GameStop 2007 Annual Report Download - page 54

In September 2007, the Company’s Luxembourg subsidiary entered into a discretionary, $20.0 million
Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line
of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit will be
made available to the Company’s foreign subsidiaries for use primarily as a bank overdraft facility for short-term
liquidity needs and for the issuance of bank guarantees and letters of credit to support operations.
As of February 2, 2008, there were no borrowings outstanding under the Line of Credit and bank guarantees
outstanding were $2.8 million.
On September 28, 2005, the Company, along with GameStop, Inc. as co-issuer (together with the Company,
the “Issuers”), completed the offering of U.S. $300 million aggregate principal amount of Senior Floating Rate
Notes due 2011 (the “Senior Floating Rate Notes”) and U.S. $650 million aggregate principal amount of Senior
Notes due 2012 (the “Senior Notes” and, together with the Senior Floating Rate Notes, the “Notes”). The Notes
were issued under an Indenture (the “Indenture”), dated September 28, 2005, by and among the Issuers, the
subsidiary guarantors party thereto, and Citibank, N.A., as trustee (the “Trustee”). Concurrently with the
consummation of the mergers on October 8, 2005, EB and its direct and indirect U.S. wholly-owned subsidiaries
(together, the “EB Guarantors”) became subsidiaries of the Company and entered into a First Supplemental
Indenture, dated October 8, 2005, by and among the Issuers, the EB Guarantors and the Trustee, pursuant to which
the EB Guarantors assumed all the obligations of a subsidiary guarantor under the Notes and the Indenture. The net
proceeds of the offering were used to pay the cash portion of the merger consideration paid to the stockholders of EB
in connection with the mergers.
The offering of the Notes was conducted in a private transaction under Rule 144A under the Securities Act of
1933, as amended (the “Securities Act”), and in transactions outside the United States in reliance upon Regulation S
under the Securities Act. In April 2006, the Company filed a registration statement on Form S-4 in order to register
new notes (the “New Notes”) with the same terms and conditions as the Notes in order to facilitate an exchange of
the New Notes for the Notes. This registration statement on Form S-4 was declared effective by the SEC in May
2006 and the Company commenced an exchange offer to exchange the New Notes for the Notes. This exchange
offer was completed in June 2006 with 100% participation.
In November 2006, Citibank, N.A. resigned as Trustee for the Notes and Wilmington Trust Company was
appointed as the new Trustee for the Notes.
The Senior Notes bear interest at 8.0% per annum, mature on October 1, 2012 and were priced at 98.688%,
resulting in a discount at the time of issue of $8.5 million. The discount is being amortized using the effective
interest method. As of February 2, 2008, the unamortized original issue discount was $5.5 million. The rate of
interest on the Senior Floating Rate Notes prior to their redemption on October 1, 2007 was 9.2350% per annum.
The Issuers pay interest on the Senior Notes semi-annually, in arrears, every April 1 and October 1, to holders
of record on the immediately preceding March 15 and September 15, and at maturity.
The Indenture contains affirmative and negative covenants customary for such financings, including, among
other things, limitations on (1) the incurrence of additional debt, (2) restricted payments, (3) liens, (4) sale and
leaseback transactions and (5) asset sales. Events of default provided for in the Indenture include, among other
things, failure to pay interest or principal on the Notes, other breaches of covenants in the Indenture, and certain
events of bankruptcy and insolvency.
As of February 2, 2008, the Company was in compliance with all covenants associated with the Revolver and
the Indenture.
Under certain conditions, the Issuers may on any one or more occasions prior to maturity redeem up to 100% of
the aggregate principal amount of the Notes issued under the Indenture at redemption prices at or in excess of 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to the redemption date. The circumstances
which would limit the percentage of the Notes which may be redeemed or which would require the Company to pay
a premium in excess of 100% of the principal amount are defined in the Indenture. Upon a Change of Control (as
defined in the Indenture), the Issuers are required to offer to purchase all of the Notes then outstanding at 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase.
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