OfficeMax 2011 Annual Report Download - page 62

Credit Agreements
On October 7, 2011, we entered into a Second Amended and Restated Loan and Security Agreement (the
“North American Credit Agreement”) with a group of banks. The North American Credit Agreement amended
both our existing credit agreement that we are party to along with certain of our subsidiaries in the U.S. (the
“U.S. Credit Agreement”) and our existing credit agreement to which our subsidiary in Canada is a party (the
“Canadian Credit Agreement”) and consolidated them into a single credit agreement. The North American Credit
Agreement permits us to borrow up to a maximum of $650 million, (U.S. dollars) of which $50 million is
allocated to our Canadian subsidiary, and $600 million is allocated to the Company and its other participating
U.S. subsidiaries, subject to a borrowing base calculation that limits availability to a percentage of eligible trade
and credit card receivables plus a percentage of the value of eligible inventory less certain reserves. The North
American Credit Agreement may be increased (up to a maximum of $850 million) at our request and the
approval of the lenders participating in the increase, or may be reduced from time to time at our request, in each
case according to the terms detailed in the North American Credit Agreement. Letters of credit, which may be
issued under the North American Credit Agreement up to a maximum of $250 million, reduce available
borrowing capacity. Stand-by letters of credit issued under the North American Credit Agreement totaled
$51.9 million at the end of fiscal year 2011. At the end of fiscal year 2011, the maximum aggregate borrowing
amount available under the North American Credit Agreement was $632.2 million and availability under the
North American Credit Agreement totaled $580.3 million. At the end of fiscal year 2011, we were in compliance
with all covenants under the North American Credit Agreement. The North American Credit Agreement expires
on October 7, 2016 and allows the payment of dividends, subject to availability restrictions and if no default has
occurred.
Borrowings under the U.S. Credit Agreement were subject to interest at rates based on either the prime rate
or the London Interbank Offered Rate (“LIBOR”). Margins were applied to the applicable borrowing rates and
letter of credit fees under the U.S. Credit Agreement depending on the level of average availability. Fees on
letters of credit issued under the U.S. Credit Agreement were charged at a weighted average rate of 0.875%. The
Company was also charged an unused line fee of 0.25% under the U.S. Credit Agreement on the amount by
which the maximum available credit exceeded the average daily outstanding borrowings and letters of credit.
Borrowings under the North American Credit Agreement are subject to interest at rates based on either the
prime rate, the federal funds rate, LIBOR or the Canadian Dealer Offered Rate. An additional percentage, which
varies depending on the level of average borrowing availability, is added to the applicable rates. Fees on letters of
credit issued under the North American Credit Agreement are charged at rates between 1.25% and 2.25%
depending on the type of letter of credit (i.e., stand-by or commercial) and the level of average borrowing
availability. The Company is also charged an unused line fee of between 0.375% and 0.5% on the amount by
which the maximum available credit exceeds the average daily outstanding borrowings and letters of credit. The
fees on letters of credit were 1.75% and the unused line fee was 0.5% at December 31, 2011.
On March 15, 2010, the Company’s five wholly-owned subsidiaries based in Australia and New Zealand
entered into a Facility Agreement (the “Australia/New Zealand Credit Agreement”) with a financial institution
based in those countries. The Australia/New Zealand Credit Agreement permits the subsidiaries in Australia and
New Zealand to borrow up to a maximum of A$80 million subject to a borrowing base calculation that limits
availability to a percentage of eligible accounts receivable plus a percentage of the value of certain owned
properties, less certain reserves. There were no borrowings outstanding under the facility at the end of fiscal year
2011, and there were no borrowings outstanding under this facility during 2011 or 2010. The maximum
aggregate borrowing amount available under the Australia/New Zealand Credit Agreement was $52.9 million
(A$52.1 million) at the end of fiscal year 2011. At the end of fiscal year 2011, the subsidiaries in Australia and
New Zealand were in compliance with all covenants under the Australia/New Zealand Credit Agreement. The
Australia/New Zealand Credit Agreement expires on March 15, 2013.
In October 2004, we sold our timberland assets in exchange for $15 million in cash plus credit-enhanced
timber installment notes in the amount of $1,635 million (the “Installment Notes”). The Installment Notes were
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