Sprouts Farmers Market 2013 Annual Report Download - page 116

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Table of Contents
Credit Facility and the Former Term Loan (each, as defined below), by entering into a new credit facility (the “Credit Facility”). The
Credit Facility provides for a $700.0 million term loan (the “Term Loan”) and a $60.0 million senior secured revolving credit facility
(the “Revolving Credit Facility”).
The proceeds of the Term Loan were used to repay in full the outstanding Former Term Loan balance of $403.1 million. Such
repayment resulted in an $8.2 million loss on extinguishment of debt due to the write-off of deferred financing costs and original
issue discount. No amounts were outstanding under the Former Revolving Credit Facility. The remaining proceeds from the Term
Loan, together with cash on hand, were used to make a $282.0 million distribution to the Company’s equity holders, to make
payments of $13.9 million to vested option holders and to pay transaction fees and expenses related to the refinancing.
The terms of the Credit Facility allow the Company, subject to certain conditions, to increase the amount of the term loans and
revolving commitments thereunder by an aggregate incremental amount of up to $160.0 million, plus an additional amount, so long
as after giving effect to such increase, (i) in the case of incremental loans that rank pari passu with the initial term loans, the net first
lien leverage ratio does not exceed 4.00 to 1.00, and (ii) in the case of incremental loans that rank junior to the initial Term Loan,
the total leverage ratio does not exceed 5.25 to 1.00.
Guarantees
Obligations under the Credit Facility are guaranteed by the Company and all of its current and future wholly owned material
domestic subsidiaries. Borrowings under the Credit Facility are secured by (i) a pledge by Sprouts of its equity interests in
Intermediate Holdings and (ii) first-
priority liens on substantially all assets of Intermediate Holdings and the subsidiary guarantors, in
each case, subject to permitted liens and certain exceptions.
Term Loan and Partial Repayment in IPO
On August 6, 2013, the Company used $340.0 million of the net proceeds from its IPO to make a partial repayment of the
Term Loan. Such repayment resulted in a $9.0 million loss on extinguishment of debt due to the write-
off of deferred financing costs
and original issue discount for the portion of the debt repaid. This loss on extinguishment of debt is reflected in the Company’s
statement of operations for the year ended December 29, 2013.
Voluntary Prepayment on Term Loan
On December 27, 2013, the Company made a $40.0 million partial repayment of the Term Loan. Such repayment resulted in a
$1.0 million loss on extinguishment of debt due to the write-off of deferred financing costs and original issue discount for the portion
of the debt repaid. This loss on extinguishment of debt is reflected in the Company’s statement of operations for the year ended
December 29, 2013.
As of December 29, 2013, the outstanding balance of the Term Loan was $311.2 million, net of issue discount of $7.0 million.
Financing fees and issue discount are being amortized to interest expense over the term of the Term Loan.
Interest and Applicable Margin
All amounts outstanding under the Credit Facility will bear interest, at the Company’s option, at a rate per annum equal to
LIBOR (with a 1.00% floor with respect to Eurodollar borrowings under the
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