Albertsons 2015 Annual Report Download - page 76

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On April 17, 2014, the Company entered into an amendment (the “First ABL Amendment”) to its Revolving ABL Credit
Facility that reduced the interest rates to LIBOR plus 1.50 percent to LIBOR plus 2.00 percent or prime plus 0.50 percent to
prime plus 1.00 percent, depending on utilization. The First ABL Amendment also eliminated the springing maturity provision
that would have accelerated the maturity of the facility to 90 days prior to May 1, 2016 if more than $250 of the Company’s
8.00 percent Senior Notes due May 2016 (the "2016 Notes") remained outstanding as of that date. The springing maturity
provision was replaced with a springing reserve provision that calls for a reserve to be placed against availability under the
facility in the amount of any outstanding Material Indebtedness (as defined in the facility) that is due within 30 days of the date
the reserve is established. The First ABL Amendment also amended the facility to provide that the Company may incur
additional term loans under the Secured Term Loan Facility in an aggregate principal amount of up to $500 instead of $250 as
was in effect prior to the First ABL Amendment, subject to identifying term loan lenders or other institutional lenders willing to
provide the additional loans and satisfying certain terms and conditions. In addition, the First ABL Amendment extended the
maturity date of the facility to February 21, 2019 and contains modified covenants to give the Company additional strategic and
operational flexibility.
On September 30, 2014, the Company entered into a second amendment (the “Second ABL Amendment”) to its Revolving
ABL Credit Facility that extended the maturity date of the facility to September 30, 2019 from its prior maturity date of
February 21, 2019. The Second ABL Amendment also added a springing maturity provision that would accelerate the maturity
of the facility to 90 days prior to the scheduled maturity date of the Secured Term Loan Facility if there are any obligations
outstanding under the Secured Term Loan Facility as of that date. By extending the maturity date of the Revolving ABL Credit
Facility to a date at least six months later than the maturity date of the Secured Term Loan Facility, the Company now has
greater flexibility to prepay the 2016 Notes with proceeds of the Revolving ABL Credit Facility.
The revolving loans under the Revolving ABL Credit Facility may be voluntarily prepaid in certain minimum principal
amounts, in whole or in part, without premium or penalty, subject to breakage or similar costs. The Company and those
subsidiaries named as borrowers under the Revolving ABL Credit Facility are required to repay the revolving loans in cash and
provide cash collateral under this facility to the extent that the revolving loans and letters of credit exceed the lesser of the
borrowing base then in effect or the aggregate amount of the lenders’ commitments under the Revolving ABL Credit Facility.
During the fiscal year ended February 28, 2015, the Company borrowed $3,268 and repaid $3,268 under its Revolving ABL
Credit Facility and its previous revolving credit facility due March 2018. During the fiscal year ended February 22, 2014, the
Company borrowed $3,803 and repaid $4,010 under its previous revolving credit facilities. Certain of the Company’s material
subsidiaries are co-borrowers under the Revolving ABL Credit Facility, and this facility is guaranteed by the rest of the
Company’s material subsidiaries (the Company and those subsidiaries named as borrowers and guarantors under the Revolving
ABL Credit Facility, the “ABL Loan Parties”). To secure their obligations under this facility, the ABL Loan Parties have
granted a perfected first-priority security interest for the benefit of the facility lenders in its present and future inventory, credit
card, wholesale trade, pharmacy and certain other receivables, prescription files and related assets. In addition, the obligations
under the Revolving ABL Credit Facility are secured by second-priority liens on and security interests in the collateral securing
the Secured Term Loan Facility, subject to certain limitations to ensure compliance with the Company’s outstanding debt
instruments and leases.
Both the Secured Term Loan Facility and the Revolving ABL Credit Facility limit the Company’s ability to make Restricted
Payments (as defined in both the Secured Term Loan Facility and the Revolving ABL Credit Facility), which include dividends
to stockholders. The Secured Term Loan Facility caps the aggregate amount of Restricted Payments that may be made over the
life of the Secured Term Loan Facility. That aggregate cap can fluctuate over time and the cap could be reduced by certain other
actions taken by the Company, including certain debt prepayments and Permitted Investments (as defined in the Secured Term
Loan Facility). As of February 28, 2015, the aggregate cap on Restricted Payments was approximately $299. The Revolving
ABL Credit Facility permits regularly scheduled dividends up to $50 in aggregate per fiscal year as long as no Cash Dominion
Event (as defined in the Revolving ABL Credit Facility) exists. The Revolving ABL Credit Facility permits other Restricted
Payments as long as the Payment Conditions (as defined in the Revolving ABL Credit Facility) are met.
Debentures
On November 14, 2014, the Company issued $350 of 7.75 percent Senior Notes due November 2022 (the “2022 Notes”) under
its shelf registration statement. Financing costs of approximately $4 were paid, capitalized and included in Other assets on the
Consolidated Balance Sheets.
Simultaneously with the issuance of the 2022 Notes, the Company delivered a 30 day redemption notice for $350 of 2016
Notes. The net proceeds from the 2022 Notes, together with borrowings under the ABL Credit Facility, were used to fund the
redemption of $350 of outstanding 2016 Notes and to pay accrued and unpaid interest on the redeemed 2016 Notes and the
applicable redemption premium of approximately $35, which was expensed. In addition, non-cash charges of $5 for the write-
off of existing unamortized financing costs and original issue discount on the redeemed 2016 Notes were incurred.