Family Dollar amends $250 million note purchase agreement in bid to modify debt structure

By Lisa Kerner

Charlotte, N.C., Nov. 17 - Family Dollar, Inc. amended a Sept. 25, 2005 note purchase agreement governing its $250 million senior notes due 2015 as part of its effort to modify the structure of its debt and committed funding, according to a form 8-K filed with the Securities and Exchange Commission.

The amendment releases Family Dollar Services, Inc., Family Dollar Trucking, Inc. and Family Dollar Operations, Inc. as guarantors of the notes, leaving Family Dollar as sole obligor, the filing said.

Also, the first amendment to the 2005 note purchase agreement:

• Changes the consolidated leverage ratio that Family Dollar is required to maintain as of any fiscal quarter-end to 50% from 60%;

• Amends the maximum total amount of priority debt permitted as of any fiscal quarter-end to 10% of consolidated net worth from 20%;

• Changes the amount of Family Dollar's consolidated total assets and consolidated gross revenues that must be accounted for by the company and subsidiaries subject to the covenants under the agreement to 90% from 75%;

• Modifies the limitation on secured debt; and

• Adds a covenant giving the notes the benefit of certain additional or more restrictive covenants that may be included in future debt of the company.

The amendment also provides for an increase in the interest rate on the notes of 100 basis points if Standard & Poor's rating drops below BBB- or if Moody's Investors Service's rating drops below Baa3 and 200 bps if either of the ratings drops below BB- and Ba3, respectively, or if no rating has been assigned by at least one of the agencies, the filing said.

Family Dollar is Charlotte, N.C., chain of self-service discount retail stores.

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