8-KMaterial AgreementsFinancial EventsExhibits & Filings

AUTOZONE INC 8-K Report, Material Agreement (Dec 29, 2004)

Filed December 29, 2004For Securities:AZO

Summary

AutoZone, Inc. (AZO) has filed an 8-K report detailing a significant financing event. On December 23, 2004, the company entered into a $300 million, 5-year term loan agreement with a syndicate of financial institutions, led by Fleet National Bank as administrative agent. This loan facility provides AutoZone with substantial liquidity and strategic flexibility. The company has elected to draw the full principal amount as a Eurodollar loan, scheduled to be funded on December 29, 2004. To manage interest rate risk, AutoZone also entered into an interest rate swap agreement on December 29, 2004, effectively fixing the interest rate on the term loan at 4.55%. This proactive measure signals a commitment to financial stability and predictable borrowing costs for investors.

Key Highlights

  • 1AutoZone secured a new $300 million, 5-year term loan facility.
  • 2Fleet National Bank is the administrative agent for the new credit facility.
  • 3The company intends to draw the full $300 million on December 29, 2004, as a Eurodollar loan.
  • 4An interest rate swap agreement was executed on December 29, 2004, to fix the loan's interest rate at 4.55%.
  • 5The Credit Agreement includes financial covenants related to debt-to-EBITDAR (max 3.00:1.00) and EBITDAR-to-interest and rent (min 2.50:1.00).
  • 6Customary events of default and cross-default provisions are included in the agreement.
  • 7The agreement allows for prepayment of the loan without penalty, subject to breakage costs for Eurodollar borrowings.

Frequently Asked Questions

This 8-K filing announces AutoZone's entry into a material definitive agreement, specifically a $300 million, 5-year term loan facility. It provides details about the loan terms, agents, lenders, and related financial arrangements.

The credit agreement is for a $300 million, 5-year term loan. Interest rates can be based on a base rate or a Eurodollar rate, with the Eurodollar rate initially set at 50 basis points over the defined Eurodollar rate, based on AutoZone's current credit ratings. The loan matures on December 23, 2009. The company has also entered into an interest rate swap to fix the rate at 4.55%.

AutoZone must maintain a ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDAR not greater than 3.00:1.00 at the end of each fiscal quarter. Additionally, the company must maintain a minimum ratio of Consolidated EBITDAR to Consolidated Interest Expense plus Consolidated Rents of 2.50:1.00.

Yes, AutoZone has the option to prepay the term loan in whole or in part at any time without penalty, although breakage and redeployment costs may apply to Eurodollar borrowings. The company also has flexibility in choosing interest periods for Eurodollar loans and can extend or convert loans.