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Debt

9 Months Ended

Sep. 30, 2011

Debt [Abstract]

6. DEBT

Short-term borrowings consisted of the following:


($ in millions)		September 30, 2011				December 31, 2010
Non-U.S. lines of credit		$	8.0			$	1.8

Long-term borrowings consisted of the following:


($ in millions)		September 30, 2011				December 31, 2010
Revolving Credit Facility		$	186.0			$	214.6
Alternative Currency Facility (within Revolving Credit Facility)			—				4.0
13.53% Secured Private Placement note with annual installments of $10.0 million due 2011			—				1.3
13.34% Secured Private Placement note with annual installments of $7.1 million due 2011			—				0.6
12.48% Secured Private Placement note due 2012			28.1				31.9
Secured Private Placement note, floating rate (8.60% and 5.39% at September 30, 2011 and December 31, 2010, respectively) due 2013			6.2				7.1
Subsidiary Loan Agreement			—				1.0
Capital Lease Obligations			0.6				1.0

			220.9				261.5
Unamortized balance of terminated fair value interest rate swaps			0.2				0.6

			221.1				262.1
Less current maturities, excluding financial services activities			(186.0	)			(75.8	)
Less current capital lease obligations			(0.2	)			(0.4	)
Less financial services activities — borrowings (included in discontinued operations)			(1.2	)			(1.5	)

Total long-term borrowings and capital lease obligations, net		$	33.7			$	184.4

The Company was in violation of its Interest Coverage Ratio covenant minimum requirement as defined in the Second Amended and Restated Credit Agreement (the “Credit Agreement”) and the Note Purchase Agreements for the fiscal quarter ended December 31, 2010.

On March 15, 2011, the Company executed the Third Amendment and Waiver to the Second Amended and Restated Credit Agreement dated as of April 25, 2007 among the Company, the bank lenders party thereto, and Bank of Montreal, as Agent (the “Third Amendment and Waiver”) with regard to the Company’s Revolving Credit Facility (the “Revolving Credit Facility”). On the same date, the Company also executed the Second Global Amendment and Waiver to the Note Purchase Agreements (the “Second Global Amendment”) with the holders of its private placement notes (the “Notes”). Both the Third Amendment and Waiver and the Second Global Amendment included a permanent waiver of compliance with the Interest Coverage Ratio covenant for the Company’s fiscal quarter ended December 31, 2010. Included in the terms of the Third Amendment and Waiver and the Second Global Amendment are the replacement of the Interest Coverage Ratio covenant with a minimum EBITDA covenant effective January 1, 2011, with the first required reporting period on April 2, 2011; an increase in pricing to the Company’s Revolving Credit Facility pricing grid; an increase in pricing for the outstanding Notes; mandatory prepayments from proceeds of asset sales; restrictions on use of excess cash flow; restrictions on dividend payments, share repurchases and other restricted payments; and a 50 basis points fee paid to the bank lenders and holders of the Notes upon execution of the Third Amendment and Waiver and the Second Global Amendment.

The new minimum EBITDA covenant is required to be tested quarterly as of the last day of the fiscal quarters ending April 2, 2011 and July 2, 2011, and monthly thereafter (commencing on August 6, 2011), in each case on a trailing twelve-month basis, except that EBITDA for the fiscal quarters ending April 2, 2011 and July 2, 2011, and the fiscal months of and including July through November of 2011, will be calculated using the Company’s year-to-date EBITDA through the test date.

Under the terms of the Third Amendment and Waiver, no share repurchases or other restricted payments will be permitted going forward except with the consent of the bank lenders and the noteholders. Certain restrictions are also placed on the Company’s ability to pay dividends subsequent to the effective date of the Third Amendment and Waiver.

As of September 30, 2011, the Company was in compliance with all covenants contained in its debt agreements.

