Redeemable preferred shares

9 Months Ended

Oct. 31, 2020

On October 5, 2016, the Company issued 625,000 shares of Series A Redeemable Convertible Preference Shares (“Preferred Shares”) to certain affiliates of Leonard Green & Partners, L.P., for an aggregate purchase price of $625.0 million, or $1,000 per share (the “Stated Value”) pursuant to the investment agreement dated August 24, 2016. Preferred shareholders are entitled to a cumulative dividend at the rate of 5% per annum, payable quarterly in arrears either in cash or by increasing the stated value of the Preferred Shares. The Company declared the Preferred Share dividend during the first, second and third quarter of Fiscal 2021 payable “in-kind” by increasing the Stated Value of the Preferred Shares. The Stated Value of the Preferred Shares increased by $12.66 per share during the third quarter of Fiscal 2021, and increased by $12.81 per share subsequent to the end of the third quarter of Fiscal 2021, all of which will become payable upon liquidation of the Preferred Shares. Refer to Note 7 for additional discussion of the Company’s dividends on Preferred Shares.


(in millions, except conversion rate and conversion price)	October 31, 2020		February 1, 2020		November 2, 2019
Conversion rate	12.2297		12.2297		12.0578
Conversion price	$	81.7682	$	81.7682	$	82.9339
Potential impact of preferred shares if-converted to common shares	7.8		7.6		7.5
Liquidation preference	$	648.7	$	632.8	$	632.8

In connection with the issuance of the Preferred Shares, the Company incurred direct and incremental expenses of $13.7 million. These direct and incremental expenses originally reduced the Preferred Shares carrying value and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date in November 2024. Accumulated accretion recorded in the condensed consolidated balance sheets was $6.9 million as of October 31, 2020 (February 1, 2020 and November 2, 2019: $5.7 million and $5.2 million, respectively).

Accretion of $0.4 million and $1.2 million was recorded to Preferred Shares in the condensed consolidated balance sheets during the 13 and 39 weeks ended October 31, 2020, respectively ($0.4 million and $1.2 million for the 13 and 39 weeks ended November 2, 2019, respectively).