XML 40 R13.htm IDEA: XBRL DOCUMENT

Debt

6 Months Ended

Jun. 30, 2012

7. Debt

Debt consists of the following:

	June 30,			December 31,
	2012			2011
	(in millions)

Unsecured revolving credit facility due July 26, 2016	$	845.0		$	645.0
Senior unsecured notes due July 2, 2013		75.0			75.0
Senior unsecured notes due November 15, 2016		350.0			350.0
Senior unsecured notes due November 15, 2036		250.0			250.0
Other notes and revolving credit facilities		12.8			12.8
Total		1,532.8			1,332.8
Less: unamortized discount		(1.6	)		(1.6	)
Less: amounts due within one year and short-term borrowings		(12.2	)		(12.2	)
Total long-term debt	$	1,519.0		$	1,319.0

Unsecured Revolving Credit Facility

On July 26, 2011, we amended and restated the existing syndicated credit agreement to increase the borrowing limit from $1.1 billion to $1.5 billion, and to extend the maturity date of the credit facility for a five-year term to July 26, 2016. The amended and restated revolving credit facility has 26 banks as lenders. Interest on borrowings from the amended and restated revolving credit facility is at variable rates based on LIBOR plus 1.50% or the bank prime rate plus 0.50% as of June 30, 2012. The amended and restated revolving credit facility includes a commitment fee on the unused portion, at an annual rate of 0.25% as of June 30, 2012. The applicable margin over LIBOR rate and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our leverage ratio, as defined.

Weighted average rates on borrowings outstanding on the revolving credit facility were 1.74% and 1.78% as of June 30, 2012 and December 31, 2011, respectively. As of June 30, 2012, we had $33.0 million of letters of credit outstanding under the revolving credit facility with availability to issue an additional $217.0 million of letters of credit.

Revolving Credit Facilities – Foreign Operations

Various other separate revolving credit facilities with a combined credit limit of approximately $20.7 million are in place for operations in Asia and Europe with combined outstanding balances of $11.9 million and $11.8 million as of June 30, 2012 and December 31, 2011, respectively.

Senior Unsecured Notes – Private Placements

We have $75.0 million of outstanding senior unsecured notes issued in private placements of debt as of June 30, 2012. At June 30, 2012, the outstanding senior notes bear interest at a fixed rate of 5.35% and mature in July 2013.

Senior Unsecured Notes – Publicly Traded

On November 20, 2006, we entered into an Indenture (the “Indenture”), for the issuance of $600 million of unsecured debt securities. The total debt issued was comprised of two tranches, (a) $350 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.20% per annum, maturing on November 15, 2016 and (b) $250 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.85% per annum, maturing on November 15, 2036. The notes are senior unsecured obligations of Reliance and rank equally with all other existing and future unsecured and unsubordinated debt obligations of Reliance. The senior unsecured notes include provisions that, in the event of a change in control and a downgrade of our credit rating, require us to make an offer to repurchase the notes at a price equal to 101% of their principal amount plus accrued interest.

Covenants

The amended and restated revolving credit facility and the senior unsecured note agreements collectively require us to maintain a minimum net worth and interest coverage ratio and a maximum leverage ratio and include a change of control provision, among other things. Our interest coverage ratio for the twelve-month period ended June 30, 2012 was approximately 10.4 times compared to the debt covenant minimum requirement of 3.0 times (interest coverage ratio is calculated as net income attributable to Reliance plus interest expense and provision for income taxes and plus or minus any non-operating non-recurring loss or gain, respectively, divided by interest expense). Our leverage ratio as of June 30, 2012 calculated in accordance with the terms of the revolving credit facility was 31.7% compared to the financial covenant maximum amount of 60% (leverage ratio is calculated as total debt, inclusive of capital lease obligations and outstanding letters of credit, divided by Reliance shareholders’ equity plus total debt). The minimum net worth requirement as of June 30, 2012 was $1.09 billion compared to Reliance shareholders’ equity balance of $3.37 billion as of June 30, 2012.

Additionally, all of our wholly-owned domestic subsidiaries, which constitute the substantial majority of our subsidiaries, guarantee the borrowings under the revolving credit facility, the Indenture and the private placement notes. The subsidiary guarantors, together with Reliance, are required collectively to account for at least 80% of our consolidated EBITDA and 80% of consolidated tangible assets. Reliance and the subsidiary guarantors accounted for approximately 87% of our total consolidated EBITDA for the last twelve months and approximately 90% of total consolidated tangible assets as of June 30, 2012.

We were in compliance with all debt covenants as of June 30, 2012.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details