Advance Auto Parts 2014 Annual Report Download - page 72

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 3, 2015, December 28, 2013 and December 29, 2012
(in thousands, except per share data)
F-25
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) Advance, 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 and (iv) engage in sale-leaseback transactions; and (d) Advance, among other things, to change
its holding company status. Advance and Advance Stores are required to comply with financial covenants with respect to a
maximum leverage ratio and a minimum consolidated 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. The Company was in compliance with its covenants with respect to the 2013 Credit Agreement at January 3,
2015 and December 28, 2013.
Senior Unsecured Notes
The Company issued 4.50% senior unsecured notes in December 2013 at 99.69% of the principal amount of $450,000
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. The net proceeds from the offering of these notes were
approximately $445,200, after deducting underwriting discounts and commissions and estimated offering expenses payable by
the Company.
The Company previously issued 4.50% senior unsecured notes in January 2012 at 99.968% of the principal amount of
$300,000, which 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. The Company also previously issued 5.75% senior unsecured
notes in April 2010 at 99.587% of the principal amount of $300,000, which 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 the Company, the subsidiary
guarantors from time to time party thereto and Wells Fargo Bank, National Association, as Trustee.
The Company 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 the Indenture for the Notes), the
Company 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. The Company 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 the Company’s 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 the
Company’s 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 the Company or any of its
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 $25,000 without such debt having been discharged or
acceleration having been rescinded or annulled within 10 days after receipt by the Company 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 reorganization affecting the Company and certain of its subsidiaries. In the case of an event of
default, the principal amount of the Notes plus accrued and unpaid interest may be accelerated. The Indenture also contains
covenants limiting the ability of the Company and its subsidiaries to incur debt secured by liens and to enter into sale and lease-
back transactions.