GameStop 2014 Annual Report Download - page 99

The Senior Notes were issued pursuant to an indenture dated as of September 24, 2014, by and among the Company,certain
subsidiary guarantors named therein and U.S. Bank National Association, as trustee and will mature on October 1, 2019. The net
proceeds from the offering of $343.7 million were used to pay down the remaining outstanding balance of our revolving credit
facility,which is described more fully below,and will be used for general corporate purposes, which may include acquisitions,
dividends and stock buybacks. The outstanding balance of the Senior Notes at January 31, 2015 was $350.0 million. We incurred
fees and expenses related to the Senior Notes offering of $6.3 million, which were capitalized during the third quarter of fiscal
2014 and will be amortized as interestexpense over theterm of the notes.
The indenture governing the Senior Notes does not contain financial covenants but does contain covenants which place certain
restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases,
dividends, distributions, the incurrence of additional debt and the repurchase debt that is junior to the Senior Notes. These covenants
are subject to certain exceptions and qualifications.
The indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain
judgments and certain events of bankruptcy,insolvencyand reorganization. If an event of default occurs and is continuing, the
principal amount of the Senior Notes, plus accrued and unpaid interest, if any,may be declared immediately due and payable.
These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy,insolvency
or reorganization occurs.
Revolving Credit Facility
On January 4, 2011, we entered into a$400million credit agreement, which we amended and restated on March 25, 2014 and
further amended on September 15, 2014 (the “Revolver”). The Revolver is afive-year,asset-based facility that is secured by
substantially all of our assets and the assets of our domestic subsidiaries. Availability under the Revolver is subject to amonthly
borrowing base calculation. The Revolver includes a$50 million letter of credit sublimit. The amendments extended the maturity
date to March 25, 2019; increased the expansion feature under the Revolver from $150 million to $200 million, subject to certain
conditions; and revised certain other terms, including areduction of the fee we are required to pay on the unused portion of the
total commitment amount. We believe the extension of the maturity date of the Revolver to March 2019 helps to limit our exposure
to potential tightening or other adverse changes in the credit markets. The September 15, 2014 amendment amended certain
covenants to permit the issuance of the Senior Notes.
Borrowing availability under the Revolver is limited to aborrowing base which allows us to borrow up to 90% of the appraisal
value of the inventory,ineach case plus 90% of eligible credit card receivables, net of certain reserves. The borrowing base provides
for borrowing up to 92.5% of the appraisal value during the fiscal months of August through October.Letters of credit reduce the
amount available to borrow under the Revolver by an amount equal to the face value of the letters of credit. Our ability to pay
cash dividends, redeem options and repurchase shares is generally permitted, except under certain circumstances, including if
either 1) excess availability under the Revolver is less than 30%, or is projected to be within 12 months after such payment or 2)
excess availability under the Revolver is less than 15%, or is projected to be within 12 months after such payment, and the fixed
charge coverage ratio, as calculated on apro-forma basisfor the prior 12 months is 1.1:1.0 or less. In the event that excess availability
under the Revolver is at any time less than the greater of (1) $30 million or (2) 10% of the lesser of the total commitment or the
borrowing base, we will be subjecttoafixed charge coverage ratio covenant of 1.0:1.0.
The Revolver places certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens,
investments, loans, guarantees, acquisitions and the incurrence of additional indebtedness. Absent consent from our lenders, we
maynot incur more than $1 billion of senior secured debt and $750 million of additional unsecured indebtedness to be limited to
$250 million in general unsecured obligations and $500 million in unsecured obligations to finance acquisitions valued at $500
million or more.
The per annum interest rate under the Revolver is variable and is calculated by applying amargin(1) for prime rate loans of
0.25% to 0.75% above the highest of (a) the prime rate of the administrative agent, (b) the federal funds effective rate plus 0.50%
or (c) the London Interbank Offered (“LIBO”) rate for a30-dayinterestperiod as determined on such day plus 1.00%, and (2) for
LIBO rate loans of 1.25% to 1.75% above the LIBO rate. The applicable margin is determined quarterly as afunction of our
average daily excess availability under the facility.Inaddition, we are required to pay acommitment fee of 0.25% for any unused
portion of the total commitment under the Revolver.AsofJanuary 31, 2015, the applicable margin was 0.25% for prime rate loans
and 1.25% for LIBO rate loans.
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 us or the borrowers
proving to be false in any material respect, certain bankruptcy,insolvencyorreceivership events affecting us or our 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 2014, we cumulatively borrowed and subsequently repaid $626.0 million under the Revolver.
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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