Rite Aid 2013 Annual Report Download - page 37

of cash are to provide working capital for operations, to service our obligations to pay interest and
principal on debt and to fund capital expenditures. Total liquidity as of March 2, 2013 was
$1,031.2 million, which consisted of revolver borrowing capacity of $1,015.0 million and invested cash of
$16.2 million.
Credit Facility
In February 2013, we amended and restated our existing senior secured revolving credit facility,
entered into a new $1.161 billion Tranche 6 Term Loan due 2020 under our senior secured credit
facility and entered into a new $470.0 million Tranche 1 Term Loan due 2020 under our new second
priority secured term loan facility. A portion of the proceeds from these transactions were used to
refinance our $1.038 billion Tranche 2 Term Loan due 2014 and our $331.7 million Tranche 5 Term
Loan due 2018.
As amended and restated, our senior secured credit facility consists of a $1.795 billion revolving
credit facility and a $1.161 billion Tranche 6 Term Loan. Borrowings under the revolving credit facility
bear interest from February 21, 2013 through May 31, 2013 at a rate per annum of LIBOR plus 2.50%,
if we choose to make LIBOR borrowings, or Citibank’s base rate plus 1.50%, and thereafter at a rate
per annum between LIBOR plus 2.25% and LIBOR plus 2.75%, if we choose to make LIBOR
borrowings, or between Citibank’s base rate plus 1.25% and Citibank’s base rate plus 1.75% in each
case based upon the amount of revolver availability as defined in the senior secured credit facility. We
are required to pay fees between 0.375% and 0.50% per annum on the daily unused amount of the
revolver, depending on the amount of revolver availability. Amounts drawn under the revolver become
due and payable on February 21, 2018, provided that such maturity date shall be accelerated to
ninety-one days prior to the maturity of our 7.5% senior secured notes due 2017, in the event that we
do not repay or refinance such notes on or prior to such date, or ninety-one days prior to the maturity
of our 9.5% senior notes due 2017, in the event that we do not repay or refinance such notes on or
prior to such date.
Our ability to borrow under the revolver is based upon a specified borrowing base consisting of
accounts receivable, inventory and prescription files. At March 2, 2013, we had $665.0 million of
borrowings outstanding under the revolver and had letters of credit outstanding against the revolver of
$115.0 million, which resulted in additional borrowing capacity of $1,015.0 million.
The credit facility also includes our $1.161 billion senior secured term loan (the ‘‘Tranche 6 Term
Loan’’). The Tranche 6 Term Loan matures on February 21, 2020 and currently bears interest at a rate
per annum equal to LIBOR plus 3.00% with a LIBOR floor of 1.00%, if we choose to make LIBOR
borrowings, or at Citibank’s base rate plus 2.00%. We must make mandatory prepayments of the
Tranche 6 Term Loan with the proceeds of certain asset dispositions and casualty events (subject to
certain limitations), and with the proceeds of certain issuances of debt (subject to certain exceptions);
provided that no such prepayment shall be required to be made with respect to excess cash flow for the
fiscal year ended March 2, 2013. If at any time there is a shortfall in our borrowing base under our
senior secured credit facility, prepayment of the Tranche 6 Term Loan may also be required.
The senior secured credit facility restricts us and the subsidiary guarantors from accumulating cash
on hand in excess of $200.0 million at any time when revolving loans are outstanding (not including
cash located in our store deposit accounts, cash necessary to cover our current liabilities and certain
other exceptions) and from accumulating cash on hand with revolver borrowings in excess of
$100.0 million over three consecutive business days. The senior secured credit facility also states that if
at any time (other than following the exercise of remedies or acceleration of any senior obligations or
second priority debt and receipt of a triggering notice by the senior collateral agent from a
representative of the senior obligations or the second priority debt) either (a) an event of default exists
under our senior secured credit facility or (b) the sum of revolver availability under our senior secured
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