Rite Aid 2012 Annual Report Download - page 36

Credit Facility
Our senior secured credit facility consists of a $1.175 billion revolving credit facility and two term
loans. Borrowings under the revolving credit facility bear interest at a rate per annum between LIBOR
plus 3.25% and LIBOR plus 3.75%, if we choose to make LIBOR borrowings, or between Citibank’s
base rate plus 2.25% and Citibank’s base rate plus 2.75% in each case based upon the amount of
revolver availability as defined in the senior secured credit facility. We are required to pay fees between
0.50% and 0.75% per annum on the daily unused amount of the revolver, depending on the amount of
revolver availability. Amounts drawn under the revolver become due and payable on August 19, 2015,
provided that such maturity date shall instead be April 18, 2014 in the event that on or prior to
April 18, 2014 we do not repay, refinance or otherwise extend the maturity date of our Tranche 2 Term
Loan (as defined below) to a date that is at least 90 days after August 19, 2015 and, in the case of a
repayment or refinancing, we must have at least $500.0 million of availability under the revolver.
Our ability to borrow under the revolver is based upon a specified borrowing base consisting of
accounts receivable, inventory and prescription files. At March 3, 2012, we had $136.0 million
borrowings outstanding under the revolver and had letters of credit outstanding against the revolver of
$128.2 million, which resulted in additional borrowing capacity of $910.8 million.
The credit facility also includes our $1.044 billion senior secured term loan (the ‘‘Tranche 2 Term
Loan’’). The Tranche 2 Term Loan will mature on June 4, 2014 and currently bears interest at a rate
per annum equal to LIBOR plus 1.75%, if we choose to make LIBOR borrowings, or at Citibank’s
base rate plus 0.75%. We must make mandatory prepayments of the Tranche 2 Term Loan with the
proceeds of asset dispositions and casualty events (subject to certain limitations), with a portion of any
excess cash flow generated by us (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 there is a shortfall
in our borrowing base under our senior secured credit facility, prepayment of the Tranche 2 Term Loan
may also be required.
On March 3, 2011, we refinanced the Tranche 3 Term Loan with a $331.8 million senior secured
term loan (the ‘‘Tranche 5 Term Loan’’). The Tranche 5 Term Loan matures on March 3, 2018,
although the maturity will instead be September 16, 2015, in the event that we do not repay or
refinance our outstanding 9.375% senior notes due 2015 prior to that time. The Tranche 5 Term Loan
bears interest at a rate per annum equal to LIBOR plus 3.25% with a 1.25% LIBOR floor. We must
make mandatory prepayments of the Tranche 5 Term Loan with the proceeds of asset dispositions and
casualty events (subject to certain limitations), with a portion of any excess cash flow generated by us
(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 there is a shortfall in our borrowing base under
our senior secured credit facility, prepayment of the Tranche 5 Term Loan may also be required.
The senior secured credit facility also restricts us and the subsidiary guarantors from accumulating
cash on hand in excess of $200.0 million at any time when revolving loans are outstanding (not
including cash located in our store deposit accounts, cash necessary to cover our current liabilities and
certain other exceptions) and from accumulating cash on hand with revolver borrowings in excess of
$100.0 million over three consecutive business days. The senior secured credit facility also states that if
at any time (other than following the exercise of remedies or acceleration of any senior obligations or
second priority debt and receipt of a triggering notice by the senior collateral agent from a
representative of the senior obligations or the second priority debt) either (a) an event of default exists
under our senior secured credit facility or (b) the sum of revolver availability under our senior secured
credit facility and certain amounts held on deposit with the senior collateral agent in a concentration
account is less than $100.0 million for three consecutive business days (a ‘‘cash sweep period’’), the
funds in our deposit accounts will be swept to a concentration account with the senior collateral agent
and will be applied first to repay outstanding revolving loans under the senior secured credit facility,
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