Sears 2015 Annual Report Download - page 73

Unsecured Commercial Paper
We borrow through the commercial paper markets. At January€30, 2016, we had no commercial paper
borrowings outstanding, while at January€31, 2015, we had outstanding commercial paper borrowings of $2 million.
Secured Short-Term Loan
On September 15, 2014, the Company, through Sears, Sears Development Co. and Kmart Corporation ("Short-
Term Borrowers"), entities wholly-owned and controlled, directly or indirectly by the Company, entered into a $400
million secured short-term loan (the "Short-Term Loan'") with JPP II, LLC and JPP, LLC (together, the "Short-Term
Lender"), entities affiliated with ESL and Fairholme. The first $200 million of the Short-Term Loan was funded at
the closing on September 15, 2014 and the remaining $200 million was funded on September 30, 2014. Proceeds of
the Short-Term Loan were used for general corporate purposes.
The Short-Term Loan was originally scheduled to mature on December 31, 2014. As permitted by the Short-
Term Loan agreement, the Company paid an extension fee equal to 0.5% of the principal amount to extend the
maturity date to February 28, 2015. The Short-Term Loan had an annual base interest rate of 5%. The Short-Term
Borrowers paid an upfront fee of 1.75% of the full principal amount. The Short-Term Loan was guaranteed by the
Company and was secured by a first priority lien on certain real properties owned by the Short-Term Borrowers.
On February 25, 2015, we entered into an agreement effective February 28, 2015, to amend and extend the
$400 million secured short-term loan. Under the terms of the amendment, we repaid $200 million of the $400
million on March 2, 2015 and the remaining $200 million on June 1, 2015, resulting in no balance outstanding at
January 30, 2016. At January€31, 2015, the outstanding balance of the Short-Term Loan was $400 million. During
2015, the Short-Term Borrowers paid interest of $6 million to the Short-Term Lender. During 2014, the Short-Term
Borrowers paid an upfront fee of $7 million, an extension fee of $2 million and interest of $6 million to the Short-
Term Lender.
Domestic Credit Agreement
During the first quarter of 2011, SRAC, Kmart Corporation (together with SRAC, the "Borrowers") and
Holdings entered into an amended credit agreement (the "Domestic Credit Agreement"). On October 2, 2013,
Holdings and the Borrowers entered into a First Amendment (the "Amendment") to the Domestic Credit Agreement
with a syndicate of lenders. Pursuant to the Amendment, the Borrowers borrowed $1.0 billion under a new senior
secured term loan facility (the "Term Loan"). On July 21, 2015, the Borrowers and Holdings entered into an
amended and restated credit agreement (the "Amended Domestic Credit Agreement") with a syndicate of lenders
that amended and restated the then-existing Domestic Credit Agreement. The Amended Domestic Credit Agreement
provides a $3.275 billion asset-based revolving credit facility (the "Revolving Facility") with a $1.0 billion letter of
credit sub-facility. The maturity date for $1.971 billion of the Revolving Facility has been extended to July€20, 2020,
while $1.304 billion retains the existing maturity date of April 8, 2016. The Amended Domestic Credit Agreement
also governs the existing Term Loan, which retains its maturity date of June€30, 2018. The Amended Domestic
Credit Agreement includes an accordion feature that allows the Borrowers to use existing collateral for the facility to
obtain up to $1.0 billion of additional borrowing capacity, subject to borrowing base requirements, as well as a
"FILO" ("first in last out") tranche feature that allows an additional $500 million of borrowing capacity. The
Amended Domestic Credit Agreement also increases Holdings' ability to undertake short-term borrowings from
$500 million to $750 million. On March 3, 2016, we announced our intention to obtain a new senior secured term
loan facility of up to $750 million under the accordion feature in our credit facility, which is currently being
marketed to potential lenders.
Revolving advances under the Amended Domestic Credit Agreement bear interest at a rate equal to, at the
election of the Borrowers, either the London Interbank Offered Rate ("LIBOR") or a base rate, in either case plus an
applicable margin dependent on Holdings' consolidated leverage ratio (as measured under the Amended Domestic
Credit Agreement). The margin with respect to borrowings under the extended commitments ranges from 3.25% to
3.75% for LIBOR loans and from 2.25% to 2.75% for base rate loans. The margin with respect to borrowings under
the non-extended commitments remains 2.00% to 2.50% for LIBOR loans and 1.00% to 1.50% for base rate loans.
The Amended Domestic Credit Agreement also provides for the payment of fees with respect to issued and undrawn
letters of credit at a rate equal to the margin applicable to LIBOR loans and a commitment fee with respect to
SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
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