Neiman Marcus 2010 Annual Report Download - page 113

Table of Contents
In the fourth quarter of fiscal year 2011, we executed the following transactions, collectively referred to as the Refinancing
Transactions:
• Amended our Senior Secured Asset-Based Revolving Credit Facility;
• Amended our Senior Secured Term Loan Facility; and
• Repurchased or redeemed $752.4 million principal amount of our Senior Notes.
Senior Secured Asset-Based Revolving Credit Facility. In May 2011, NMG entered into an amendment and restatement of
the Asset-Based Revolving Credit Facility. As amended, the maximum committed borrowing capacity under the Asset-Based
Revolving Credit Facility is $700.0 million and the Asset-Based Revolving Credit Facility matures on May 17, 2016 (or, if earlier, the
date that is 45 days prior to the scheduled maturity of NMG's Senior Secured Term Loan Facility or Senior Subordinated Notes, or any
indebtedness refinancing them, unless refinanced as of that date). The Asset-Based Revolving Credit 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 $1,000.0 million.
Availability under the Asset-Based Revolving Credit Facility is 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
is equal to at any time the sum of (a) 90% of the net orderly liquidation value of eligible inventory, net of certain reserves, plus
(b) 85% of the amounts owed by credit card processors in respect of eligible credit card accounts constituting proceeds from the sale
or disposition of inventory, less certain reserves. Excess availability provisions were revised to provide that NMG must at all times
maintain excess availability of at least the greater of (a) 10% of the lesser of 1) the aggregate revolving commitments and 2) the
borrowing base and (b) $50 million, but NMG is not required to maintain a fixed charge coverage ratio.
On July 30, 2011, NMG had no borrowings outstanding under this facility, $13.7 million of outstanding letters of credit and
$615.8 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 $1,000 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 $1,000
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 subordinated notes, or the cash proceeds of any incremental term loans may be
used to repurchase any of such notes and may be used for working capital and general corporate purposes.
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. Following the amendment and restatement, the applicable margin is up to 1.25% with respect to base rate borrowings and up
to 2.25% with respect to LIBOR borrowings, provided that for the first three months after the closing of the Asset-Based Revolving
Credit Facility, the applicable margin is 1.00% with respect to base rate borrowings and 2.00% with respect to LIBOR borrowings.
The applicable margin is subject to adjustment based on the historical excess 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) 0.375% per annum during
any applicable period in which the average revolving loan utilization is 40% or more or (b) 0.50% per annum during any applicable
period in which the average revolving loan utilization is less than 40%. NMG must also pay customary letter of credit fees and agency
fees.
If at any time the aggregate amount of outstanding revolving loans, unreimbursed letter of credit drawings and undrawn
letters of credit under the Asset-Based Revolving Credit Facility exceeds the lesser of (a) the commitment amount and (b) the
borrowing base (including as a result of reductions to the borrowing base that would result from certain non-ordinary course sales of
inventory with a value in excess of $25 million, if applicable), NMG will be required to repay outstanding loans or cash collateralize
letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. In addition, at any time
when incremental term loans are outstanding, if the aggregate amount
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