Barnes and Noble 2010 Annual Report Download - page 43

3. CREDIT FACILITY
On September 30, 2009, the Company entered into a credit
agreement (the Credit Agreement) with Bank of America,
N.A., as administrative agent, collateral agent and swing
line lender, and other lenders, under which the lenders
committed to provide up to $1,000,000 in commitments
under a four-year asset-backed revolving credit facility
(the Credit Facility) and which is secured by eligible inven-
tory and accounts receivable and related assets. Borrowings
under the Credit Agreement are limited to a specified
percentage of eligible inventories and accounts receivable
and accrue interest, at the election of the Company, at Base
Rate or LIBO Rate, plus, in each case, an Applicable Margin
(each term as defined in the Credit Agreement). In addi-
tion, the Company has the option to request the increase
in commitments under the Credit Agreement by up to
$300,000, subject to certain restrictions.
The Credit Agreement includes a fixed charge coverage
ratio requirement which would be triggered if Availability
(as defined in the Credit Agreement) were to fall below (a)
the greater of (i) 15% of the Loan Cap (as defined in the
Credit Agreement) or (ii) $110,000. In addition, the Credit
Facility contains covenants that limit, among other things,
the Company’s ability to incur indebtedness, create liens,
make investments, make restricted payments, merge or
acquire assets, and contains default provisions that are
typical for this type of financing, among other things.
The Company paid $37,207 for advisory and arrangement
fees related to the Credit Facility, which are being amor-
tized over the four-year life of the Credit Facility.
The Credit Facility replaces the Company’s prior $850,000
credit agreement (Prior Credit Facility) which had a matu-
rity date of July 31, 2011, as well as B&N College’s $400,000
credit agreement which had a maturity date of November
13, 2011. The remaining unamortized deferred costs of
$807 relating to the Company’s prior credit facility were
deferred and are being amortized over the four-year term
of the Credit Facility.
The Prior Credit Facility had a maturity date of July 31, 2011
and could have been increased to $1,000,000 under certain
circumstances at the option of the Company. The Prior
Credit Facility had an applicable margin that was applied
to loans and standby letters of credit ranging from 0.500%
to 1.000% above the stated Eurodollar rate. A fee was paid
on commercial letters of credit ranging from 0.2500% to
0.5000%. In addition, a commitment fee ranging from
0.100% to 0.200% was paid on the unused portion of the
Prior Credit Facility. In each case, the applicable rate was
based on the Company’s consolidated fixed charge coverage
ratio. Proceeds from the Prior Credit Facility were used for
general corporate purposes, including seasonal working
capital needs.
Selected information related to the Company’s Credit
Facility and Prior Credit Facility:
Fiscal
2010
13 Weeks
Ended
May 2,
2009
Fiscal
2008
Fiscal
2007
Credit facility at period end $ 260,400 — — —
Average balance
outstanding during the
period $ 107,504 — 63,871 1,392
Maximum borrowings
outstanding during the
period $ 512,500 — 199,900 37,600
Weighted average interest
rate during the period (a) 4.38% — 6.05% 173.16%
Interest rate at end of
period 4.13% — — —
a The fiscal 2007 interest rate is higher than the fiscal 2008 interest rate
due to the lower average borrowings and the fixed nature of the amor-
tization of the deferred financing fees and commitment fees. Excluding
the deferred financing fees and the commitment fees in fiscal 2007, the
weighted average interest rate was 7.51%.
Fees expensed with respect to the unused portion of the
Credit Facility and Prior Credit Facility were $4,198, $274,
$956 and $1,034 during fiscal 2010, the transition period,
fiscal 2008 and 2007, respectively. The increase in com-
mitment fees in fiscal 2010 was related to the Company’s
Credit Agreement entered into on September 30, 2009 in
connection with the Acquisition.
The Company has no agreements to maintain compensat-
ing balances.
4. ACQUISITION OF B&N COLLEGE
On September 30, 2009, the Company completed the
acquisition of B&N College from Leonard Riggio and Louise
Riggio (Sellers) pursuant a Stock Purchase Agreement
dated as of August 7, 2009 among the Company and the
Sellers. Mr. Riggio is the Chairman of the Company’s Board
of Directors and a significant stockholder. As part of the
transaction, the Company acquired the Barnes & Noble
trade name that had been owned by B&N College and
licensed to the Company.
2010 Annual Report 41