Rite Aid 2013 Annual Report Download - page 90

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011
(In thousands, except per share amounts)
11. Indebtedness and Credit Agreement (Continued)
Credit Facility
The Company has a senior secured credit facility that consists of a $1,795,000 revolving credit
facility and a $1,161,000 senior secured term loan (the ‘‘Tranche 6 Term Loan’’). Borrowings under the
revolving credit facility bear interest from February 21, 2013 through May 31, 2013 at a rate per annum
of LIBOR plus 2.50%, if we choose to make LIBOR borrowings, or Citibank’s base rate plus 1.50%,
and thereafter at a rate per annum between LIBOR plus 2.25% and LIBOR plus 2.75%, if the
Company chooses to make LIBOR borrowings, or between Citibank’s base rate plus 1.25% and
Citibank’s base rate plus 1.75% in each case based upon the amount of revolver availability as defined
in the senior secured credit facility. The Company is required to pay fees between 0.375% and 0.50%
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 February 21, 2018,
provided that such maturity date shall be accelerated to ninety-one days prior to the maturity of the
7.5% senior secured notes due 2017, in the event that the Company does not repay or refinance such
notes on or prior to such date, or ninety-one days prior to the maturity of the 9.5% senior notes due
2017, in the event that the Company does not repay or refinance such notes on or prior to such date.
The Tranche 6 Term Loan matures on February 21, 2020 and currently bears interest at a rate per
annum equal to LIBOR plus 3.00%, if the Company chooses to make LIBOR borrowings, or at
Citibank’s base rate plus 2.00%. The Tranche 6 Term Loan is subject to a 1.00% LIBOR floor per
annum.
The Company’s ability to borrow under the revolver is based upon a specified borrowing base
consisting of accounts receivable, inventory and prescription files. At March 2, 2013, the Company had
$665,000 of borrowings outstanding under the revolver and had letters of credit outstanding against the
revolver of $114,970, which resulted in additional borrowing capacity of $1,015,030.
The senior secured credit facility contains certain restrictions on the ability of the Company and
the subsidiary guarantors to accumulate cash on hand, and under certain circumstances, requires the
funds in the Company’s deposit accounts to be applied first to the repayment of outstanding revolving
loans under the senior secured credit facility and then to be held as Collateral for the senior
obligations.
The senior credit facility restricts the amount of secured and unsecured debt the Company may
have outstanding in addition to borrowings under the senior secured credit facility and existing
indebtedness, subject to limitations on the amount of such debt that shall mature or require scheduled
payments of principal prior to May 21, 2020. The senior secured credit facility allows the Company to
incur an unlimited amount of unsecured debt with a maturity beyond May 21, 2020. However, the
Company’s second priority secured term loan facility and the indentures that govern the Company’s
secured and guaranteed unsecured notes contain restrictions on the amount of additional secured and
unsecured debt that can be incurred by the Company. The Company could not incur any additional
secured debt assuming a fully drawn revolver and the outstanding letters of credit. The ability to issue
additional unsecured debt under the second priority secured term loan facility and the indentures is
generally governed by an interest coverage ratio test.
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