Albertsons 2010 Annual Report Download - page 56

principal balance of $394 at LIBOR plus 0.875 percent, of which $113 was classified as current, and Term
Loan B had a remaining principal balance of $1,005 at LIBOR plus 1.25 percent, of which $10 was classified
as current. Letters of credit outstanding under the Revolving Credit Facility were $333 and the unused
available credit under the Revolving Credit Facility was $1,651. The Company also had $4 of outstanding
letters of credit issued under separate agreements with financial institutions. These letters of credit primarily
support workers’ compensation, merchandise import programs and payment obligations.
On April 5, 2010, the Company entered into an Amended and Restated Credit Agreement (the “Credit
Agreement”), which provides for an extension of the maturity of portions of the senior secured credit facilities
provided under the original credit agreement. Specifically, $1,500 of the Revolving Credit Facility was
extended until April 5, 2015 and $500 of Term Loan B was extended until October 5, 2015. The remaining
$600 of the Revolving Credit Facility will expire on June 2, 2011 and the remaining $502 of Term Loan B
will mature on June 2, 2012. The maturity date of Term Loan A was not extended and will mature on June 2,
2011.
The fees and rates in effect on outstanding borrowings under the Credit Agreement are based on the
Company’s current credit ratings. Borrowings under the non-extended portion of the Revolving Credit Facility,
if any, carry an interest rate of LIBOR plus 1.00 percent, borrowings under Term Loan A carry an interest rate
of LIBOR plus 0.875 percent and borrowings under the non-extended portion of Term Loan B carry an interest
rate of LIBOR plus 1.25 percent. Borrowings under the extended portion of the Revolving Credit Facility, if
any, carry an interest rate of LIBOR plus 2.25 percent and borrowings under the extended portion of Term
Loan B carry an interest rate of LIBOR plus 2.75 percent. Facility fees under the non-extended and extended
portions of the Revolving Credit Facility are 0.20 percent and 0.50 percent, respectively. The Company pays
fees of up to 2.50 percent on the outstanding balance of the letters of credit issued under the extended
Revolving Credit Facility. Borrowings under the extended and non-extended term loans may be repaid, in full
or in part, at any time without penalty.
The Credit Agreement reset covenants which are generally less restrictive than the covenants that existed prior
to April 5, 2010. Specifically, the Company must maintain a leverage ratio no greater than 4.25 to 1.0 through
December 30, 2011, 4.0 to 1.0 from December 31, 2011 through December 30, 2012 and 3.75 to 1.0
thereafter. Additionally, the Company must maintain an interest expense coverage ratio of not less than 2.20 to
1.0 through December 30, 2011, 2.25 to 1.0 from December 31, 2011 through December 30, 2012 and 2.30 to
1.0 thereafter.
All obligations under the senior secured credit facilities are guaranteed by each material subsidiary of the
Company. The obligations are also secured by a pledge of the equity interests in those same material
subsidiaries, limited as required by the existing public indentures of the Company, such that the respective
debt issued need not be equally and ratably secured.
In May 2009, the Company issued $1,000 in senior notes, which rank equally with all of the Company’s other
senior unsecured indebtedness. In conjunction with the debt issuance, the Company paid off $191 of
7.50% Debentures due May 2037 that contained put options exercised in May 2009, early redeemed $60 of
6.77% Medium Term Notes due July 2009 and purchased pursuant to a tender offer $232 of 7.875% Notes
due August 2009, $177 of 6.95% Notes due August 2009 and $110 of 8.35% Notes due May 2010 for an
aggregate payment of $777 in cash. The remainder of the debt issuance proceeds was used to reduce
borrowings under the Revolving Credit Facility.
In May 2009, the Company amended and extended its 364-day accounts receivable securitization program.
The Company can borrow up to $200 on a revolving basis, with borrowings secured by eligible accounts
receivable, which remain under the Company’s control. The facility fee in effect on February 27, 2010, based
on the Company’s current credit ratings, was 1.00 percent. The Company intends to execute a new $200
program in May 2010.
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