Express 2010 Annual Report Download - page 95

may be netted against consolidated debt for borrowed money for this purpose), including amounts drawn under
letters of credit and any synthetic debt, to Adjusted EBITDA (“Leverage Ratio”), in effect on the first day of each
interest period with respect to LIBOR-based advances and by the Leverage Ratio in effect from time to time with
respect to base rate-based advances. As a result of the amendment described above, effective March 5, 2010, the
applicable margin rate for LIBOR-based advances is 4.25% per annum, or 4.00% if the Leverage Ratio is less
than 1.00 to 1.00, and for base rate-based advances is 3.25% per annum, or 3.00% if the Leverage Ratio is less
than 1.00 to 1.00. Additionally, these rates may be further increased by 50 basis points per annum in the event
that Express, LLC fails to maintain, at the time of determination, a corporate family rating of B2 or better by
Moody’s and a corporate credit rating of B or better by S&P. As of January 29, 2011, the interest rate under the
Opco term loan was 4.54%.
Interest payments under the Opco term loan are due quarterly on the last calendar day of each April, July,
October, and January for base rate-based advances and on the last day of the applicable interest period for
LIBOR-based advances for interest periods of one, two, three, and six months (or if available to all lenders, nine
or twelve months), and additionally every three months after the first day of the interest period for LIBOR-based
advances for interest periods of greater than three months. Principal payments under the Opco term loan are due
quarterly on the last business day of each April, July, October, and January through July 6, 2013, in equal
installments of 0.25% of the initial principal balance with the balance of principal due on July 6, 2014.
The agreement governing the Opco term loan requires that annual prepayments of principal be made within five
business days after the 120th calendar day following the end of each fiscal year in the amount by which an
applicable percentage of “excess cash flow” (as defined in the agreement) that corresponds to Express Holding’s
Leverage Ratio, exceeds any voluntary prepayments of the Opco term loan over the fiscal year.
The Opco term loan contains customary covenants and restrictions on Express Holding and its subsidiaries’
activities, including, but not limited to, limitations on the incurrence of additional indebtedness; liens, negative
pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, and prepayment of other debt;
distributions, dividends, and the repurchase of capital stock; transactions with affiliates; the ability to change the
nature of its business or its fiscal year; the ability to amend the terms of the Opco revolving credit facility; and
permitted activities of Express Holding. All obligations under the Opco term loan are guaranteed by Express
Holding and Express, LLC’s subsidiaries and secured by a lien on substantially all of the assets of Express
Holding and its subsidiaries; provided that the liens on certain assets of Express Holding and its subsidiaries shall
be junior in priority to the liens securing the Opco revolving credit facility.
The Opco term loan also requires that Express Holding maintain a Leverage Ratio for the most recently
completed reporting period (last 4 consecutive quarters as of the end of each quarter) of not more than 1.75 to
1.00. Express Holding was in compliance with the covenant requirement as of January 29, 2011.
Effective July 6, 2007, Express, LLC entered into a receive variable/pay fixed interest rate swap agreement to
mitigate exposure to interest rate fluctuations on a notional principal amount of $75.0 million of the
$125.0 million variable-rate Opco term loan. The interest rate swap agreement terminated on August 6, 2010.
Senior Notes
On March 5, 2010, Express and Express Finance co-issued, in a private placement, $250.0 million of 8
3
⁄ 4 %
Senior Notes due 2018 at an offering price of 98.599% of the face value. An affiliate of Golden Gate purchased
$50.0 million of Senior Notes in the offering. Interest on the Senior Notes is payable on March 1 and
September 1 of each year. On March 5, 2010, net proceeds of $241.4 million (net of original issuance and
underwriting discount) were received from the Senior Notes. Net proceeds from the Senior Notes offering were
used to prepay $154.9 million related to the Term C Loan (including principal, interest, and a prepayment
penalty), $85.2 million was allocated to the Company, and the remainder was used to pay related transaction fees
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