8-KMaterial AgreementsFinancial Events

AUTOZONE INC 8-K Report, Material Agreement (Jul 9, 2009)

Filed July 9, 2009For Securities:AZO

Summary

This 8-K filing reports on AutoZone, Inc.'s significant refinancing activities as of July 9, 2009. The company entered into a new $800 million Revolving Credit Agreement, which can be increased to $1 billion, replacing its previous $1 billion in credit facilities. This new agreement has a termination date of July 15, 2012, with a potential extension to July 15, 2013. The document details the terms of the new facility, including interest rate calculations based on Eurodollar and base rates plus an "Applicable Margin" tied to AutoZone's credit default swap spread and long-term debt ratings. It also outlines sublimits for swingline loans and letters of credit, as well as covenants related to debt-to-EBITDAR and EBITDAR-to-interest and rent expense ratios.

Key Highlights

  • 1AutoZone entered into a new $800 million Revolving Credit Agreement, which can be expanded to $1 billion.
  • 2The new agreement replaces prior credit facilities totaling $1 billion, indicating a refinancing and potential adjustment in credit capacity.
  • 3The termination date for the new agreement is July 15, 2012, with an option for AutoZone to request an extension to July 15, 2013.
  • 4Interest rates will be determined by fluctuating base or Eurodollar rates plus an 'Applicable Margin' linked to AutoZone's credit default swap spread and debt ratings.
  • 5The agreement includes specific sublimits: $50 million for swingline loans and $200 million for letters of credit.
  • 6Key financial covenants require AutoZone to maintain a Consolidated Adjusted Debt to Consolidated Adjusted EBITDAR ratio not exceeding 3.10:1.00 and a Consolidated EBITDAR to Consolidated Interest Expense plus Consolidated Rents ratio of at least 2.50:1.00.

Frequently Asked Questions

The main purpose of this 8-K filing is to inform investors about AutoZone's entry into a new Revolving Credit Agreement and the termination of its previous credit facilities, marking a significant update to the company's financing structure.

The new Revolving Credit Agreement provides for up to $800 million, expandable to $1 billion, replacing the prior aggregate credit of $1 billion. While the total potential capacity is similar, the terms, maturity, and interest rate calculation methods have been updated.

AutoZone must ensure its ratio of 'Consolidated Adjusted Debt' to 'Consolidated Adjusted EBITDAR' does not exceed 3.10 to 1.00. Additionally, it must maintain a minimum ratio of 'Consolidated EBITDAR' to 'Consolidated Interest Expense plus Consolidated Rents' of 2.50 to 1.00.

The new Revolving Credit Agreement terminates on July 15, 2012. However, AutoZone has the option to request an extension of this termination date to July 15, 2013, subject to lender agreement.