Neiman Marcus 2008 Annual Report Download - page 109

Table of Contents
NOTE 9. LONG-TERM DEBT
The significant components of our long-term debt are as follows:
(in thousands) Interest Rate
August 1,
2009
August 2,
2008
Senior Secured Term Loan Facility variable $ 1,625,000 $ 1,625,000
2028 Debentures 7.125% 121,297 121,102
Senior Notes 9.0%/9.75% 734,541 700,000
Senior Subordinated Notes 10.375% 500,000 500,000
Total debt 2,980,838 2,946,102
Less: current portion of Senior Secured Term
Loan Facility (26,617)—
Long-term debt $ 2,954,221 $ 2,946,102
Senior Secured Asset-Based Revolving Credit Facility. On July 15, 2009, NMG amended and restated the terms of its prior
asset-based revolving credit facility (which had been scheduled to mature on October 6, 2010). The terms of the amended and restated
Asset-Based Revolving Credit Facility include a scheduled maturity date of January 15, 2013 and a maximum committed borrowing
capacity of $600.0 million (the same amount as the prior facility). The new facility also provides an uncommitted accordion feature
that allows NMG to request the lenders to provide additional capacity in either the form of increased revolving commitments or
incremental term loans, subject to a potential total maximum facility of $800 million.
The Asset-Based Revolving Credit Facility provides committed financing of up to $600.0 million, subject to a borrowing
base. The Asset-Based Revolving Credit Facility includes borrowing capacity available for letters of credit and for borrowings on
same-day notice. The borrowing base for the Asset-Based Revolving Credit Facility is equal to at any time the sum of (a) the lesser of
(i) 80% of eligible inventory (valued at the lower of cost or market value) and (ii) 85% of the net orderly liquidation value of eligible
inventory, and (b) 85% of the amounts owed by credit card processors in respect of eligible credit card accounts constituting proceeds
arising from the sale or disposition of inventory, less certain reserves. Through April 30, 2011, NMG is required to maintain excess
availability of at least the greater of (a) 10% of the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base and
(b) $50 million under the terms of the Asset-Based Revolving Credit Facility. After April 30, 2011, if at any time, excess availability
is less than the greater of (a) 15% of the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base and (b) $60
million, NMG will be required to maintain a pro forma ratio of consolidated EBITDA to consolidated Fixed Charges (as such terms
are defined in the credit agreement) of at least 1.1 to 1.0. On August 1, 2009, NMG had no borrowings outstanding under this facility,
$32.8 million of outstanding letters of credit and $468.5 million of unused borrowing availability.
The Asset-Based Revolving Credit Facility provides that NMG has the right at any time to request up to $300 million of
additional revolving facility commitments and/or incremental term loans; provided that the aggregate amount of loan commitments
under the Asset-Based Revolving Credit Facility may not exceed $800 million. However, the lenders are under no obligation to
provide any such additional commitments or loans, and any increase in commitments or incremental term loans will be subject to
customary conditions precedent. If NMG were to request any such additional commitments and the existing lenders or new lenders
were to agree to provide such commitments, the Asset-Based Revolving Credit Facility size could be increased to up to $800 million,
but NMG's ability to borrow would still be limited by the amount of the borrowing base. Incremental term loans may be exchanged by
NMG for any of NMG's existing senior notes and senior subordinated notes, or the cash proceeds of any incremental term loans may
be used to repurchase any of such notes, but neither the incremental term loans nor the proceeds thereof may be used for any other
purpose.
Borrowings under the Asset-Based Revolving Credit Facility bear interest at a rate per annum equal to, at NMG's option,
either (a) a base rate determined by reference to the highest of (i) a defined prime rate, (ii) the federal funds effective rate plus 1/2 of
1% or (iii) a one-month LIBOR rate plus 1% or (b) a LIBOR rate, subject to certain adjustments, in each case plus an applicable
margin. The applicable margin is up to 3.50% with respect to base rate borrowings and up to 4.50% with respect to LIBOR
borrowings, provided that until October 1, 2010, the applicable margin will be 3.25% with respect to base rate borrowings and 4.25%
with respect to LIBOR borrowings. The applicable margin is subject to adjustment based on the historical availability under the Asset-
Based Revolving Credit Facility. In addition, NMG is required to pay a commitment fee in respect of unused commitments of
(a) 0.750% per annum during any applicable period in which the average revolving loan utilization is 50% or more or (b) 1% per
annum during any applicable period in which the average revolving loan utilization is less than 50%. NMG must also pay customary
letter of credit fees and agency fees.
F-20