Dollar General 2010 Annual Report Download - page 153

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Current and long-term obligations (Continued)
All obligations and guarantees of those obligations under the Term Loan Facility are secured by,
subject to certain exceptions, a second-priority security interest in all existing and after-acquired
inventory and accounts receivable; a first priority security interest in substantially all of the Company’s
and the guarantors’ tangible and intangible assets (other than the inventory and accounts receivable
collateral); and a first-priority pledge of the capital stock held by the Company. All obligations under
the ABL Facility are secured by all existing and after-acquired inventory and accounts receivable,
subject to certain exceptions.
The Credit Facilities contain certain covenants, including, among other things, covenants that limit
the Company’s ability to incur additional indebtedness, sell assets, incur additional liens, pay dividends,
make investments or acquisitions, or repay certain indebtedness.
Under the ABL facility, for the years ended January 28, 2011 and January 29, 2010, the Company
had no borrowings or repayments; for the year ended January 30, 2009, the Company had no
borrowings and repayments of $102.5 million. As of January 28, 2011 and January 29, 2010,
respectively, amounts outstanding under the ABL Facility included $52.7 million and $85.1 million of
standby letters of credit, and $19.1 million and $15.4 million of commercial letters of credit, while
excess availability under the ABL Facility was $959.3 million and $930.6 million, respectively.
On July 6, 2007, in conjunction with the Merger, the Company issued $1.175 billion aggregate
principal amount of 10.625% senior notes due 2015 (the ‘‘Senior Notes’’) which were issued net of a
discount of $23.2 million and which mature on July 15, 2015 pursuant to an indenture, dated as of
July 6, 2007 (the ‘‘senior indenture’’), and $725 million aggregate principal amount of 11.875%/12.625%
senior subordinated toggle notes due 2017 (the ‘‘Senior Subordinated Notes’’), which mature on
July 15, 2017, pursuant to an indenture, dated as of July 6, 2007 (the ‘‘senior subordinated indenture’’).
The Senior Notes and the Senior Subordinated Notes are collectively referred to herein as the ‘‘Notes’’.
The senior indenture and the senior subordinated indenture are collectively referred to herein as the
‘‘indentures.’’
Interest on the Notes is payable on January 15 and July 15 of each year. Interest on the Senior
Notes and Senior Subordinated Notes is payable in cash. Cash interest on the Senior Subordinated
Notes accrues at a rate of 11.875% per annum. For certain interest periods, the Company previously
had the ability to elect to pay interest on the Senior Subordinated Notes by increasing the principal
amount of the Senior Subordinated Notes or issuing new senior subordinated notes (‘‘PIK interest’’),
instead of paying interest in cash. This election was never utilized by the Company and due to the
expiration of the notification period for such option, all interest on the Notes has been paid in cash.
The Notes are fully and unconditionally guaranteed by each of the existing and future direct or
indirect wholly owned domestic subsidiaries that guarantee the obligations under the Company’s Credit
Facilities.
The Company may redeem some or all of the Notes at any time at redemption prices described or
set forth in the indentures. In addition, the holders of the Notes can require the Company to redeem
the Notes at 101% of the aggregate principal amount outstanding in the event of certain change in
control events.
In May 2010, the Company repurchased in the open market $50.0 million aggregate principal
amount of 10.625% senior notes due 2015 at a price of 111.0% plus accrued and unpaid interest. In
September 2010, the Company repurchased in the open market $65.0 million aggregate principal
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