Albertsons 2007 Annual Report Download - page 35

B
”). As of February 24, 2007, rates on the facilities were tied to LIBOR plus 0.
5
0 percent to 2.00 percent or the
Pr
i
me Rate p
l
us 0.00 percent to 1.00 percent,
d
epen
di
ng on t
h
e type o
fb
orrow
i
ng an
d
t
h
e Company’s cre
di
t
ratin
g
s, with facilit
y
fees ran
g
in
g
from 0.10 percent to 0.
5
0 percent, also dependin
g
on the Compan
y
’s credi
t
ratings. The rates in effect on outstanding borrowings under the facilities as of February 24, 2007, based on th
e
C
ompany’s current credit ratings, were 0.40 percent for the facility fees, LIBOR plus 1.50 percent for LIBO
R
revolvin
g
advances, Prime Rate plus 0.
5
0 percent for base rate revolvin
g
advances, LIBOR plus 1.
5
0 for Term
Loan A and LIBOR
p
lus 1.7
5p
ercent for Term Loan B.
On March 8, 2007, the Compan
y
executed an amendment to the existin
g
credit facilit
y
, resultin
g
in ne
w
app
licable interest rates for Term Loan A and Term Loan B. As of the amendment date, rates on Term Loan A
a
nd Term Loan B were changed to LIBOR plus 0.375 percent to 1.50 percent and LIBOR plus 1.25 percent to
1.7
5
percent, respectivel
y
, dependin
g
on the Compan
y
’s credit ratin
g
s. This amendment resulted in the rates on
the outstanding Term Loan A and Term Loan B balances changing on March 8, 2007, to LIBOR plus 1.37
5
percent and LIBOR plus 1.50 percent, respectively.
All obligations under the senior secured credit facilities are guaranteed by each material subsidiary of the
C
ompany. T
h
eo
bli
gat
i
ons are a
l
so secure
db
yap
l
e
d
ge o
f
t
h
e equ
i
ty
i
nterests
i
nt
h
ose same mater
i
a
l
su
b
s
idi
ar
i
es
,
l
imited as required b
y
the existin
g
public indentures of the Compan
y
and subsidiaries such that the respective
d
ebt issued need not be equally and ratably secured
.
T
he senior secured credit facilities also contain various financial covenants includin
g
a minimum interest
expense coverage ratio and a maximum debt leverage ratio. The interest expense coverage ratio shall not be less
than 2.10 to 1 for each of the fiscal quarters ending up through December 30, 2006, 2.15 to 1 for each of th
e
f
iscal quarters endin
g
up throu
g
h December 30, 2007, and moves pro
g
ressivel
y
to a ratio of not less than 2.30 t
o
1 for the fiscal quarters ending after December 30, 2009. The debt leverage ratio shall not exceed 4.
5
0to1fo
r
eac
h
o
f
t
h
e
fi
sca
l
quarters en
di
ng up t
h
roug
h
Decem
b
er 30, 2007 an
d
moves progress
i
ve
l
y to a rat
i
o not to
exceed 3.7
5
to 1 for each of the fiscal quarters endin
g
after December 30, 2009. As of Februar
y
24, 2007, the
C
ompany is in compliance with the covenants of the senior secured credit facilities.
I
n con
j
unction with the $4,000 senior secured credit facilities, the Compan
y
terminated its previous five-
y
ea
r
u
nsecured
$
750 revolving credit agreement dated February 2005. Also terminated were the previous Albertsons
credit facilities:
$
400 dated June 2005,
$
900 dated June 2004 and
$
100 dated July 2004. All letters of credit that
h
ad been issued and outstandin
g
under the previous credit facilities were transferred under the new credit facilit
y.
B
orrow
i
ngs un
d
er Term Loan A an
d
Term Loan B may
b
e repa
id
,
i
n
f
u
ll
or
i
n part, at any t
i
me w
i
t
h
out pena
l
ty
.
T
erm Loan A has required repa
y
ments, pa
y
able quarterl
y
, equal to 2.
5
0 percent of the initial drawn balance fo
r
the first four quarterly payments (year one) and 3.7
5
percent of the initial drawn balance for each quarterl
y
payment
i
n years two t
h
roug
hfi
ve, w
i
t
h
t
h
e ent
i
re rema
i
n
i
ng
b
a
l
ance
d
ue at t
h
e
fi
ve year ann
i
versary o
f
t
he
inception date. Term Loan B has required repa
y
ments, pa
y
able quarterl
y
, equal to 0.2
5
percent of the initial
d
rawn balance, with the entire remaining balance due at the six year anniversary of the inception date
.
As of Februar
y
24, 2007, there were $654 of outstandin
g
borrowin
g
s under the Revolvin
g
Credit Facilit
y
, Term
Loan A had a remaining principal balance of
$
713, of which
$
94 was classified as current, and Term Loan B had
a
remaining principal balance of
$
1,241, of which
$
13 was classified as current. Letters of credit outstandin
g
u
nder the Revolvin
g
Credit Facilit
y
were $347 and the unused available credit under the Revolvin
g
Credi
t
Facility was
$
999. The Company also had
$
65 of outstanding letters of credit issued under separate agreement
s
wi
t
hfi
nanc
i
a
li
nst
i
tut
i
ons
.
I
n November 2006, the Company executed a 364-day accounts receivable securitization program, under whic
h
the Company can borrow up to
$
200 on a revolving basis, with borrowings secured by eligible account
s
receivable, which remain under the Compan
y
’s control. Facilit
y
fees under this pro
g
ram ran
g
e from 0.1
5
percent
to 1.
5
0 percent, based on the Company’s credit ratings. The facility fee in effect on February 24, 2007, based on
29