Item 1.01. Entry into a Material Definitive Agreement.
Amendment to Senior Secured Credit Facilities
On August 30, 2016, Dollar Tree, Inc. (the Company), entered into Amendment No. 3 (the Third Amendment) to that certain credit agreement, dated as of March 9, 2015, with JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders party thereto (as previously amended, the Existing Credit Agreement and, as amended by the Third Amendment, the Amended Credit Agreement). The Third Amendment reduced the applicable interest rate margin with respect to the Companys term loan A facility (the Existing Term A Facility), which had $937.5 million outstanding immediately prior to the date of the Third Amendment, and the Companys revolving credit facility (the Existing Revolving Facility), which was undrawn other than letters of credit immediately prior to the date of the Third Amendment. The reduction in the interest rate margins was accomplished by replacing the Existing Term A Loan Facility with a new term loan A-1 facility (the Term A-1 Facility) and the Existing Revolving Facility with new revolving facility commitments (the Tranche A Revolving Commitments) that, except as set forth below, have terms identical to the Existing Term A Facility and Existing Revolving Facility. As a result, the total amount borrowed under the Amended Credit Agreement is unchanged from the total amount borrowed under the Existing Credit Agreement.
Loans made under the Tranche A Revolving Commitments or the Term A-1 Facility will bear interest at LIBOR plus 1.75% per annum (or a base rate plus 0.75%) until the Company delivers its quarterly compliance certificate to the lenders outlining its secured net leverage ratio for the quarter ended January 28, 2017. Prior to such date, the Company will pay a commitment fee on the unused portion of the Tranche A Revolving Commitments of 0.30% per annum. Thereafter, loans made under the Tranche A Revolving Commitments or the Term A-1 Facility will bear interest at LIBOR plus 1.50% to 2.25% or at a base rate plus 0.50% to 1.25% and the Company will pay a commitment fee on the unused portion of the Tranche A Revolving Commitments ranging from 0.25% to 0.375% (in each case, determined based on the Companys secured net leverage ratio).
Commencing on January 13, 2017, loans made under the Term A-1 Facility will require quarterly amortization payments of 1.25% of the original principal amount thereof until April 15, 2017 and 1.875% thereafter.
The obligations under the Term A-1 Facility and the Tranche A Revolving Commitments are secured by the same collateral and subject to the same guarantees as the loans under the Existing Credit Agreement.
The restrictive covenants and events of default in the Amended Credit Agreement are unchanged from the provisions in the Existing Credit Agreement.
The foregoing description of the Third Amendment and the Amended Credit Agreement is not intended to be complete and is qualified in its entirety by reference to the Third Amendment, a copy of which is attached hereto as Exhibit 10.1, and incorporated herein by reference.