GameStop 2010 Annual Report Download - page 91

Table of Contents
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
9. Debt
On January 4, 2011, the Company entered into a $400 million credit agreement (the "Revolver"), which amends and restates, in its entirety, the
Company's prior credit agreement entered into on October 11, 2005 (the "Credit Agreement"). The Revolver provides for a five-year, $400 million
asset-based facility, including a $50 million letter of credit sublimit, secured by substantially all of the Company's and its domestic subsidiaries'
assets. The Company has the ability to increase the facility, which matures in January 2016, by $150 million under certain circumstances. The
extension of the Revolver to 2016 reduces our exposure to potential tightening in the credit markets.
The availability under the Revolver is limited to a borrowing base which allows the Company to borrow up to 90% of the appraisal value of
the inventory, in each case plus 90% of eligible credit card receivables, net of certain reserves. Letters of credit reduce the amount available to
borrow by their face value. The Company's ability to pay cash dividends, redeem options and repurchase shares is generally permitted, except under
certain circumstances, including if Revolver excess availability is less than 20%, or is projected to be within 12 months after such payment. In
addition, if Revolver usage is projected to be equal to or greater than 25% of the borrowing base during the prospective 12-month period, the
Company is subject to meeting a fixed charge coverage ratio of 1.1:1.0 prior to making such payments. In the event that excess availability under the
Revolver is at any time less than the greater of (1) $40.0 million or (2) 12.5% of the lesser of the total commitment or the borrowing base, the
Company will be subject to a fixed charge coverage ratio covenant of 1.1:1.0.
The Revolver places certain restrictions on the Company and its subsidiaries, including limitations on asset sales, additional liens, investments,
loans, guarantees, acquisitions and the incurrence of additional indebtedness. The per annum interest rate under the Revolver is variable and is
calculated by applying a margin (1) for prime rate loans of 1.25% to 1.50% above the highest of (a) the prime rate of the administrative agent, (b) the
federal funds effective rate plus 0.50% and (c) the LIBO rate for a 30-day interest period as determined on such day plus 1.00%, and (2) for LIBO
rate loans of 2.25% to 2.50% above the LIBO rate. The applicable margin is determined quarterly as a function of the Company's average daily
excess availability under the facility and is set at 1.25% for prime rate loans and 2.25% for LIBO rate loans until the first day of the fiscal quarter of
the borrowers commencing on May 1, 2011. In addition, the Company is required to pay a commitment fee of 0.375% or 0.50%, depending on
facility usage, for any unused portion of the total commitment under the Revolver. As of January 29, 2011 the applicable margin was 1.25% for
prime rate loans and 2.25% for LIBO rate loans while the required commitment fee was 0.50% for the unused portion of the Revolver.
The Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest
when due, failure to comply with covenants, any material representation or warranty made by the Company or the Borrowers proving to be false in
any material respect, certain bankruptcy, insolvency or receivership events affecting the Company or its subsidiaries, defaults relating to certain
other indebtedness, imposition of certain judgments and mergers or the liquidation of the Company or certain of its subsidiaries.
During fiscal 2010, the Company borrowed and repaid $120.0 million under the prior Credit Agreement. During fiscal 2009, the Company
borrowed and repaid $115.0 million under the prior Credit Agreement.
As of January 29, 2011, there were no borrowings outstanding under the Revolver and letters of credit outstanding totaled $8.2 million.
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 January 29, 2011, there were
$11.0 million of cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $5.6 million.
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