Dollar General 2007 Annual Report Download - page 168

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interest rates receiving an all-in fixed rate of 7.683% which includes a 2.75% spread on a
notional amount of $2,000.0 million which will amortize on a quarterly basis until maturity at
July 31, 2012. Also in connection with the Merger, Goldman, Sachs & Co. and Citigroup Global
Markets Inc., along with other institutions, (i) acted as initial purchasers for our issuance of
$1,175.0 million aggregate principal amount of 10.625% senior notes due 2015 and $725 million
aggregate principal amount of 11.875%/12.625% senior subordinated notes due 2017 and
(ii) provided financial advisory services to, and received financial advisory fees from us, the
Investors and their affiliates. Finally, in connection with the Merger, we completed a cash tender
offer to purchase any and all of our $200 million principal amount of 8-5/8% Notes due June
2010. Goldman, Sachs & Co. acted as dealer manager and consent solicitation agent for that
tender offer. In the aggregate, approximately $32.0 million in fees were paid to Goldman,
Sachs & Co. and its affiliates and approximately $26.2 million in fees were paid to Citigroup
Global Markets Inc. and its affiliates in connection with the foregoing transactions relating to the
Merger, portions of which have been capitalized as debt financing costs or as direct acquisition
costs. In addition, under the registration rights agreement, we agreed to file a “market-making”
prospectus in order to enable Goldman, Sachs & Co. to engage in market-making activities for
the notes.
In addition, in the fourth quarter of fiscal 2007, we purchased a total of $25 million of the
11.857%/12.625% senior subordinated notes held by Goldman Sachs & Co. or its affiliates for a
purchase price of $20 million, and paid a commission of $62,500 in connection therewith.
Goldman Sachs Credit Partners L.P. and Goldman, Sachs & Co. are affiliates of GS
Capital Partners VI Fund, L.P. and affiliated funds. In addition, Mr. Jones, who serves on our
Board, and Sumit Rajpal, who served on our Board for a brief period following the Merger, each
serve as Managing Directors of Goldman, Sachs & Co. GS Capital Partners VI Fund, L.P. and
affiliated funds indirectly own approximately 22% of our common stock on a fully diluted basis.
Citigroup Global Markets Inc. and Citicorp North America Inc. are affiliates of Citigroup Private
Equity LP. Funds managed by Citigroup Private Equity LP indirectly own approximately 7.2%
of our common stock on a fully diluted basis.
We use Capstone Consulting, LLC, a team of executives who work exclusively with
KKR portfolio companies as an integral part of the value-creation process, for certain consulting
services. We pay Capstone a monthly fee, currently $210,000, plus expense reimbursements.
During fiscal 2007, we incurred aggregate fees and expense reimbursements paid or owing to
Capstone for such services of approximately $1.9 million. We also paid approximately $78,750
of fees to Capstone for services provided in connection with the Merger and related transactions.
Dean Nelson, who serves on our Board, is the Chief Executive Officer of Capstone. Although
neither KKR nor any entity affiliated with KKR owns any of the equity of Capstone, prior to
January 1, 2007 KKR had provided financing to Capstone.
(d) Related Party Transaction Approval Policy. Prior to the Merger, as a public
company, we had policies and procedures in place regarding the review, approval and ratification
of “related party” transactions. Those policies and procedures are described below. None of the
Merger-related transactions or the transactions with the Investors discussed above were
considered under the pre-existing policies and procedures.