427		414		13.000%
Asset-based revolving credit facility	—		—		—		Variable
Other	—		1		1		5.970%
Total debt	3,511		3,668		3,765
Less current portion	135		1		1
Long-term debt	$	3,376	$	3,667	$	3,764

7¾% Senior Notes due 2018

On October 21, 2010, we issued $800.0 million aggregate principal amount of 7¾% Senior Notes that mature on November 1, 2018 (the “2018 Senior Notes”), which were sold at a discounted price of 99.262% of face value, resulting in an effective interest rate of 77/8%. The 2018 Senior Notes are guaranteed, jointly and severally, on an unsecured senior basis, by each of our subsidiaries that guarantee indebtedness under our senior secured asset-based revolving credit facility and senior secured term loan facility.

In connection with the issuance of the 2018 Senior Notes, we entered into a registration rights agreement. Under the terms of the registration rights agreement, we were required to file, and did initially file on April 28, 2011, an exchange offer registration statement, as amended (the “Exchange Offer Registration Statement”), enabling holders to exchange the 2018 Senior Notes for registered notes with terms identical in all material respects to the terms of the 2018 Senior Notes, except the exchange notes would be freely tradable. We also agreed to use our reasonable best efforts to have the Exchange Offer Registration Statement declared effective by the Securities and Exchange Commission (the “SEC”) no later than 360 days after the date of the issuance of the 2018 Senior Notes. On June 20, 2011, the Exchange Offer Registration Statement was declared effective by the SEC. We completed the exchange offer on August 1, 2011.

113/8%  Senior Subordinated Notes due 2016

During the third quarter of fiscal 2011, we completed open market repurchases of our outstanding 113/8% Senior Subordinated Notes due 2016 (“Senior Subordinated Notes”) totaling $7 million. Pursuant to the terms of the repurchases, we agreed to pay the holders of the Senior Subordinated Notes face value plus a purchase premium. In accordance with ASC 470, Debt, we recorded a loss related to the early extinguishment of the repurchased Senior Subordinated Notes, which was immaterial to the consolidated financial statements.

13%  Subordinated Discount Notes due 2016

During the third quarter of fiscal 2011, we completed open market repurchases of our outstanding 13% Subordinated Discount Notes due 2016 (“Subordinated Discount Notes”) totaling $18 million. During the first nine months of fiscal 2011, we completed open market repurchases of our outstanding Subordinated Discount Notes totaling $142 million face value, or $134 million accreted value. Pursuant to the terms of the repurchases, we agreed to pay the holders of the Subordinated Discount Notes face value plus a purchase premium.

In accordance with ASC 470, we recorded a loss of $1 million and $16 million during the third quarter and nine months ended October 29, 2011, respectively, related to the early extinguishment of the repurchased Subordinated Discount Notes.  The $1 million loss is for the purchase premiums paid. The $16 million loss is comprised of $10 million to recognize the unrealized interest accretion and the write off of related debt issuance costs, as well as $6 million in purchase premiums.

On May 1, 2012, and, if necessary, any interest payment date thereafter prior to the maturity date of the Subordinated Discount Notes, we are required to redeem a portion of each Subordinated Discount Note outstanding on such date equal to an amount sufficient, but not in excess of the amount necessary, to ensure that such Subordinated Discount Note will not be an applicable high yield discount obligation (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code of 1986, as amended. These redemptions are to be at a price equal to 100% of the Accreted Value of such portion as of the date of redemption. As of October 29, 2011, the payment required to ensure the Subordinated Discount Notes will not be an AHYDO was $135 million and is classified as Current portion of long-term debt on the Consolidated Balance Sheets.

Senior Secured Asset-Based Revolving Credit Facility

Our senior secured asset-based revolving credit facility, provides an aggregate amount of $850 million in tranche A commitments, which are scheduled to terminate on the earlier of April 15, 2014, or 45 days prior to the maturity date of any class of term loans in the Company’s senior secured term loan facility. On April 8, 2011, the Company elected to permanently terminate $50 million in commitments under a last out tranche.

The borrowing base under the senior secured asset-based revolving credit facility equals the sum of (i) 90% of eligible credit card receivables and debit card receivables; (ii) between 85% and 87.5% of the appraised net orderly liquidation value of eligible inventory and of eligible letters of credit; and (iii) a percentage of eligible in-transit inventory, less certain reserves. As of October 29, 2011, the borrowing base was $802 million, of which we had no outstanding borrowings, $55 million of outstanding letters of credit, and $747 million of excess availability.