| Item 1.01 | Entry into a Material Definitive Agreement |
On December 20, 2021 (the “Effective Date”), Albertsons Companies, Inc. (the “Company”) and certain of its subsidiaries entered into a Fourth Amended and Restated Asset-Based Revolving Credit Agreement (the “Restated Credit Agreement”) pursuant to which its existing Third Amended and Restated Asset-Based Revolving Credit Agreement, dated as of November 16, 2018, as amended prior to the Effective Date (the “Existing Credit Agreement”), by and among the Company, certain subsidiaries of the Company as borrowers or guarantors, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent, was amended and restated in its entirety.
The Restated Credit Agreement provides for a $4.0 billion senior secured revolving credit facility (the “ABL Facility”), with a $1.5 billion letter of credit subfacility and a $250 million swingline loan subfacility, subject to a borrowing base (described below). In addition, the Restated Credit Agreement also permits the Company to increase the commitments under the Restated Credit Agreement from time to time by up to $1.5 billion, subject to, among other things, the receipt of additional commitments from existing and/or new lenders and excess availability being greater than or equal to $0 on a pro forma basis. As of the Effective Date, there were no revolving loans outstanding and approximately $250 million in outstanding letters of credit under the Restated Credit Agreement. The proceeds of the loans under the Restated Credit Agreement may be used for working capital and general corporate purposes.
The ABL Facility bears interest, at the Company’s option, at (i) the base rate, plus an applicable margin equal to (a) 0.25% (if daily average excess availability during the most recently ended fiscal quarter is greater than or equal to 50% of the aggregate commitments), or (b) 0.50% (if daily average excess availability during the most recently ended fiscal quarter is less than 50% of the aggregate commitments), or (ii) LIBOR (based on one, three, six, and if available by all lenders, twelve-month interest periods), plus an applicable margin equal to (x) 1.25% (if daily average excess availability during the most recently ended fiscal quarter is greater than or equal to 50% of the aggregate commitments), or (y) 1.50% (if daily average excess availability during the most recently ended fiscal quarter is less than 50% of the aggregate commitments). The base rate means the highest of the prime rate, the federal funds rate plus a margin equal to 0.50%, the LIBOR rate for a 1-month interest period plus a margin equal to 1.0%, and 1.0%. The ABL Facility also provides for a successor rate to be determined when LIBOR is no longer available. If not paid when due, the ABL Facility bears interest at the rate otherwise applicable to such loans at such time plus an additional 2.0% per annum during the continuance of such payment event of default and the letter of credit fees increase by 2.0%. Other overdue amounts bear interest at a rate equal to the rate otherwise applicable to such revolving loans bearing interest at the base rate at such time, plus 2.0% until such amounts are paid in full. Interest is due and payable in arrears on the first business day of each month for loans bearing interest at the base rate and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the LIBOR rate.
Certain customary closing fees, arrangement fees, administration fees, commitment fees and letter of credit fees are payable to the lenders and the agents under the Restated Credit Agreement, including a commitment fee on the average daily unused amount of the ABL Facility, in an amount equal to 0.25% per annum.
The Company may borrow, repay and reborrow the loans under the ABL Facility until December 20, 2026, at which time the commitments will terminate and all outstanding loans, together with all accrued and unpaid interest, must be repaid. The Company may prepay the loans and terminate the loan commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions, including minimum amounts and reimbursement of certain costs in the case of prepayments of LIBOR loans.
The amount of loans and letters of credit available under the Restated Credit Agreement is limited to the lesser of the aggregate commitments under the Restated Credit Agreement or an amount determined pursuant to a borrowing base. The borrowing base at any time is equal to 90% of eligible credit card receivables, plus 90% of the net amount of eligible pharmacy receivables, plus 90% (or 92.5% for the three consecutive four-week fiscal accounting periods ending nearest to the end of February, March and April of each year) of the “net recovery percentage” of eligible inventory (other than perishable inventory) multiplied by the book value thereof, plus 90% (or 92.5% for the three consecutive four-week fiscal accounting periods ending nearest to the end of February, March and April of each year) of the “net recovery percentage” of eligible perishable inventory multiplied by the book value thereof (subject to a cap of 25% of the borrowing base), plus 85% of the product of the average per script net orderly liquidation value of the eligible prescription files of the borrowers and the guarantors thereunder (the “ABL Eligible Pharmacy Scripts”), multiplied by the number of such ABL Eligible Pharmacy Scripts (subject to a cap of 30% of the borrowing base), minus eligibility reserves. The eligibility of accounts receivable, inventory and prescription files for inclusion in the borrowing base will be determined in accordance with certain customary criteria specified in the Restated Credit Agreement, including periodic appraisals.
