Best Buy 2013 Annual Report Download - page 91

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The Agreements permit borrowings of up to $2.5 billion (which may be increased to up to $3.0 billion at our option under
certain circumstances) and a $300 million letter of credit sublimit. The 364-Day Facility Agreement and the Five-Year Facility
Agreement terminate in August 2013 (subject to a one-year term-out option) and October 2016, respectively.
The interest rates under the Agreements are variable and are determined at our option as: (i) the sum of (a) the greatest of
JPMorgan's prime rate, the federal funds rate plus 0.5%, or the one-month London Interbank Offered Rate (“LIBOR”) plus 1%,
and (b) a margin (the “ABR Margin”); or (ii) the LIBOR plus a margin (the “LIBOR Margin”). In addition, a facility fee is
assessed on the commitment amount. The ABR Margin, LIBOR Margin and the facility fee are based upon our long-term credit
ratings. Under the 364-Day Facility Agreement, the ABR Margin ranges from 0.0% to 0.525%, the LIBOR Margin ranges from
0.925% to 1.525%, and the facility fee ranges from 0.075% to 0.225%. Under the Five-Year Facility Agreement, the ABR
Margin ranges from 0.0% to 0.475%, the LIBOR Margin ranges from 0.875% to 1.475%, and the facility fee ranges from
0.125% to 0.275%.
The Agreements are guaranteed by specified subsidiaries of Best Buy Co., Inc. and contain customary affirmative and negative
covenants. Among other things, these covenants restrict Best Buy Co., Inc. or its subsidiaries' ability to incur certain types or
amounts of indebtedness, incur liens on certain assets, make material changes in corporate structure or the nature of its
business, dispose of material assets, engage in a change in control transaction, make certain foreign investments, enter into
certain restrictive agreements, or engage in certain transactions with affiliates. The Agreements also contain covenants that
require us to maintain a maximum quarterly cash flow leverage ratio and a minimum quarterly interest coverage ratio. The
Agreements contain customary default provisions including, but not limited to, failure to pay interest or principal when due and
failure to comply with covenants. We were in compliance with all such covenants at February 2, 2013.
Europe Revolving Credit Facility
In July 2011, Best Buy Europe entered into a £400 million [$646 million based on the exchange rate in effect as of the end of
fiscal 2013 (11-month)] unsecured revolving credit facility agreement (the “RCF”) with ING Bank N.V., London Branch, as
agent, and a syndicate of banks to finance its working capital needs. The RCF expires in July 2015. Best Buy Europe had £369
million ($596 million) of borrowings under the RCF at February 2, 2013.
Interest rates under the RCF are variable, based on LIBOR plus an applicable margin based on Best Buy Europe’s fixed charges
coverage ratio. The RCF includes a commitment fee of 40% of the applicable margin on unused available capacity, as well as a
utilization fee ranging from 0.0% to 0.5% of the aggregate amount outstanding based on the percentage of the aggregate
amount outstanding to the total RCF. The RCF also required an initial arrangement fee of 0.75%.
The RCF is guaranteed by certain subsidiaries of Best Buy Europe and does not provide for any recourse to Best Buy Co., Inc.
The RCF contains customary affirmative and negative covenants. Among other things, these covenants restrict or prohibit Best
Buy Europe’s ability to incur certain types or amounts of indebtedness, make material changes in the nature of its business,
dispose of material assets, make guarantees, or engage in a change in control transaction. The RCF also contains covenants that
require Best Buy Europe to comply with a maximum annual leverage ratio and a maximum fixed charges coverage ratio.
The RCF replaced the previous £350 million Europe receivables financing facility (the “ERF”) between a subsidiary of Best
Buy Europe and a syndicate of banks, including Barclays Bank PLC acting as administrative agent. The ERF was originally
scheduled to expire in July 2012. The RCF also replaced Best Buy Europe’s previous £125 million revolving credit facility (the
“Old RCF”) with one of Best Buy Co., Inc.’s subsidiaries and Carphone Warehouse as lenders. The Old RCF was originally
scheduled to expire in March 2013.
Canada Revolving Demand Facility
We have a $50 million revolving demand facility available to our Canada operations including an additional seasonal facility of
$50 million Canadian dollars that is available from September through December of each year. There were no borrowings
outstanding under the facility at February 2, 2013. There is no set expiration date for the facility. All borrowings under the
facility are made available at the sole discretion of the lender and are payable on demand. Borrowings under the facility bear
interest at rates specified in the credit agreement for the facility. Borrowings are secured by a guarantee of Best Buy Co., Inc.
China Revolving Demand Facilities
We have $156 million in revolving demand facilities available to our China operations, of which no borrowings were
outstanding at February 2, 2013. The facilities are renewed annually with the respective banks. All borrowings under these
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