Albertsons 2012 Annual Report Download - page 62

In June 2006, the Company entered into senior secured credit facilities provided by a group of lenders consisting
of a five-year revolving credit facility (the “Revolving Credit Facility”), a five-year term loan (“Term Loan A”)
and a six-year term loan (“Term Loan B”). On April 5, 2010, the Company entered into an Amended and
Restated Credit Agreement (the “Credit Agreement”), which provided 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 (“Term Loan B-2”)
was extended until October 5, 2015. The remainder of Term Loan B (“Term Loan B-1”) matures on June 2,
2012. On June 2, 2011, the $600 unextended Revolving Credit Facility expired and Term Loan A matured and
was paid.
On April 29, 2011, the Company entered into the First Amendment to the Credit Agreement (the “Amended
Credit Agreement”) which provided for Term Loan B-1 lenders to extend all or a portion of their advances into
either Term Loan B-2 or a new seven-year term loan (“Term Loan B-3”) and also allowed new lenders to
participate in Term Loan B-3. Through the amendment, $86 of Term Loan B-1 was extended into Term Loan B-2
and $161 of Term Loan B-1 was extended into Term Loan B-3. In addition, Term Loan B-3 received $291 of
new advances which were used to reduce short-term borrowings and to retire Term Loan A at its maturity. Term
Loan B-3 matures on April 29, 2018.
The fees and rates in effect on outstanding borrowings under the senior secured credit facilities are based on the
Company’s current credit ratings. As of February 25, 2012, there was $27 of outstanding borrowings under the
Revolving Credit Facility at Prime plus 1.50 percent, Term Loan B-1 had a remaining principal balance of $22 at
LIBOR plus 1.375 percent, all of which was classified as current. Term Loan B-2 had a remaining principal
balance of $577 at LIBOR plus 3.25 percent, of which $6 was classified as current. Term Loan B-3 had a
remaining principal balance of $448 at LIBOR plus 3.50 percent with a 1.00 percent LIBOR floor, of which $5
was classified as current. Letters of credit outstanding under the Revolving Credit Facility were $288 at fees up
to 2.75 percent and the unused available credit under the Revolving Credit Facility was $1,185. The Company
also had $2 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. Facility fees under the Revolving Credit Facility are 0.625 percent. Borrowings under the term loans
may be paid, in full or in part, at any time without penalty.
Under the Amended Credit Agreement, the Company must maintain a leverage ratio no greater than 4.0 to 1.0
from December 31, 2011 through December 30, 2012 and 3.75 to 1.0 thereafter. The Company’s leverage ratio
was 3.47 to 1.0 at February 25, 2012. Additionally, the Company must maintain expense fixed charge coverage
ratio of not less than 2.25 to 1.0 from December 31, 2011 through December 30, 2012 and 2.3 to 1.0 thereafter.
The Company’s fixed charge coverage ratio was 2.58 to 1.0 at February 25, 2012.
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 November 2011, the Company amended and extended its accounts receivable securitization program until
November 2014. 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. As of February 25, 2012, there was $55 of
outstanding borrowings under this facility at 1.10 percent. Facility fees on the unused portion are 0.50 percent.
As of February 25, 2012, there was $282 of accounts receivable pledged as collateral, classified in Receivables in
the Consolidated Balance Sheet.
As of February 25, 2012 and February 26, 2011, the Company had $28 and $30, respectively, of debt with
current maturities that are classified as long-term debt due to the Company’s intent to refinance such obligations
with the Revolving Credit Facility or other long-term debt.
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