Dollar Tree 2015 Annual Report Download - page 80

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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”).
Interest on the Acquisition Notes is due semiannually on March 1 and September 1 and commenced on September 1, 2015.
The Indentures contain covenants that limit the ability of the Company and certain of its subsidiaries 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.
Credit Facility and Term Loans
On March 9, 2015, the Escrow Issuer entered into a credit agreement, with JPMorgan Chase Bank, N.A., as administrative
agent, providing for $6.2 billion in senior secured credit facilities (the “New Senior Secured Credit Facilities”) consisting of a
$1.25 billion revolving credit facility (the “New Revolving Credit Facility”) and $4.95 billion of term loan facilities (the “New
Term Loan Facilities”). The New Term Loan Facilities consist of a $1.0 billion Term Loan A tranche and a $3.95 billion Term
Loan B tranche. The Term Loan B tranche also included a discount of 50 basis points or $19.8 million. The New Revolving
Credit Facility and the borrowings under the Term Loan A tranche mature five years after the Acquisition Date, 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
mature seven years after the Acquisition Date.
The New Senior Secured Credit Facilities were not guaranteed by the Company or any of its subsidiaries prior to the
consummation of the Acquisition, but upon and after the Acquisition Date, the New Senior Secured Credit Facilities are
guaranteed by certain of the Company's direct or indirect wholly-owned U.S. subsidiaries, including Family Dollar and certain
of its subsidiaries (collectively, the “Credit Agreement Guarantors”). Upon and after the Acquisition Date, the New Senior
Secured Credit Facilities are secured by a security interest in substantially all of the assets of the Company and the Credit
Agreement Guarantors, subject to certain exceptions.
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 held in escrow until the Acquisition Date. Upon the consummation of
the Acquisition, the Escrow Issuer merged with and into the Company, the Company became the borrower under the New
Senior Secured Credit Facilities and drew the borrowings under the Term Loan A facility and the Company has the ability to
borrow under the New Revolving Credit Facility.
On June 11, 2015, the Escrow Issuer amended the terms of the New Senior Secured Credit Facilities to refinance the Term
Loan B tranche with $3.3 billion of floating-rate Term B-1 Loans and $650.0 million of fixed-rate Term B-2 Loans. The
Company incurred charges on the amendment of $69.1 million which is comprised of a 1.0% prepayment penalty and the
write-off of the debt discount and related debt issuance costs. These charges are recorded in "Interest expense, net" in the
accompanying consolidated income statements.
The loans under the Term Loan A tranche and the New Revolving Credit Facility bear interest at LIBOR plus 2.25% per
annum (or a base rate plus 1.25%), the Term B-1 Loans of the New Senior Secured Credit Facilities bear interest at LIBOR plus
2.75% per annum (or a base rate plus 1.75%) and the Term B-2 Loans bear interest at a fixed rate of 4.25%. The Term B-1
tranche is subject to a “LIBOR floor” of 0.75%. The Term Loan A tranche of the New Term Loan Facilities requires quarterly
amortization payments of 1.25% of the original principal amount thereof in the first year following the Acquisition Date, 2.5%
of the original principal amount thereof in the second year following the Acquisition Date, and 3.75% of the original principal
amount thereof thereafter. The Term B-1 Loans require quarterly amortization payments of 0.25% of the original principal
amount thereof after the Acquisition Date and the Term B-2 Loans do not require amortization payments prior to maturity. The
New Term Loan Facilities, excluding the Term B-2 Loans, also require mandatory prepayments in connection with certain asset
sales and out of excess cash flow, among other things, and subject in each case to certain significant exceptions. The Company
will pay certain commitment fees in connection with the New Revolving Credit Facility. Additionally, the Term B-1 Loans
require the Company to pay a 1.0% prepayment fee if the loans thereunder are subject to certain repricing transactions before
June 11, 2016. The Term B-2 Loans require the Company to pay a 2.0% prepayment fee if they are repaid in the second year
after the refinance date and a 1.0% prepayment fee if they are repaid in the third year after the refinance date.