Sprouts Farmers Market 2013 Annual Report Download - page 117

Table of Contents
Term Loan), adjusted for statutory reserves, plus a margin equal to 3.00%, or an alternate base rate, plus a margin equal to 2.00%,
as set forth in the Credit Facility. These interest margins were reduced to their current levels (from 3.50% and 2.50%, respectively)
effective August 2, 2013, as a result of (i) the consummation of the Company’s IPO, and (ii) the Company achieving a reduction in
the net first lien leverage ratio to less than or equal to 2.75 to 1.00.
Payments and Prepayments
The Term Loan will mature in April 2020 and will amortize at a rate per annum, in four equal quarterly installments, in an
aggregate amount equal to 1.00% of the original principal balance, with the balance due on the maturity date.
Subject to exceptions set forth therein, the Credit Facility requires mandatory prepayments in amounts equal to (i) 50%
(reduced to 25% if net first lien leverage is less than 3.00 to 1.00 but greater than 2.50 to 1.00 and 0% if net first lien leverage is
less than 2.50 to 1.00) of excess cash flow (as defined in the Credit Facility) at the end of each fiscal year, (ii) 100% of the net cash
proceeds from certain non-ordinary course asset sales by the Company or any subsidiary guarantor (subject to certain exceptions
and reinvestment provisions) and (iii) 100% of the net cash proceeds from the issuance or incurrence of debt by the Company or
any of its subsidiaries not permitted under the Credit Facility.
Voluntary prepayments of borrowings under the Credit Facility are permitted at any time, in agreed-upon minimum principal
amounts. There is a prepayment fee equal to 1.00% of the principal amount of the Term Loan under the Credit Facility optionally
prepaid in connection with any “repricing transaction” on or prior to April 23, 2014, the first anniversary of the closing date.
Prepayments made thereafter will not be subject to premium or penalty (except LIBOR breakage costs, if applicable).
Revolving Credit Facility
The Credit Facility includes a $60.0 million Revolving Credit Facility which matures in April 2018. The Revolving Credit Facility
includes letter of credit and $5.0 million swingline loan subfacilities. Letters of credit issued under the facility reduce the borrowing
capacity on the total facility. There are no amounts outstanding on the Revolving Credit Facility at December 29, 2013. Letters of
credit totaling $7.4 million have been issued as of December 29, 2013 primarily to support the Company’s insurance programs.
Amounts available under the Revolving Credit Facility at December 29, 2013 totaled $52.6 million.
Interest terms on the Revolving Credit Facility are the same as the Term Loan.
The Company capitalized debt issuance costs of $1.1 million related to the Revolving Credit Facility, which are being
amortized to interest expense over the term of the Revolving Credit Facility.
Under the terms of the Credit Facility, the Company is obligated to pay a commitment fee on the available unused amount of
the Revolving Credit Facility commitments equal to 0.50% per annum.
Covenants
The Credit Facility contains financial, affirmative and negative covenants. The negative covenants include, among other
things, limitations on the Company’s ability to:
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• incur additional indebtedness;
• grant additional liens;
•
enter into sale
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leaseback transactions;