Dollar General 2007 Annual Report Download - page 37

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million. Borrowings under the asset-based credit facility will be incurred first under the last out
tranche, and no borrowings will be permitted under any other tranche until the last out tranche is
fully utilized. Repayments of the senior secured asset-based revolving credit facility will be
applied to the last out tranche only after all other tranches have been fully paid down.
Interest Rate and Fees. Borrowings under the New Credit Facilities bear interest at a rate
equal to an applicable margin plus, at our option, either (a) LIBOR or (b) a base rate (which is
usually equal to the prime rate). The applicable margin for borrowings is (i) under the term loan
facility, 2.75% with respect to LIBOR borrowings and 1.75% with respect to base-rate
borrowings and (ii) as of February 1, 2008 under the asset-based revolving credit facility (except
in the last out tranche described above), 1.50% with respect to LIBOR borrowings and 0.50%
with respect to base-rate borrowings and for any last out borrowings, 2.25% with respect to
LIBOR borrowings and 1.25% with respect to base-rate borrowings. The applicable margins for
borrowings under the asset-based revolving credit facility (except in the case of last out
borrowings) are subject to adjustment each quarter based on average daily excess availability
under the asset-based revolving credit facility.
In addition to paying interest on outstanding principal under the New Credit Facilities, we
are required to pay a commitment fee to the lenders under the asset-based revolving credit
facility in respect of the unutilized commitments thereunder. At February 1, 2008 the
commitment fee rate was 0.375% per annum. The commitment fee rate will be reduced (except
with regard to the last out tranche) to 0.25% per annum at any time that the unutilized
commitments under the asset-based credit facility are equal to or less than 50% of the aggregate
commitments under the asset-based revolving credit facility. We must also pay customary letter
of credit fees.
Prepayments. The senior secured credit agreement for the term loan facility requires us to
prepay outstanding term loans, subject to certain exceptions, with:
• 50% of our annual excess cash flow (as defined in the credit agreement) commencing
with the fiscal year ending on or about January 31, 2008 (which percentage will be
reduced to 25% and 0% if we achieve and maintain a total net leverage ratio of 6.0 to
1.0 and 5.0 to 1.0, respectively);
• 100% of the net cash proceeds of all non-ordinary course asset sales or other
dispositions of property in excess of $25.0 million in the aggregate and subject to our
right to reinvest the proceeds; and
• 100% of the net cash proceeds of any incurrence of debt, other than proceeds from
debt permitted under the senior secured credit agreement.
The mandatory prepayments discussed above will be applied to the term loan facility as
directed by the senior secured credit agreement.