Neiman Marcus 2012 Annual Report Download - page 41

Table of Contents
TLF Amendment increased the amount of borrowings to $2,060.0 million and extended the maturity of the loans to May 16, 2018. Loans that were not
extended under the TLF Amendment were refinanced. The proceeds of the incremental borrowings under the term loan facility, along with cash on hand, were
used to repurchase or redeem the $752.4 million principal amount outstanding of Senior Notes. The TLF Amendment also provided for an uncommitted
incremental facility to request lenders to provide additional term loans, upon certain conditions, including that NMG’s secured leverage ratio (as defined in the
TLF Amendment) is less than or equal to 4.50 to 1.00 on a pro forma basis after giving effect to the incremental loans and the use of proceeds thereof.
In November 2012, we entered into a further amendment to the Senior Secured Term Loan Facility in order to provide for the incurrence of an
incremental term loan, increasing the principal amount of that facility to $2,560.0 million. The incremental term loan under the Senior Secured Term Loan
Facility bears interest under the same terms as the previously existing Senior Secured Term Loan Facility and has the same maturity. The proceeds of the
incremental borrowing, along with cash on hand, were used to repurchase or redeem the $500.0 million principal amount outstanding of Senior Subordinated
Notes.
On February 8, 2013, we entered into a repricing amendment with respect to the Senior Secured Term Loan Facility. The amendment provided for
(a) an immediate reduction in the interest rate margin applicable to the loans outstanding under the Senior Secured Term Loan Facility from 1) 3.50% to 3.00%
for LIBOR borrowings and 2) 2.50% to 2.00% for base rate borrowings, (b) an immediate lowering of the LIBOR floor for loans outstanding under the Senior
Secured Term Loan Facility from 1.25% to 1.00% and (c) the borrowing of incremental term loans, the proceeds of which were used to repay the outstanding
loans of lenders that did not consent to the repricing amendment (the Non-Consenting Lenders) in an aggregate principal amount of approximately
$99.6 million, which is the amount of loans held by such Non-Consenting Lenders on February 8, 2013.
At August 3, 2013, the outstanding balance under the Senior Secured Term Loan Facility was $2,560.0 million. On August 29, 2013, we made a
voluntary prepayment of $126.9 million on our Senior Secured Term Loan Facility, which was funded by cash on hand and borrowings of $100.0 million
under our Senior Secured Asset-Based Revolving Credit Facility. The principal amount of the loans outstanding is due and payable in full on May 16, 2018.
Depending on its leverage ratio as defined in the credit agreement governing the Senior Secured Term Loan Facility, NMG could be required to prepay
outstanding term loans from a certain portion of its annual excess cash flow, as defined in the credit agreement. The calculation of excess cash flow under the
credit agreement includes net income, adjusted for non-cash charges, decreases in working capital and long-term accounts receivable and other adjustments,
less the sum of the amount of non-cash credits included in computing net income, capital expenditures, debt principal repayments and other adjustments. The
leverage ratio under the credit agreement is computed as a ratio of total indebtedness to EBITDA, as such terms are defined in the credit agreement, for the
period of the most recently ended four full consecutive fiscal quarters. Required excess cash flow payments commence at 50% of NMG’s annual excess cash
flow (which percentage will be reduced to 25% if NMG’s leverage ratio is equal to or less than 5.0 to 1.0 but greater than 4.5 to 1.0 and will be reduced to 0% if
NMG’s leverage ratio is equal to or less than 4.5 to 1.0). NMG also must offer to prepay outstanding term loans at 100% of the principal amount to be
prepaid, plus accrued and unpaid interest, with the proceeds of certain asset sales under certain circumstances.
See Note 6 of the Notes to Consolidated Financial Statements in Item 15, which contains a further description of the terms of the Senior Secured
Term Loan Facility.
2028 Debentures. We have outstanding $125.0 million aggregate principal amount of 7.125% 2028 Debentures. Our 2028 Debentures mature on
June 1, 2028 (the 2028 Debentures).
See Note 6 of the Notes to Consolidated Financial Statements in Item 15, which contains a further description of the terms of the 2028 Debentures.
Interest Rate Caps. At August 3, 2013, we had outstanding floating rate debt obligations of $2,575.0 million. We have entered into interest rate cap
agreements which cap LIBOR at 2.50% for an aggregate notional amount of $1,000.0 million from December 2012 through December 2014 in order to hedge
the variability of our cash flows related to a portion of our floating rate indebtedness. In the event LIBOR is less than 2.50%, we will pay interest at the lower
LIBOR rate. In the event LIBOR is higher than 2.50%, we will pay interest at the capped rate of 2.50%.
39