Barnes and Noble 2013 Annual Report Download - page 23

the limited liability company agreement of NOOK Media,
no distributions may be made by NOOK Media without
Morrison’s approval.
On December 21, 2012, NOOK Media entered into an
agreement with a subsidiary of Pearson to make a strategic
investment in NOOK Media. That transaction closed on
January 22, 2013, and Pearson investedapproximately
$89.5 million of cashin NOOK Media at a post-money
valuation of approximately $1.789 billion in exchange for
convertible preferred membership interests representing
a 5% equity stake in NOOK Media. Following the closing of
the transaction, the Company owns approximately 78.2% of
NOOK Media and Microsoft, which holds convertible pre-
ferred membership interests, owns approximately 16.8%.
The convertible preferred membership interests have a
liquidation preference equal to the original investment.
In addition, NOOK Media granted warrants to Pearson to
purchase up to an additional 5% of NOOK Media under cer-
tain conditions at a pre-money valuation of NOOK Media of
approximately $1.789 billion.
At closing, NOOK Media and Pearson entered into a com-
mercial agreement with respect to distributing Pearson
content in connection with this strategic investment.
On August18, 2011, the Company entered into an invest-
ment agreement between the Company and Liberty pursu-
ant to which the Company issued and sold to Liberty, and
Liberty purchased, 204,000 shares of the Company’s Series
J Preferred Stock, par value $0.001 per share (Preferred
Stock), for an aggregate purchase price of $204.0 million in
a private placement exempt from the registration require-
ments of the 1933 Act. The shares of Preferred Stock will
be convertible, at the option of the holders, into shares of
Common Stock, based on the initial conversion rate. The
initial conversion rate reflects an initial conversion price
of $17.00 and is subject to adjustment in certain circum-
stances. The initial dividend rate for the Preferred Stock is
equal to 7.75%per annum of the initial liquidation prefer-
ence of the Preferred Stock to be paid quarterly and subject
to adjustment in certain circumstances.
On September30, 2009, in connection with the closing
of the acquisition of B&N College (the Acquisition), the
Company issued the sellers (i)a senior subordinated note
(the Senior Seller Note) in the principal amount of $100.0
million, with interest of 8% per annum payable on the
unpaid principal amount, which was paid on December 15,
2010 in accordance to its scheduled date, and (ii)a junior
subordinated note (the Junior Seller Note) in the princi-
pal amount of $150.0 million, payable in full on the fifth
anniversary of the closing of the Acquisition, with interest
of 10% per annum payable on the unpaid principal amount.
Pursuant to a settlement agreed to on June 13, 2012, the
sellers have agreed to waive their right to receive $22.8
million in principal amount (and interest on such principal
amount) of the Junior Seller Note.
On April29, 2011, the Company entered into an amended
and restated credit agreement (the 2011 Amended Credit
Agreement) with Bank of America, N.A., as adminis-
trative agent, collateral agent and swing line lender,
and other lenders, which amended and restated the
credit agreement (the 2009 Credit Agreement) entered
into on September30, 2009 with Bank of America,
N.A., as administrative agent, collateral agent and
swinglinelender,andother lenders. Under the 2011
Amended Credit Agreement, Lenders are providing up to
$1.0 billion in aggregate commitments under a five-year
asset-backed revolving credit facility (the 2011 Amended
Credit Facility), which is secured by eligible inventory
with the ability to include eligible real estate and accounts
receivable and related assets. Borrowings under the 2011
Amended Credit Agreement are limited to a specified
percentage of eligible inventories with the ability to include
eligible real estate, accounts receivable and accrued inter-
est, 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 2011 Amended Credit Agreement). In addi-
tion,the Company has the option to request an increase in
commitments under the 2011 Amended Credit Agreement
by up to $300.0 million, subject to certain restrictions.
The 2011 Amended Credit Agreement requires Availability
(as defined in the 2011 Amended Credit Agreement) to
be greater than the greater of (i)10% ofthe Loan Cap(as
defined in the 2011 Amended Credit Agreement)and
(ii)$50.0 million. In addition, the 2011 Amended Credit
Agreement contains covenants that limit, among other
things, the Company’s ability to incur indebtedness, cre-
ate liens, make investments, make restricted payments,
merge or acquire assets, dispose of assets, and contains
default provisions that are typical for this type of financ-
ing, among other things. Proceeds from the 2011 Amended
Credit Agreement are used for general corporate purposes,
including seasonal working capital needs.
As a result of the 2011 Amended Credit Agreement, $6.6
million of deferred financing fees related to the 2009
Credit Agreement were written off in fiscal 2011, and
included in net interest expenses. The remaining unam-
ortized deferred costs of $16.3 million and new charges
of $10.2 million relating to the Company’s 2011 Amended
Credit Facility were deferred and are being amortized over
the five-year term of the 2011 Amended Credit Facility.
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