Dollar General 2011 Annual Report Download - page 139

10-K
Certain Covenants and Events of Default. The senior secured credit agreements contain a number
of covenants that, among other things, restrict, subject to certain exceptions, our ability to:
• incur additional indebtedness;
• sell assets;
• pay dividends and distributions or repurchase our capital stock;
• make investments or acquisitions;
• repay or repurchase subordinated indebtedness, including the Senior Subordinated Notes
discussed below;
• amend material agreements governing our subordinated indebtedness, including the Senior
Subordinated Notes discussed below;
• change our lines of business.
The senior secured credit agreements also contain certain customary affirmative covenants and
events of default.
At February 3, 2012, we had the following amounts outstanding under our ABL Facility:
borrowings of $184.7 million; standby letters of credit of $21.7 million; and commercial letters of credit
of $16.7 million.
Senior Notes due 2015 and Senior Subordinated Toggle Notes due 2017
Overview. On April 29, 2011, we repurchased in the open market $25.0 million outstanding
aggregate principal amount of our 10.625% senior notes due 2015 (the ‘‘Senior Notes’’) at a
redemption price of 107.0% of the principal amount, plus accrued and unpaid interest, resulting in a
pretax loss of $2.2 million. On July 15, 2011, we redeemed the remaining $839.3 million outstanding
aggregate principal amount of the Senior Notes (which had been scheduled to mature on July 15, 2015)
at a redemption price of 105.313% of the principal amount, plus accrued and unpaid interest, resulting
in a pretax loss of $58.1 million. The redemption was effected in accordance with the indenture dated
as of July 6, 2007 governing the Senior Notes pursuant to a notice dated May 31, 2011. The pretax
losses on these transactions are reflected in Other (income) expense in our consolidated statement of
income for 2011. We funded the redemption price for the Senior Notes with cash on hand and
borrowings under the ABL Facility. The redemption is a significant factor in the reduction of our cash
balances at February 3, 2012 compared to the prior year end.
As of February 3, 2012, we had $450.7 million aggregate principal amount of 11.875%/12.625%
senior subordinated toggle notes due 2017 (the ‘‘Senior Subordinated Notes’’) outstanding, which
mature on July 15, 2017, pursuant to an indenture dated as of July 6, 2007 (the ‘‘senior subordinated
indenture’’).
Interest on the Senior Subordinated Notes is payable on January 15 and July 15 of each year. Cash
interest on the Senior Subordinated Notes accrues at a rate of 11.875% per annum. An option to pay
interest by increasing the principal amount of the Senior Subordinated Notes or issuing new Senior
Subordinated Notes (‘‘PIK interest’’) instead of paying cash interest expired in 2011. As a result, all
interest on the Senior Subordinated Notes has been paid or will be payable in cash.
The Senior Subordinated 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
our Credit Facilities.
We intend to redeem some or all of the Senior Subordinated Notes near the first scheduled call
date in July 2012. We may redeem some or all of the Senior Subordinated Notes at any time at
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