Pep Boys 2008 Annual Report Download - page 84

annual shortfall. The maximum annual obligation under any shortfall is approximately $950. At
January 31, 2009, we expect to meet the cumulative minimum purchase requirements under this
contract.
Long-term Debt
Senior Secured Term Loan Facility due October, 2013
On January 27, 2006 we entered into a $200,000,000 Senior Secured Term Loan facility due
January 27, 2011. This facility is secured by a collateral pool consisting of real property and
improvements associated with our stores, which is adjusted periodically based upon real estate values
and borrowing levels. Interest at the rate of London Interbank Offered Rate (LIBOR) plus 3.0% on
this facility was payable starting in February 2006. Proceeds from this facility were used to satisfy and
discharge our then outstanding $43,000,000 6.88% Medium Term Notes due March 6, 2006 and
$100,000,000 6.92% Term Enhanced Remarketable Securities (TERMS) due July 7, 2016 and to reduce
borrowings under our line of credit by approximately $39,000,000.
On October 27, 2006, we amended and restated the Senior Secured Term Loan facility to
(i) increase the size from $200,000,000 to $320,000,000, (ii) extend the maturity from January 27, 2011
to October 27, 2013 and (iii) reduce the interest rate from LIBOR plus 3.00% to LIBOR plus 2.75%.
Proceeds were used to satisfy and discharge $119,000,000 in outstanding 4.25% convertible Senior
Notes due June 1, 2007.
On February 15, 2007, we further amended the Senior Secured Term Loan facility to reduce the
interest rate from LIBOR plus 2.75% to LIBOR plus 2.00%.
On November 27, 2007, we sold the land and buildings for 34 owned properties to an independent
third party. We used $162,558,000 of the net proceeds to prepay a portion of the Senior Secured Term
Loan facility. This prepayment reduced the principal amount of the facility to $155,000,000 and reduced
the scheduled quarterly repayments from $800,000 to $391,000. In addition the prepayment resulted in
the recognition in interest expense of approximately $5,900,000 of deferred financing fees and the
reclassification from other comprehensive loss for the portion of the related interest rate swap that is
no longer designated as a hedge.
As of January 31, 2009, the number of stores which collateralize the Senior Secured Term Loan
was reduced to 101 properties. The outstanding balance under the Term loan at the end of fiscal year
2008 was $150,794,000. The $3,858,000 decline in the outstanding balance was due to quarterly
principal payments and an additional payment to release a store from the collateral pool to allow it to
be sold to an unrelated third party.
Senior Subordinated Notes due December, 2014
On December 14, 2004, we issued $200,000,000 aggregate principal amount of 7.5% Senior
Subordinated Notes due December 15, 2014. During fiscal year 2008 the Company repurchased notes
in the principal amount of $25,465,000 with a portion of the net proceeds generated from the sale
leaseback transactions on 63 stores. On January 31, 2009 the outstanding balance of these notes was
$174,535,000.
Revolving Credit Agreement due December, 2009
On December 2, 2004, we further amended our then existing amended and restated line of credit
agreement. The amendment increased the amount available for borrowings to $357,500,000 with an
ability, upon satisfaction of certain conditions, to increase such amount to $400,000,000. The
amendment also reduced the interest rate under the agreement to LIBOR plus 1.75% (after June 1,
2005, the rate decreased to LIBOR plus 1.50%, subject to 0.25% incremental increases as excess
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