Dollar General 2011 Annual Report Download - page 174

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Current and long-term obligations (Continued)
The amount available under the ABL Facility (including up to $350.0 million for letters of credit)
may not exceed the borrowing base (consisting of specified percentages of eligible inventory and credit
card receivables less any applicable availability reserves). The ABL Facility includes a $930.0 million
tranche and a $101.0 million (‘‘last out’’) tranche. Repayments of the ABL Facility will be applied to
the $101.0 million tranche only after all other tranches have been fully paid down.
Borrowings under the Credit Facilities bear interest at a rate equal to an applicable margin plus, at
the Company’s option, either (a) LIBOR or (b) a base rate (which is usually equal to the prime rate).
The applicable margin for borrowings as of February 3, 2012 and January 28, 2011 is (i) under the
Term Loan, 2.75% for LIBOR borrowings and 1.75% for base-rate borrowings (ii) under the ABL
Facility (except in the last out tranche described above), 1.50% and 1.25%, respectively, for LIBOR
borrowings and 0.50% and 0.25%, respectively, for base-rate borrowings; and for any last out
borrowings, 2.25% for LIBOR borrowings and 1.25% for base-rate borrowings. The applicable margins
for borrowings under the ABL Facility (except in the case of last out borrowings) are subject to
adjustment each quarter based on average daily excess availability under the ABL Facility. The interest
rate for borrowings under the Term Loan Facility was 3.1% and 3.0% (without giving effect to the
interest rate swaps discussed in Note 8), as of February 3, 2012 and January 28, 2011, respectively.
In addition to paying interest on outstanding principal under the Credit Facilities, the Company is
required to pay a commitment fee to the lenders under the ABL Facility for any unutilized
commitments. The commitment fee rate is 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 ABL Facility are equal to or less than 50% of the aggregate
commitments under the ABL Facility. The Company also must pay customary letter of credit fees.
The senior secured credit agreement for the Term Loan Facility requires the Company to prepay
outstanding term loans, subject to certain exceptions, with percentages of excess cash flow, proceeds of
non-ordinary course asset sales or dispositions of property, and proceeds of incurrences of certain debt.
In addition, the senior secured credit agreement for the ABL Facility requires the Company to prepay
the ABL Facility, subject to certain exceptions, with proceeds of non-ordinary course asset sales or
dispositions of property and any borrowings in excess of the then current borrowing base. The Term
Loan Facility can be prepaid in whole or in part at any time. No prepayments have been required
under the prepayment provisions listed above through February 3, 2012.
During 2009, the Company made required installment payments and also made a voluntary
prepayment on the Term Loan Facility, resulting in total principal payments of $336.5 million. As a
result, no further quarterly principal installments will be required prior to maturity of the Term Loan
Facility. The Company incurred a pretax loss of $4.7 million in 2009 for the write off of debt issuance
costs associated with such prepayment.
All obligations under the Credit Facilities are unconditionally guaranteed by substantially all of the
Company’s existing and future domestic subsidiaries (excluding certain immaterial subsidiaries and
certain subsidiaries designated by the Company under the Credit Facilities as ‘‘unrestricted
subsidiaries’’).
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