GameStop 2007 Annual Report Download - page 88

payment, equal to or greater than 25% of the borrowing base, the Company may repurchase its capital stock and pay
cash dividends. In addition, in the event that credit extensions under the Revolver at any time exceed 80% of the
lesser of the total commitment or the borrowing base, the Company will be subject to a fixed charge coverage ratio
covenant of 1.5:1.0.
The interest rate on the Revolver is variable and, at the Company’s option, is calculated by applying a margin
of (1) 0.0% to 0.25% above the higher of the prime rate of the administrative agent or the federal funds effective rate
plus 0.50% or (2) 1.00% to 1.50% above the LIBO rate. The applicable margin is determined quarterly as a function
of the Company’s consolidated leverage ratio. As of February 2, 2008, the applicable margin was 0.0% for prime
rate loans and 1.00% for LIBO rate loans. In addition, the Company is required to pay a commitment fee of 0.25%
for any unused portion of the total commitment under the Revolver.
As of February 2, 2008, there were no borrowings outstanding under the Revolver and letters of credit
outstanding totaled $6,796.
In September 2007, the Company’s Luxembourg subsidiary entered into a discretionary, $20,000 Uncom-
mitted 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 $2,815.
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. $300,000 aggregate principal amount of Senior Floating Rate Notes
due 2011 (the “Senior Floating Rate Notes”) and U.S. $650,000 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
merger 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
merger.
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 $8,528. The discount is being amortized using the effective interest
method. As of February 2, 2008, the unamortized original issue discount was $5,527. The rate of interest on the
Senior Floating Rate Notes prior to their redemption on October 1, 2007 was 9.2350% per annum.
F-21
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)