Advance Auto Parts 2013 Annual Report Download - page 45

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alternate base rate borrowings, respectively. A facility fee is charged on the total amount of the revolving credit facility, payable
in arrears. The current facility fee rate is 0.20% per annum and subject to change based on our credit ratings. Under the terms of
the 2013 Credit Agreement, the interest rate and facility fee are based on our credit rating.
The interest rate on the term loan is based, at our option, on adjusted LIBOR, plus a margin, or an alternate base rate, plus
a margin. The current margin is 1.50% and 0.50% per annum for the adjusted LIBOR and alternate base rate borrowings,
respectively. Under the terms of the term loan, the interest rate is based on our credit rating and subject to change based on our
credit rating.
The 2013 Credit Agreement contains customary covenants restricting the ability of (a) subsidiaries of Advance Stores to,
among other things, create, incur or assume additional debt, (b) Advance Stores and its subsidiaries to, among other things ,(i)
incur liens, (ii) make loans and investments, (iii) guarantee obligations, and (iv) change the nature of its business conducted by
itself and its subsidiaries; (c) us, Advance Stores and their subsidiaries to, among other things (i) engage in certain mergers,
acquisitions, asset sales and liquidations, (ii) enter into certain hedging arrangements, (iii) enter into restrictive agreements
limiting its ability to incur liens on any of its property or assets, pay distributions, repay loans, or guarantee indebtedness of its
subsidiaries, (iv) engage in sale-leaseback transactions; and (d) us, among other things, to change our holding company status.
Advance Stores is required to comply with financial covenants with respect to a maximum leverage ratio and a minimum
coverage ratio. The 2013 Credit Agreement also provides for customary events of default, including non-payment defaults,
covenant defaults and cross-defaults to Advance Stores’ other material indebtedness. We are also required to comply with
financial covenants with respect to a maximum leverage ratio and a minimum consolidated coverage ratio. We were in
compliance with our covenants at December 28, 2013 with respect to the 2013 Credit Agreement and December 29, 2012 with
respect to the 2011 Credit Agreement, respectively.
Senior Unsecured Notes
We issued 4.50% senior unsecured notes on December 3, 2013 at 99.69% of the principal amount of $450 million which
are due December 1, 2023 (the “2023 Notes”). The 2023 Notes bear interest at a rate of 4.50% per year payable semi-annually
in arrears on June 1 and December 1 of each year, beginning June 1, 2014. The net proceeds from the offering of these notes
were approximately $445.2 million, after deducting underwriting discounts and commissions and estimated offering expenses
payable by us. The net proceeds from the 2023 Notes were used in aggregate with borrowings under our revolving credit
facility and term loan and cash on-hand to fund our acquisition of GPI on January 2, 2014.
We previously issued its 4.50% senior unsecured notes in January 2012 at 99.968% of the principal amount of $300
million and are due January 15, 2022 (the “2022 Notes”). The 2022 Notes bear interest at a rate of 4.50% per year payable
semi-annually in arrears on January 15 and July 15 of each year. Our 5.75% senior unsecured notes were issued in April 2010
at 99.587% of the principal amount of $300 million and are due May 1, 2020 (the “2020 Notes” or collectively with the 2023
Notes and the 2022 Notes, “the Notes”). The 2020 Notes bear interest at a rate of 5.75% per year payable semi-annually in
arrears on May 1 and November 1 of each year. Advance served as the issuer of the Notes with certain of Advance’s domestic
subsidiaries currently serving as subsidiary guarantors. The terms of the Notes are governed by an indenture (as amended,
supplemented, waived or otherwise modified, the “Indenture”) among us, the subsidiary guarantors from time to time party
thereto and Wells Fargo Bank, National Association, as Trustee.
We may redeem some or all of the Notes at any time or from time to time, at the redemption price described in the
Indenture. In addition, in the event of a Change of Control Triggering Event (as defined in each of the Indentures for the
Notes), we will be required to offer to repurchase the Notes at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest to the repurchase date. The Notes are currently fully and unconditionally guaranteed, jointly and
severally, on an unsubordinated and unsecured basis by each of the subsidiary guarantors party thereto. We will be permitted to
release guarantees without the consent of holders of the Notes under the circumstances described in the Indenture: (i) upon the
release of the guarantee of our other debt that resulted in the affected subsidiary becoming a guarantor of this debt; (ii) upon the
sale or other disposition of all or substantially all of the stock or assets of the subsidiary guarantor; or (iii) upon our exercise of
its legal or covenant defeasance option.
The Indenture contains customary provisions for events of default including for: (i) failure to pay principal or interest when
due and payable; (ii) failure to comply with covenants or agreements in the Indenture or the Notes and failure to cure or obtain
a waiver of such default upon notice; (iii) a default under any debt for money borrowed by us or any of our subsidiaries that
results in acceleration of the maturity of such debt, or failure to pay any such debt within any applicable grace period after final
stated maturity, in an aggregate amount greater than $25.0 million without such debt having been discharged or acceleration
having been rescinded or annulled within 10 days after receipt by us of notice of the default by the Trustee or holders of not
less than 25% in aggregate principal amount of the Notes then outstanding; and (iv) events of bankruptcy, insolvency or