As required in the Third Amendment and Waiver and the Second Global Amendment, on March 15, 2011, the Company repaid $30.0 million that was applied to the amounts outstanding under the Revolving Credit Facility and the Notes on a pro rata basis (i.e., 85.8% for the bank lenders under the Revolving Credit Facility and 14.2% for the Notes).

The Third Amendment and Waiver permanently reduced the available commitments to the Company’s Revolving Credit Facility from $250.0 million to $240.0 million.

Borrowings under the facility pursuant to the Third Amendment and Waiver bear interest, at the Company’s option, at the Base Rate or LIBOR plus an applicable margin. The applicable margin is 2.00% for Base Rate borrowings and 3.00% for LIBOR borrowings for the period January 1, 2011 through June 30, 2011; 2.50% for Base Rate borrowings and 3.50% for LIBOR borrowings from July 1, 2011 through September 30, 2011; 2.75% for Base Rate borrowings and 3.75% for LIBOR borrowings from October 1, 2011 through December 31, 2011; 3.00% for Base Rate borrowings and 4.00% for LIBOR borrowings from January 1, 2012 through March 31, 2012; and 3.25% for Base Rate borrowings and 4.25% for LIBOR borrowings thereafter. The Third Amendment and Waiver requires a LIBOR floor of 1.50% beginning January 1, 2011. The six-month LIBOR borrowing option was removed. Interest on all loans is payable monthly. The default rate increase in interest rates is 300 basis points.

The Second Global Amendment required an increase in interest rates applicable to the Notes by the same amounts as the interest rate increases under the Revolving Credit Facility. Also, under the Second Global Amendment, the default rate increase in interest rates is 300 basis points. The Company also agreed to pay to each consenting Noteholder a consent fee equal to 0.50% of the outstanding principal amounts of the Notes.

The outstanding debt under the Company’s Revolving Credit Facility and Notes will be prepaid on a pro rata basis in accordance with their pro rata percentages on a quarterly basis by an amount equal to the Excess Cash Flow for that quarter. Excess Cash Flow is defined as EBITDA for the applicable quarter minus the sum of interest, scheduled principal payments, cash taxes, cash dividends and capital expenditures paid in accordance with the Revolving Credit Agreement for that quarter, plus after the second fiscal quarter of 2011, the aggregate amount that the Company’s working capital has decreased in the ordinary course during such period. The Excess Cash Flow pro rata payment against the Revolving Credit Facility outstanding debt will concurrently and permanently reduce the same amount of Revolving Credit Facility commitments. The commitments may be reinstated with approval from all bank lenders within the Revolving Credit Facility.

The Company made an Excess Cash Flow payment of $6.5 million on August 15, 2011. The amount allocated to the Revolving Credit Facility and outstanding Private Placement Notes was $5.6 million and $0.9 million, respectively. The Revolving Credit Facility Commitments were reduced to $234.4 million immediately after the excess cash flow payment was executed.

The Revolving Credit Facility and Private Placement Notes are secured by a first-priority perfected security interest in substantially all of the domestic tangible and intangible assets of the Company and its domestic subsidiaries as the guarantors.

The amendments also contain certain covenants that restrict the Company’s ability to make voluntarily debt payments, acquisitions or dispositions without the lenders’ consent. In addition, certain limitations are placed on the Company’s capital expenditure levels in future years.

At September 30, 2011, $186.0 million was drawn under the Revolving Credit Facility, leaving available borrowings of $48.4 million that includes $28.8 million of capacity used for existing letters of credit.

At September 30, 2011, the debt outstanding under the Company’s Revolving Credit Facility has been classified as a current liability based on the April 2012 maturity date. It is the Company’s intention to refinance, prior to maturity, all debt outstanding under the Revolving Credit Facility and Private Placement Notes into senior secured long-term notes combined with an asset-based lending facility.

At September 30, 2011, $8.0 million was drawn against the Company’s non-U.S. lines of credit, which provide for borrowings up to $17.4 million.