Safeway 2013 Annual Report Download - page 65

Table of Contents
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to not exceed an Adjusted Debt (total consolidated debt less cash and cash equivalents in excess of $75.0 million) to Adjusted EBITDA ratio of
3.5 to 1. As of December 28, 2013, the Company was in compliance with these covenant requirements. As of December 28, 2013, there
were no borrowings, and letters of credit totaled $43.4 million under the Credit Agreement. Total unused borrowing capacity under the credit
agreement was $1,456.6 million as of December 28, 2013.
The Sale of Canadian Operations was permitted under the terms of the Credit Agreement. The Company has the option to permanently
reduce or terminate the $250.0 million Canadian credit facility.
U.S. borrowings under the credit agreement carry interest at one of the following rates selected by the Company: (1) the prime rate; (2) 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 margin
based on the Company’s debt rating or interest coverage ratio (the “Pricing Margin”); or (3) rates quoted at the discretion of the lenders.
Canadian borrowings denominated in U.S. dollars carry interest at one of the following rates selected 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: (1) the Canadian prime rate; or (2) the rate for Canadian bankers acceptances plus the Pricing
Margin.
During 2013, the Company paid facility fees of 0.15% on the total amount of the credit facility.
Term Credit Agreement Safeway has a $700.0 million term credit agreement with a syndicate of banks which matures on March 19, 2015.
The term credit agreement provided an up to $700.0 million three-year and three-month senior term credit facility available to Safeway. Loans
under the term credit agreement carry interest, at Safeway’s option, at either a Base Rate (as defined in the Term Credit Agreement) plus a
pricing margin or a Eurodollar Rate (as defined in the Term Credit Agreement) plus a pricing margin. The Term Credit Agreement covenants
are substantially similar to the covenants contained in Safeway's existing bank credit agreement dated as of June 1, 2011, as previously
disclosed under the caption "Bank Credit Agreement." As of December 28, 2013, the Company was in compliance with these covenant
requirements. As of December 28, 2013, there were $400.0 million of outstanding borrowings under the Term Credit Agreement.
Shelf RegistrationOn October 24, 2011, the Company filed a shelf registration statement (the “Shelf”) with the SEC which enables
Safeway to issue an unlimited amount of debt securities and/or common stock. The Shelf expires on October 24, 2014. The Safeway Board
of Directors authorized issuance of up to $3.0 billion of securities under the Shelf. As of December 28, 2013, $1.95 billion of securities were
available for issuance under the board’s authorization.
Issuances of Senior Unsecured Indebtedness Safeway issued $250.0 million of Floating Rate Senior Notes on June 14, 2012, which
matured on December 12, 2013. The Company did not issue any senior unsecured debt in 2013.
Redemption of Notes In the fourth quarter of 2013, the Company redeemed $500.0 million of 6.25% Senior Notes due March 15, 2014.
This redemption resulted in a make-whole premium of $6.7 million, before tax, which is classified in Other Income on the consolidated
income statement.
Satisfaction and Discharge of Indenture In the fourth quarter of 2013, the Company deposited CAD304.5 million (USD292.2 million) in
an account with the Trustee under the indenture governing the CAD300.0 million (USD287.9 million), 3.00% Second Series Notes due
March 31, 2014. Safeway met the conditions for satisfaction and discharge of the Company's obligations under the indenture and as a result,
extinguished the CAD300.0 million (USD287.9 million) notes and CAD304.5 million (USD292.2 million) cash from the consolidated
balance sheet.
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