Advance Auto Parts 2005 Annual Report Download - page 52

At December 31, 2005, the senior credit facility
provided for (1) $438,300 in term loans (as detailed
above) and (2) $200,000 under a revolving credit
facility (which provides for the issuance of letters of
credit with a sub limit of $70,000). As of December
31, 2005, the Company had $54,579 in letters of cred-
it outstanding, which reduced availability under the
credit facility to $145,421. In addition to the letters of
credit, the Company maintains approximately $1,607
in surety bonds issued by its insurance provider pri-
marily to utility providers and the departments of
revenue for certain states. These letters of credit and
surety bonds generally have a term of one year or less.
The tranche A term loan currently requires sched-
uled repayments of $7,500 on March 31, 2006 and
quarterly thereafter through December 31, 2006,
$10,000 on March 31, 2007 and quarterly thereafter
through December 31, 2007, $12,500 on March 31,
2008 and quarterly thereafter through June 30, 2009
and $25,000 due at maturity on September 30, 2009.
The tranche B term loan currently requires scheduled
repayments of $425 on March 31, 2006 and quarterly
thereafter, with a final payment of $160,650 due at
maturity on September 30, 2010. The delayed draw
term loan currently requires scheduled repayments of
0.25% of the aggregate principal amount outstanding
on March 31, 2006 and quarterly thereafter, with a
final payment due at maturity on September 30,
2010. The revolver expires on September 30, 2009. In
addition, the Pennsylvania Department of Com-
munity and Economic Development machinery and
equipment loan fund, or MELF, loan currently
requires nominal monthly principal repayments rang-
ing from $5 to $7 until maturity on January 1, 2010.
The interest rates on the tranche A and B term
loans, the delayed term loan and the revolver are
based, at the Company’s option, on an adjusted
LIBOR rate, plus a margin, or an alternate base rate,
plus a margin. The current margin for the tranche A
term loan and revolver is 1.25% and 0.25% per
annum for the adjusted LIBOR and alternate base
rate borrowings, respectively. The current margin for
the tranche B loan and the delayed draw term loan is
1.50% and 0.50% per annum for the adjusted LIBOR
and alternative base rate borrowings, respectively.
Additionally, a commitment fee of 0.25% per annum
will be charged on the unused portion of the revolver,
payable in arrears. The effective interest rate on the
MELF loan is 2.75%.
Borrowings under the senior credit facility are
required to be prepaid, subject to certain exceptions,
with (1) 50% of the Excess Cash Flow (as defined in
the senior credit facility) unless the Company’s
Senior Leverage Ratio (as defined in the senior credit
facility) at the end of any fiscal year is less than or
equal to 1.00, in which case 25% of Excess Cash
Flow for such fiscal year will be required to be
repaid, (2) 100% of the net cash proceeds of all asset
sales or other dispositions of property by the
Company and its subsidiaries, subject to certain
exceptions (including exceptions for reinvestment of
certain asset sale proceeds within 270 days of such
sale and certain sale-leaseback transactions), and
(3) 100% of the net proceeds of certain issuances of
debt or equity by the Company and its subsidiaries.
Voluntary prepayments and voluntary reductions of
the unutilized portion of the revolver are permitted in
whole or in part, at the Company’s option, in mini-
mum principal amounts specified in the senior credit
facility, without premium or penalty, subject to reim-
bursement of the lenders’ redeployment costs in the
case of a prepayment of adjusted LIBOR borrowings
other than on the last day of the relevant interest period.
Voluntary prepayments will (1) generally be allocated
among the facilities on a pro rata basis (based on the
then outstanding principal amount of the loans under
each facility) and (2) within each such facility, be
applied to the installments under the amortization
schedule within the following 12 months under such
facility until eliminated. All remaining amounts of
prepayments will be applied pro rata to the remaining
amortization payments under such facility. The senior
credit facility also provides for customary events of
default, including non-payment defaults, covenant
defaults and cross-defaults to the Company’s other
material indebtedness.
The senior credit facility is guaranteed by the
Company and by each of its existing domestic sub-
sidiaries and will be guaranteed by all future domestic
subsidiaries. The facility is secured by a first priority
lien on substantially all, subject to certain exceptions,
of the Advance Stores’ properties and assets and the
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Years Ended December 31, 2005, January 1, 2005 and January 3, 2004 (in thousands, except per share data)