| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On March 4, 2022, Advance Auto Parts, Inc., a Delaware corporation (the “Company”) completed its previously announced offering of $350,000,000 aggregate principal amount of its 3.500% Notes due March 15, 2032 (the “Notes”). The terms of the Notes are governed by an indenture, dated as of April 29, 2010 (as amended or supplemented as of the date hereof, the “Base Indenture”), among the Company, the guarantors from time to time party thereto and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as Trustee, as supplemented by the Ninth Supplemental Indenture, dated as of March 4, 2022 (the “Ninth Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), among the Company, Advance Stores Company, Incorporated (the “Guarantor”) and the Trustee, for the benefit of the holders of each Note. The Notes have been registered under the Securities Act of 1933, as amended, pursuant to a registration statement filed on September 22, 2020 on Form S-3, File No. 333-248963.
The Notes bear interest at the applicable rate per annum listed in the description of the Notes above, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2022. The Notes are unsecured and unsubordinated obligations of the Company and rank equally in right of payment with all of the Company’s other unsecured and unsubordinated debt. The Notes are guaranteed on a full and unconditional senior unsecured basis initially by the Guarantor, which is a wholly owned subsidiary of the Company.
The Indenture provides, among other things, that the Notes may be redeemed in whole or in part at any time and from time to time prior to December 15, 2031 (three months prior to the maturity date of the Notes, the “Par Call Date”), at the Company’s option, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points less (b) interest accrued to the date of redemption; and (2) 100% of the principal amount of the Notes to be redeemed; plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date. On or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date. In addition, in the event of a change of control triggering event, the Company will be required to offer to repurchase the Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.
The terms of the Indenture will, among other things, limit the ability of the Company and its subsidiaries to (i) create or incur debt secured by liens on certain property, or upon shares of capital stock or evidence of indebtedness issued by any of the Company’s subsidiaries, and owned by the Company or by any of its subsidiaries, and (ii) enter into certain sale and leaseback transactions, and will limit the ability of the Company and the Guarantor to merge, sell, transfer, lease or convey all or substantially all of their property. These covenants are subject to a number of important limitations and exceptions that are described in the Indenture.
The Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the Indenture, payment defaults or acceleration of other indebtedness and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing, the Trustee or holders of at least 25% in principal amount outstanding of the Notes may declare the principal and the accrued and unpaid interest, if any, on the Notes to be due and payable. These events of default are subject to a number of important qualifications, limitations and exceptions that are described in the Indenture.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Base Indenture (which was previously filed by the Company with the Securities and Exchange Commission) and the Ninth Supplemental Indenture and the form of Note, which are incorporated herein by reference and are attached hereto as Exhibit 4.1 and referenced as Exhibit 4.2 hereto, respectively.