Long-term Debt and Bank Credit Facilities

9 Months Ended

Oct. 05, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 5 – Long-term Debt and Bank Credit Facilities

Total debt outstanding was comprised of the following:

(In thousands)		October 5, 2013	December 29, 2012
Asset-backed credit agreement:
Revolving credit	$	328,282	188,825
Senior subordinated convertible debt, 3.50% due in 2035		-	148,724
Notes payable and mortgage notes, variable rate due in various installments through 2019		50,630	18,702
Equipment note, 2.61% due in various installments through 2018		6,807	-
Total debt		385,719	356,251
Less current maturities		(2,704)	-
Long-term debt	$	383,015	356,251

Asset-backed Credit Agreement

                On December 21, 2011, the Company and its subsidiaries entered into a credit agreement and related security and other agreements with Wells Fargo and the Lenders party thereto (the "Credit Agreement"), providing for a $520.0 million revolving asset-backed credit facility, which included a $50.0 million Swing Line sub-facility and a $75.0 million letter of credit sub-facility (the "Revolving Credit Facility").  At the inception of the agreement, we were required to maintain a reserve of $100.0 million with respect to the Senior Subordinated Convertible Debt, which reserve increased to $150.0 million commencing on December 15, 2012, and was eliminated upon redemption of the Senior Subordinated Convertible Debt on March 15, 2013.  Provided no event of default is then existing or would arise, the Company may from time-to-time request that the Revolving Credit Facility be increased by an aggregate amount (for all such requests) not to exceed $250.0 million.

                On November 27, 2012, the Company and its subsidiaries entered into Amendment No. 1 (the “Amendment”) to the Credit Agreement.

                Among other things, the Amendment (i) increased the commitments under the Credit Agreement by $70.0 million to $590.0 million, including within the increase a first-in last-out tranche (“FILO Tranche Loans”) of $30.0 million which amortizes by $2.5 million on the first day of each fiscal quarter beginning March 24, 2013, (ii) extended the maturity of the Credit Agreement by one year to December 21, 2017, and (iii) provided for increases to advance rates of certain components of the borrowing base as well as permitting the inclusion of asset classes in the borrowing base that were previously excluded.

                The principal amount outstanding under the amended Revolving Credit Facility, plus accrued and unpaid interest thereon, will be due and payable in full at maturity on December 21, 2017.  The Company can elect, at the time of borrowing, for loans to bear interest at a rate equal to either the base rate or LIBOR plus a margin.  The LIBOR interest rate margin can vary quarterly in 0.25% increments between three pricing levels ranging from 1.50% to 2.00%, except for FILO Tranche Loans which bear interest at a rate equal to LIBOR plus 2.75%.  The pricing levels for the non-FILO Tranche Loans are based on the Excess Availability, which is defined in the Credit Agreement as (a) the lesser of (i) the borrowing base; or (ii) the aggregate commitments; minus (b) the aggregate of the outstanding credit extensions.  The LIBOR interest rate margin was 1.75% as of October 5, 2013.

                At October 5, 2013, $248.0 million was available under the Revolving Credit Facility after giving effect to outstanding borrowings and to $13.7 million of outstanding letters of credit primarily supporting workers’ compensation obligations.

                The Credit Agreement contains no financial covenants unless and until (i) the continuance of an event of default thereunder, or (ii) the failure of the Company to maintain Excess Availability equal to or greater than 10% of the borrowing base at any time, in which event, the Company must comply with a trailing 12-month basis consolidated fixed charge covenant ratio of 1.0 : 1.0, which ratio shall continue to be tested each period thereafter until Excess Availability exceeds 10% of the borrowing base for three consecutive fiscal periods.

                The Credit Agreement contains usual and customary covenants for a facility of this type requiring the Company and its subsidiaries, among other things, to maintain collateral, comply with applicable laws, keep proper books and records, preserve corporate existence, maintain insurance and pay taxes in a timely manner. Events of default under the Credit Agreement are usual and customary for transactions of this type, subject to, in specific instances, materiality and cure periods including, among other things: (a) any failure to pay principal thereunder when due or to pay interest or fees on the due date; (b) material misrepresentations; (c) default under other agreements governing material indebtedness of the Company; (d) default in the performance or observation of any covenants; (e) any event of insolvency or bankruptcy; (f) any final judgments or orders to pay more than $15.0 million that remain unsecured or unpaid; (g) change of control, as defined in the Credit Agreement; and (h) any failure of a collateral document, after delivery thereof, to create a valid mortgage or first-priority lien.

                We are currently in compliance with all covenants contained within the Credit Agreement.

Senior Subordinated Convertible Debt

Tofinance a portion of the acquisition of two distribution centers in 2005, we sold $150.1 million in aggregate issue price (or $322.0 million aggregate principal amount at maturity) of senior subordinated convertible notes due in 2035.  The notes were unsecured senior subordinated obligations and ranked junior to our existing and future senior indebtedness, including borrowings under our Revolving Credit Facility.  On March 15, 2013, the Company completed the redemption of the notes at a price equal to $466.11 per $1,000 in principal amount at maturity, which resulted in a total payment of $150.1 million.  See our Annual Report on Form 10-K for the fiscal year ended December 29, 2012 filed with the Securities and Exchange Commission (“SEC”), for additional information regarding the notes.

Notes Payable and Mortgage Notes

On May 18, 2012, the Company, as guarantor for U Save Foods, Inc., a Nebraska corporation and wholly-owned subsidiary of Nash Finch Company, entered into a seven year $16.9 million term loan facility with First National Bank of Omaha.  This loan agreement is secured by seven corporate-owned retail locations in Nebraska.

                On June 26, 2013, the Company entered into a six-year $32.25 million term loan facility (“the Agreement”) with First National Bank of Omaha.  This loan facility is intended to provide working capital to be used for general corporate purposes.  The Agreement is secured by our executive office building in Minneapolis, Minnesota and our distribution centers in St. Cloud, Minnesota and Omaha, Nebraska.