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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 27, 2010, February 28, 2009 and March 1, 2008
(In thousands, except per share amounts)
11. Indebtedness and Credit Agreement (Continued)
Credit Facility
The Company has a senior secured credit facility that includes a $1,175,000 revolving credit facility.
Borrowings under the revolving credit facility bear interest at LIBOR plus 4.25% (with a minimum
LIBOR of 3.00%), if the Company chooses to make LIBOR borrowings, or at Citibank’s base rate plus
3.25% (with a minimum base rate of 4.00%). The interest rate can fluctuate between LIBOR plus
4.25% and LIBOR plus 4.75%, based upon the amount of revolver availability, as defined in the senior
secured credit facility. The Company is required to pay fees between 0.75% and 1.00% per annum on
the daily unused amount of the revolving credit facility, depending on the amount of revolver
availability. Amounts drawn under the revolving credit facility become due and payable in September
2012.
The Company’s ability to borrow under the revolving credit facility is based upon a specified
borrowing base consisting of accounts receivable, inventory and prescription files. At February 27, 2010,
the Company had $80,000 of borrowings outstanding under the revolving credit facility. At February 27,
2010, the Company also had letters of credit outstanding against the revolving credit facility of
$159,040, which gave the Company additional borrowing capacity of $935,960.
On June 4, 2007, the Company amended its senior secured credit facility to establish a new senior
secured term loan in the aggregate principal amount of $1,105,000 and borrowed the full amount
thereunder. A portion of the proceeds from the borrowings under this senior secured term loan (the
‘‘Tranche 2 Term Loan’’) were used to fund the acquisition of Brooks Eckerd. The Tranche 2 Term
Loan will mature on June 4, 2014 and currently bears interest at LIBOR plus 1.75%, if the Company
chooses to make LIBOR borrowings, or at Citibank’s base rate plus 0.75%. The Company must make
mandatory prepayments of the Tranche 2 Term Loan with the proceeds of asset dispositions (subject to
certain limitations), with a portion of any excess cash flow generated by the Company (as defined in
the senior secured credit facility) and with the proceeds of certain issuances of equity and debt (subject
to certain exceptions). If at any time total debt outstanding under the senior secured credit facility
exceeds the borrowing base, prepayment of the Tranche 2 Term Loan may also be required.
In July 2008, the Company issued a new senior secured term loan (the ‘‘Tranche 3 Term Loan’’) of
$350,000 under the Company’s existing senior secured credit facility. The Tranche 3 Term Loan was
issued at a discount of 90% of par. The Tranche 3 Term Loan matures on June 4, 2014 and bears
interest at LIBOR (with a minimum LIBOR rate of 3.00%) plus 3.00%, if the Company chooses to
make LIBOR borrowings, or at Citibank’s base rate (with a minimum base rate of 4.00%) plus 2.00%.
The Company must make mandatory prepayments of the Tranche 3 Term Loan with the proceeds of
asset dispositions (subject to certain limitations), with a portion of any excess cash flow generated by
the Company (as defined in the senior secured credit facility) and with the proceeds of certain
issuances of equity and debt (subject to certain exceptions). If at any time total debt outstanding under
the senior secured credit facility exceeds the borrowing base, prepayment of the Tranche 3 Term Loan
may also be required.
In June 2009, the Company issued a new senior secured term loan (the ‘‘Tranche 4 Term Loan’’)
of $525,000 under our existing secured credit facility. In October 2009, the Company issued an
additional $125,000 under the Tranche 4 Term Loan. The Tranche 4 Term Loan matures on June 10,
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