8-KLeadership ChangesMaterial AgreementsFinancial Events+4

DOLLAR GENERAL CORP 8-K Report, Material Agreement (Jul 12, 2007)

Filed July 12, 2007For Securities:DG

Summary

This Form 8-K filing from Dollar General Corporation (DG) on July 12, 2007, details the completion of a significant merger on July 6, 2007, where the company became a subsidiary of Buck Holdings, L.P., which is controlled by investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P., GS Capital Partners, Citi Private Equity, and other co-investors. This transaction resulted in substantial changes to the company's financing structure and executive leadership. The company has entered into significant new credit facilities, including a $2.3 billion senior secured term loan facility and a $1.125 billion senior secured asset-based revolving credit facility. Additionally, new notes have been issued: $1.175 billion in 10.625% senior notes due 2015 and $725 million in 11.875%/12.625% senior subordinated toggle notes due 2017. These financing arrangements include various covenants, prepayment requirements, and security interests. The filing also announces the departure of CEO David Perdue and the appointment of David Beré as interim CEO. A new stock incentive plan and management agreements with the investment firms were also established.

Key Highlights

  • 1Dollar General Corporation completed a merger with Buck Acquisition Corp., a subsidiary of Buck Holdings, L.P., on July 6, 2007.
  • 2New senior secured debt facilities were established: a $2.3 billion Term Loan Credit Facility and a $1.125 billion Asset-Based Credit Facility.
  • 3The company issued $1.175 billion in 10.625% Senior Notes due 2015 and $725 million in Senior Subordinated Toggle Notes due 2017.
  • 4The new debt instruments contain various covenants restricting the company's ability to incur additional debt, sell assets, pay dividends, make investments, and more.
  • 5David Perdue, the former Chairman and CEO, resigned effective upon the merger's completion.
  • 6David Beré has been appointed as the interim Chief Executive Officer until a permanent replacement is found, with his employment agreement detailing compensation and severance terms.
  • 7A new 2007 Stock Incentive Plan was established, allowing for awards of options covering 4% of the company's fully diluted equity post-merger.

Frequently Asked Questions

The main event reported is the completion of the merger between Dollar General Corporation and Buck Acquisition Corp. (a subsidiary of Buck Holdings, L.P.) on July 6, 2007. This transaction was orchestrated by investment funds affiliated with Kohlberg Kravis Roberts & Co., GS Capital Partners, and Citi Private Equity.

The company entered into a $2.3 billion senior secured term loan facility and a $1.125 billion senior secured asset-based revolving credit facility. Additionally, it issued $1.175 billion in senior notes due 2015 and $725 million in senior subordinated toggle notes due 2017, significantly altering its debt structure.

David Perdue, the former Chairman and CEO, resigned. David Beré has been appointed as the interim Chief Executive Officer. The filing also notes changes to the Board of Directors, with new members appointed who are affiliated with the investment firms involved in the merger.

The new credit facilities and indentures impose various covenants that restrict Dollar General's financial flexibility. These include limitations on incurring additional debt, selling assets, paying dividends, and making investments. The senior notes and senior subordinated notes carry significant interest rates, and the company must adhere to specific prepayment requirements and security arrangements.