Safeway 2000 Annual Report Download - page 35

Safeway Inc. and Subsidiaries
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BANK CREDIT AGREEMENT Safeway’s total borrowing
capacity under the bank credit agreement is $3.0 billion. Of
the $3.0 billion credit line, $2.0 billion matures in 2002 and
has two one-year extension options, and $1.0 billion is
renewable annually through 2004. The restrictive covenants
of the bank credit agreement limit Safeway with respect to,
among other things, creating liens upon its assets and dis-
posing of material amounts of assets other than in the ordi-
nary course of business. Safeway is also required to meet cer-
tain financial tests under the bank credit agreement. At year-
end 2000, the Company had total unused borrowing capaci-
ty under the bank credit agreement of $492 million.
U.S. borrowings under the bank credit agreement carry
interest at one of the following rates selected by the
Company: (i) the prime rate; (ii) a rate based on rates at
which Eurodollar deposits are offered to first-class banks by
the lenders in the bank credit agreement plus a pricing mar-
gin based on the Company’s debt rating or interest coverage
ratio (the “Pricing Margin”); or (iii) rates quoted at the dis-
cretion of the lenders. Canadian borrowings denominated in
U.S. dollars carry interest at one of the following rates select-
ed by the Company: (a) the Canadian base rate; or (b) the
Canadian Eurodollar rate plus the Pricing Margin. Canadian
borrowings denominated in Canadian dollars carry interest
at one of the following rates selected by the Company: (i)
the Canadian prime rate or (ii) the rate for Canadian
bankers acceptances plus the Pricing Margin.
The weighted average interest rate on borrowings under
the bank credit agreement was 6.03% during 2000 and
6.13% at year-end 2000.
SENIOR SECURED INDEBTEDNESS The 9.30% Senior
Secured Debentures due 2007 are secured by a deed of
trust that created a lien on the land, buildings and
equipment owned by Safeway at its distribution center in
Tracy, California.
SENIOR UNSECURED INDEBTEDNESS In September 1999,
Safeway issued senior unsecured debt facilities consisting of
7.00% Notes due 2002, 7.25% Notes due 2004 and 7.5%
Notes due 2009.
In 1998 Safeway issued senior unsecured debt securities
consisting of 5.75% Notes due 2000, 5.875% Notes due
2001, 6.05% Notes due 2003 and 6.50% Notes due 2008.
On November 15, 2000, the 5.75% Notes, described above,
were paid.
In 1997 Safeway issued senior unsecured debt securities
consisting of 6.85% Senior Notes due 2004, 7.00% Senior
Notes due 2007 and 7.45% Senior Debentures due 2027.
The Company used the proceeds from this debt to redeem a
portion of the Senior Subordinated Indebtedness, described
below.
SENIOR SUBORDINATED INDEBTEDNESS The 10% Senior
Subordinated Notes due 2001, 9.65% Senior Subordinated
Debentures due 2004 and 9.875% Senior Subordinated
Debentures due 2007 are subordinated in right of payment
to, among other things, the Company’s borrowings under
the bank credit agreement, the 9.30% Senior Secured
Debentures, the Senior Unsecured Indebtedness and
mortgage notes payable.
MORTGAGE NOTES PAYABLE Mortgage notes payable at
year-end 2000 have remaining terms ranging from one to 23
years, have a weighted average interest rate of 8.28% and are
secured by properties with a net book value of approximately
$214 million.
OTHER NOTES PAYABLE Other notes payable at year-end
2000 have remaining terms ranging from one to nine years
and a weighted average interest rate of 7.09%.