Dollar General 2009 Annual Report Download - page 35

retain earnings, if any, for future operation and expansion and debt repayment. Any decision to declare
and pay dividends in the future will be made at the discretion of our Board of Directors and will
depend on, among other things, our results of operations, cash requirements, financial condition,
contractual restrictions and other factors that our Board of Directors may deem relevant. In addition,
our ability to pay dividends is limited by covenants in our Credit Facilities and in the indentures
governing our outstanding 10.625% senior notes due 2015 (the ‘‘Senior Notes’’) and 11.875%/12.625%
senior subordinated toggle notes due 2017 (the ‘‘Senior Subordinated Notes’’ and, collectively with the
Senior Notes, the ‘‘Notes’’). See ‘‘Liquidity and Capital Resources’’ in the Management’s Discussion
and Analysis of Financial Condition and Results of Operations section of this report for a description
of restrictions on our ability to pay dividends.
Use of Proceeds
On November 18, 2009, we completed the IPO of 39,215,000 shares of our common stock (the
‘‘IPO Shares’’). We sold 22,700,000 shares (the ‘‘Company Shares’’) at a price to the public of $21.00
per share and a selling shareholder sold an additional 16,515,000 previously outstanding shares (the
‘‘Selling Shareholder Shares’’) at a price to the public of $21.00 per share. The IPO Shares were
registered under the Securities Act of 1933, as amended, on a registration statement on Form S-1
(Registration No. 333-161464). The registration statement was declared effective by the Securities and
Exchange Commission on November 12, 2009. Citigroup Global Markets Inc., Goldman, Sachs & Co.,
KKR Capital Markets LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan
Securities Inc. served as joint book-running managers for the IPO.
The net proceeds to us from the sale of the Company Shares, after deducting the underwriting
discount of approximately $27.4 million and additional offering-related expenses then reasonably
estimated at $3.3 million, were approximately $446.0 million. The offering-related expenses include
those of the selling shareholder which we were required to pay under the terms of the registration
rights agreement. Of the approximately $27.4 million of underwriting discounts, approximately
$6.0 million was provided to each of (a) KKR Capital Markets LLC; (b) Goldman, Sachs & Co.; and
(c) Citigroup Global Markets Inc. We used the net proceeds to us from the sale of the Company
Shares as follows: (1) $229.6 million of the net proceeds was applied to redeem $205.2 million in
aggregate principal amount of our Senior Subordinated Notes at a redemption price of 111.875% and
(2) the remaining $216.5 million of the net proceeds was applied to redeem $195.7 million in aggregate
principal amount of our Senior Notes at a redemption price of 110.625%. Each such redemption was
made pursuant to a provision of the applicable indenture that permitted us to redeem up to 35% of the
aggregate principal amount of such Notes with the net cash proceeds of certain equity offerings. In
each case, we paid accrued and unpaid interest on the Notes through the redemption date with cash
generated from operations. Some of the underwriters or their affiliates may have received part of the
proceeds of the offering by reason of the redemption of Notes held by them. We did not receive any
proceeds from the sale by the selling shareholder of the Selling Shareholder Shares.
Affiliates of KKR Capital Markets LLC and Goldman, Sachs & Co. each have an indirect interest
in more than 10% of our capital stock through their investment in Buck Holdings, L.P. and Buck
Holdings, LLC, its general partner and a Delaware limited liability company controlled by investment
funds affiliated with Kohlberg Kravis Roberts & Co., L.P.
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