Albertsons 2016 Annual Report Download - page 81

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The Company’s credit facilities and certain long-term debt agreements have restrictive covenants and cross-default provisions,
which generally provide, subject to the Company’s right to cure, for the acceleration of payments due in the event of a breach
of a covenant or a default in the payment of a specified amount of indebtedness due under certain other debt agreements. The
Company was in compliance with all such covenants and provisions for all periods presented.
Senior Secured Credit Agreements
As of February 27, 2016 and February 28, 2015, the Company had outstanding borrowings of $1,459 and $1,469, respectively,
under its $1,500 term loan facility (the “Secured Term Loan Facility”), which is secured by substantially all of the Company’s
real estate, equipment and certain other assets, and bears interest at the rate of LIBOR plus 3.50 percent subject to a floor on
LIBOR of 1.00 percent. The Secured Term Loan Facility is guaranteed by the Company’s material subsidiaries (together with
the Company, the “Term Loan Parties”). To secure their obligations under the Secured Term Loan Facility, the Company
granted a perfected first-priority security interest for the benefit of the facility lenders in the Term Loan Parties’ equity interests
in Moran Foods, LLC, the main operating entity of the Company’s Save-A-Lot business, and the Term Loan Parties granted a
perfected first priority security interest in substantially all of their intellectual property and a first priority mortgage lien and
security interest in certain owned or ground-leased real estate and associated equipment pledged as collateral. As of
February 27, 2016 and February 28, 2015, there was $781 and $776, respectively, of owned or ground-leased real estate and
associated equipment pledged as collateral, which was included in Property, plant and equipment, net in the Consolidated
Balance Sheets. In addition, the obligations of the Term Loan Parties under the Secured Term Loan Facility are secured by
second-priority security interests in the collateral securing the Company’s $1,000 asset-based revolving ABL credit facility (the
“Revolving ABL Credit Facility”). As of February 27, 2016 and February 28, 2015, $102 and $11 of the Secured Term Loan
Facility was classified as current, respectively.
The loans under the Secured Term Loan Facility may be voluntarily prepaid in certain minimum principal amounts, subject to
the payment of breakage or similar costs. Pursuant to the Secured Term Loan Facility, the Company must, subject to certain
customary reinvestment rights, apply 100 percent of Net Cash Proceeds (as defined in the facility) from certain types of asset
sales (excluding proceeds of the collateral security of the Revolving ABL Credit Facility and other secured indebtedness) to
prepay the loans outstanding under the Secured Term Loan Facility. The Company must also prepay loans outstanding under
the facility no later than 90 days after the fiscal year end in an aggregate principal amount equal to a percentage (which
percentage ranges from 0 to 50 percent depending on the Company’s Total Secured Leverage Ratio (as defined in the facility)
as of the last day of such fiscal year) of Excess Cash Flow (as defined in the facility) for the fiscal year then ended minus any
voluntary prepayments made during such fiscal year with Internally Generated Cash (as defined in the facility). Based on the
Company's Excess Cash Flow for the fiscal year ended February 27, 2016, a $99 prepayment will be required under the
Secured Term Loan Facility no later than 90 days after the fiscal year ended February 27, 2016.
On February 3, 2016, the Company entered into Amendment No. 3 (the "Third ABL Amendment") to the Revolving ABL
Credit Facility that extended the maturity date of the facility to February 3, 2021 from its prior maturity date of September 30,
2019. The Third ABL Amendment also reduced the rate at which interest is paid on loans under the Revolving ABL Credit
Facility by 25 basis points to, at the Company’s election, LIBOR plus an interest rate margin between 1.25 percent to 1.75
percent or prime plus an interest rate margin between 0.25 percent to 0.75 percent, in each case, depending on quarterly average
excess availability. The Third ABL Amendment also reduced the letter of credit fee under the Revolving ABL Credit Facility to
1.25 percent to 1.75 percent, depending on quarterly average excess availability. Further, the amount of the facility fee required
to be paid quarterly in arrears by the Company was reduced to 0.25 percent multiplied by the aggregate unused commitments
under the Revolving ABL Credit Facility. This Third ABL Amendment also permits the Company and its subsidiaries to
undertake certain transactions reasonably determined by the Company to be necessary to effectuate a spin-off of Save-A-Lot. In
addition, the Third ABL Amendment also modifies certain representations and warranties, covenants and events of default set
forth in the Revolving ABL Credit Facility, and provides for the adjustment of certain covenants in the event a spin-off of Save-
A-Lot is consummated.
As of February 27, 2016 and February 28, 2015, the Company had $138 and $0 of outstanding borrowings under the Revolving
ABL Credit Facility, respectively. As of February 27, 2016, letters of credit outstanding under the Revolving ABL Credit
Facility were $69 at fees of 1.625 percent, and the unused available credit under this facility was $744 with facility fees of 0.25
percent. As of February 28, 2015, letters of credit outstanding under the Company's Revolving ABL Credit Facility were $76 at
fees of 1.625 percent, and the unused available credit under this facility was $871 with facility fees of 0.375 percent. As of
February 27, 2016, the Revolving ABL Credit Facility was secured on a first-priority basis by $1,238 of certain inventory assets
included in Inventories, net, $222 of certain receivables included in Receivables, net, $23 of certain amounts included in Cash
and cash equivalents and all of the Company’s pharmacy scripts included in Intangible assets, net, in the Consolidated Balance
Sheets. As of February 28, 2015, the Revolving ABL Credit Facility was secured on a first-priority basis by $1,188 of certain
inventory assets included in Inventories, net, $220 of certain receivables included in Receivables, net, $28 of certain amounts