KOHLS Corp
For the period ended Feb 1, 2025. Filed Mar 20, 2025.
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FY2025 · Filed Mar 20, 2025
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2. Debt
- Debt
Long-term debt, which excludes borrowings on the revolving credit facility, consists of the following unsecured debt:
| Outstanding | ||||
|---|---|---|---|---|
| Maturity (Dollars in Millions) | Effective Rate at Issuance | Coupon Rate | February 1, 2025 | February 3, 2024 |
| 2025 | 9.50% | 10.75% | — | 113 |
| 2025 | 4.25% | 4.25% | 353 | 353 |
| 2029 | 7.36% | 7.25% | 42 | 42 |
| 2031 | 3.40% | 4.63% | 500 | 500 |
| 2033 | 6.05% | 6.00% | 112 | 112 |
| 2037 | 6.89% | 6.88% | 101 | 101 |
| 2045 | 5.57% | 5.55% | 427 | 427 |
| Outstanding unsecured senior debt | 1,535 | 1,648 | ||
| Unamortized debt discounts and deferred financing costs | (8) | (10) | ||
| Current portion of unsecured senior debt | (353) | — | ||
| Long-term unsecured senior debt | $1,174 | $1,638 | ||
| Effective interest rate at issuance | 4.73% | 5.06% | ||
Our estimated fair value of unsecured senior long-term debt is determined using Level 1 inputs, using financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our unsecured senior debt was $1.2 billion at February 1, 2025 and $1.3 billion at February 3, 2024.
In June 2024, we completed a voluntary redemption of the remaining $113 million of outstanding 9.50% notes due May 15, 2025. We recognized a $5 million loss on extinguishment of debt in net interest expense during the second quarter of 2024, which is primarily a make whole premium paid to holders as a result of the redemption.
In December 2024, S&P downgraded our senior unsecured credit rating from BB to BB- and Moody’s downgraded our rating from Ba3 to B1. As a result of the downgrades, the interest rate on our 3.375% notes due May 2031 will increase an additional 50 basis points in May 2025 due to the coupon adjustment provision within the note. Our credit rating was also downgraded in 2023 and 2022. This resulted in the interest rates on our 3.375% notes due May 2031 and 9.50% notes due May 2025 increasing 100 basis points in 2023 and 25 basis points in 2022. In total, the interest rates on the notes due May 2031 have increased 175 basis points since their issuance, of which 50 basis points becomes effective in May 2025, and the rates on the notes due May 2025 increased 125 basis points from their issuance to their redemption in June 2024.
Borrowings under the $1.5 billion revolving credit facility, recorded as short-term debt, were $290 million as of February 1, 2025, and $92 million as of February 3, 2024. Outstanding borrowings under the credit facility bear interest at a variable rate based on SOFR plus the applicable margin. As of February 1, 2025, we had $21 million of standby and trade letters of credit outstanding under the credit facility, which reduces the available borrowing capacity.
Our various debt agreements contain covenants including limitations on additional indebtedness and certain financial tests. As of February 1, 2025, we were in compliance with all covenants of the various debt agreements.
We also had outstanding standby and trade letters of credit outside of the credit facility totaling approximately $7 million at February 1, 2025.
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