Dollar Tree 2014 Annual Report Download - page 47

31
due 2023 (the “2023 notes”, and together with the 2020 notes, the “acquisition notes”). The acquisition notes were offered only
to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”),
and outside the United States, only to non-U.S. investors pursuant to Regulation S under the Securities Act. The acquisition
notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United
States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not
subject to the registration requirements of the Securities Act or any state securities laws.
We expect to use the proceeds of the acquisition notes to finance in part the Acquisition. The proceeds of the 2020 notes
and the 2023 notes will be held in, and secured by liens on, separate escrow accounts with U.S. Bank National Association, as
escrow agent (the “Escrow Agent”), pending consummation of the Acquisition. We expect that, in connection with the
consummation of the Acquisition, our wholly owned subsidiary that issued the acquisition notes will merge with and into us,
we will assume the obligations in respect of the acquisition notes, and the acquisition notes will be jointly and severally
guaranteed on an unsecured, unsubordinated basis, subject to certain exceptions, by each of our subsidiaries that guarantees the
obligations under our new senior secured credit facilities or certain other indebtedness, including Family Dollar and certain of
its subsidiaries.
The 2020 notes, which mature on March 1, 2020, were issued pursuant to an indenture, dated as of February 23, 2015, with
U.S. Bank National Association, as trustee (the “2020 notes indenture”). The 2023 notes, which mature on March 1, 2023,
were issued pursuant to an indenture, dated as of February 23, 2015, with U.S. Bank National Association, as trustee (the “2023
notes indenture”, and together with the 2020 notes indenture, the “indentures”).
The indentures provide that if the Acquisition is not consummated before August 28, 2015, if the Escrow Agent has not
received certain additional monthly deposits by certain dates, or upon the occurrence of certain other events, the acquisition
notes will be subject to a special mandatory redemption at a price of 100% of the gross proceeds of the acquisition notes
offered, plus accrued and unpaid interest to, but excluding, the date of redemption.
Interest on the acquisition notes is due semiannually on March 1 and September 1 of each year, commencing on September
1, 2015. No principal is due on the acquisition notes within five years and annual interest is expected to be approximately
$183.1 million.
The indentures contain covenants that, from and after the date of the Acquisition, will limit our and certain of our
subsidiaries ability to, among other things and subject to certain significant exceptions: (i) incur, assume or guarantee
additional indebtedness; (ii) declare or pay dividends or make other distributions with respect to, or purchase or otherwise
acquire or retire for value, equity interests; (iii) make any principal payment on, or redeem or repurchase, subordinated debt;
(iv) make loans, advances or other investments; (v) incur liens; (vi) sell or otherwise dispose of assets, including capital stock
of subsidiaries; (vii) consolidate or merge with or into, or sell all or substantially all assets to, another person; and (viii) enter
into transactions with affiliates. The indentures also provide for certain events of default, which, if any of them occurs, would
permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding
acquisition notes under the applicable indenture to be declared immediately due and payable.
On March 9, 2015, our wholly owned subsidiary entered into a credit agreement, with JPMorgan Chase Bank, N.A., as
administrative agent, providing for $6,200 million in senior secured credit facilities (the “New Senior Secured Credit
Facilities”) consisting of a $1,250 million revolving credit facility (the “New Revolving Credit Facility”) and $4,950 million of
term loan facilities (the “New Term Loan Facilities”). The New Term Loan Facilities consist of a $1,000 million Term Loan A
tranche and a $3,950 million Term Loan B tranche. The New Revolving Credit Facility and the borrowings under the Term
Loan A tranche will mature five years after the closing of the Acquisition, unless any of the 2020 notes remain outstanding as of
91 days prior to their stated maturity, in which case the New Revolving Credit Facility and the borrowings under the Term Loan
A tranche will mature at such time. The borrowings under the Term Loan B tranche will mature seven years after the closing of
the Acquisition. Annual interest expense on the New Term Loan Facilities is expected to approximate $197.6 million.
The proceeds of the borrowings under the Term Loan B tranche were deposited in an escrow account (separate from the
escrow accounts related to the acquisition notes) and will be held in escrow prior to the closing of the Acquisition. Upon the
consummation of the Acquisition, we will become the borrower under the New Senior Secured Credit Facilities and will draw
the term loans under the Term Loan A facility and will have the ability to borrow under the New Revolving Credit Facility.
The New Senior Secured Credit Facilities will not be guaranteed by us or any of our subsidiaries prior to the
consummation of the Acquisition, but upon consummation of the Acquisition the New Senior Secured Credit Facilities will be
guaranteed by certain of our direct or indirect wholly owned U.S. subsidiaries, including Family Dollar and certain of its
subsidiaries (collectively, the “Credit Agreement Guarantors”). Upon the consummation of the Acquisition, we expect the New