Sprouts Farmers Market 2013 Annual Report Download - page 77

Table of Contents
cash proceeds from certain non-ordinary course asset sales by Sprouts or any subsidiary guarantor (subject to certain exceptions
and reinvestment provisions) and (iii) 100% of the net cash proceeds from the issuance or incurrence after the April 2013
Refinancing Closing Date of debt by Sprouts or any of its subsidiaries not permitted under the Credit Facility.
Voluntary prepayments of borrowings under the Credit Facility are permitted at any time, in agreed-upon minimum principal
amounts. There is a prepayment fee equal to 1.00% of the principal amount of the Term Loan under the Credit Facility optionally
prepaid in connection with any “repricing transaction” on or prior to the first anniversary of the closing date. Prepayments made
thereafter will not be subject to premium or penalty (except LIBOR breakage costs, if applicable).
The Term Loan will mature on the seventh anniversary of the April 2013 Refinancing Closing Date and will amortize at a rate
per annum, in four equal quarterly installments, in an aggregate amount equal to 1.00% of the April 2013 Refinancing Closing Date
principal amount of the term loans, with the balance due on the maturity date. The Revolving Credit Facility will mature on the fifth
anniversary of the April 2013 Refinancing Closing Date.
Covenants
. The Credit Facility contains financial, affirmative and negative covenants that we believe are usual and customary
for a senior secured credit agreement. In addition, if we have any amounts outstanding under the Revolving Credit Facility as of the
last day of any fiscal quarter, the Revolving Credit Facility requires us to maintain a ratio of Revolving Facility Credit exposure to
consolidated trailing 12-month EBITDA (as defined in the Credit Facility) of no more than 0.75 to 1.00 as of the end of each such
fiscal quarter.
We were in compliance with all applicable covenants under the Credit Facility as of December 29, 2013.
Events of Default . The Credit Facility contains customary events of default included in financing transactions, including failure
to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and
warranties, involuntary or voluntary bankruptcy, and material monetary judgments. During the continuation of a payment default, we
will be required to pay interest at a default rate unless waived.
Debt Repayment in Connection with IPO. On August 6, 2013, we used $340.0 million of the net proceeds from our IPO to
make a partial repayment of the Term Loan. Such repayment resulted in $9.0 million of 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 our statement of operations for 2013. As a result of our IPO and the concurrent repayment of a portion of the
Term Loan, under the terms of the Credit Facility, the interest rate margins were reduced by 50 basis points to 3.00% in the case of
LIBOR borrowings and 2.00% in the case of alternate base rate borrowings, effective August 2, 2013.
Voluntary Principal Payment. On December 27, 2013, we made an additional principal payment of $40.0 million on the Term
Loan. Such repayment resulted in $1.0 million of 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 our statement of
operations for 2013.
Former Credit Facilities
On April 18, 2011, we entered into a revolving credit facility (referred to as the “Former Revolving Credit Facility”) and a term
loan facility (referred to as the “Former Term Loan” and, together with the Former Revolving Credit Facility, the “Former Credit
Facilities”). The borrower under such Former Credit Facilities was Intermediate Holdings.
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