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Debt
 3 Months Ended
Mar. 31, 2012
Debt [Abstract]  
DEBT

5. DEBT

Short-term borrowings consisted of the following:

 

                 
($ in millions)   March 31,
2012		     December 31,
2011		  

Non-U.S. lines of credit

   $ 2.8     $ 9.0  
   

 

 

    

 

 

  

Total short-term borrowings

   $ 2.8     $ 9.0  
   

 

 

    

 

 

  

Long-term borrowings consisted of the following:

 

                 
($ in millions)   March 31,
2012		     December 31,
2011		  

Revolving Credit Facility

   $ —       $ 180.0  

ABL Facility

     17.2       —    

Term Loan

     215.0       —    

12.98% Private Placement note due 2012

     —         27.3  

Private Placement note, floating rate (8.85% at December 31, 2011)

     —         6.2  

Capital Lease Obligations

     0.6       0.6  
   

 

 

    

 

 

  
      232.8       214.1  

Unamortized balance of terminated fair value interest rate swaps

     —         0.1  
   

 

 

    

 

 

  
      232.8       214.2  

Less current maturities

     (5.4 )      —    

Less current capital lease obligations

     (0.2 )      (0.2 ) 

Less financial services activities — borrowings (included in discontinued operations)

     —         (0.9 ) 
   

 

 

    

 

 

  

Total long-term borrowings and capital lease obligations, net

   $ 227.2     $ 213.1  
   

 

 

    

 

 

  

On February 22, 2012, the Company entered into a Credit Agreement, by and among the Company, as borrower and General Electric Capital Corporation, as a co-collateral agent, and Wells Fargo Capital Finance, LLC, as administrative agent and co-collateral agent, providing the Company with a new $100 million secured credit facility (the “ABL Facility”).

The ABL Facility is a five-year asset-based revolving credit facility pursuant to which up to $100 million initially will be available, with the right, subject to certain conditions, to increase the availability under the facility by up to an additional $25 million. The ABL Facility provides for loans and letters of credit in an amount up to the aggregate availability under the facility subject to meeting certain borrowing base conditions, with a sub-limit of $50 million for letters of credit. Borrowings under the ABL Facility bear interest, at the Company’s option, at a base rate or a LIBOR rate, plus, in each case, an applicable margin. The applicable margin ranges from 1.00% to 2.75% for base rate borrowings and 1.75% to 3.50% for LIBOR borrowings. The Company must also pay a commitment fee to the facility lenders equal to 0.50% per annum on the unused portion of the ABL Facility along with other standard fees. Letter of credit fees are payable on outstanding letters of credit in an amount equal to the applicable LIBOR margin plus other customary fees.

The Company is allowed to prepay in whole or in part advances under the ABL Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The ABL Facility requires that the Company, on a consolidated basis, maintain a minimum monthly fixed charge coverage ratio, along with other customary restrictive covenants, certain of which are subject to materiality thresholds. The Company was in compliance with all its debt covenants as of March 31, 2012.

The obligations under the ABL Facility are secured by (i) a first priority security interest in the Company’s and its domestic subsidiaries’ accounts, inventory, chattel paper, payment intangibles, cash and cash equivalents and other working capital assets (the “ABL First Priority Collateral”) and (ii) a second priority security interest in all other now or hereafter acquired domestic property and assets, the stock or other equity interests in each of the domestic subsidiaries and certain of the first-tier foreign subsidiaries, subject to certain exclusions.

The Company’s obligations under the ABL Facility are guaranteed by certain of the Company’s domestic subsidiaries.

On February 22, 2012, the Company also entered into a Financing Agreement by and among the Company, certain subsidiaries of the Company, as guarantors, the lenders party thereto (the “Term Lenders”) and TPG Specialty Lending, Inc., as administrative agent, collateral agent and sole lead arranger, pursuant to which the Term Lenders agreed to provide the Company with a $215 million term loan (the “Term Loan”).

 

The Term Loan is a five-year, secured term loan maturing on February 22, 2017. Installment payments under the Term Loan do not commence until March 2013. The Term Loan allows for mandatory prepayments in certain specified situations. Except in these certain specified situations, the Term Loan is not repayable in the first 12 months of the term and thereafter is subject to the following prepayment premium; (i) 2.75% in months 13-24, (ii) 2.00% in months 25-36 and (iii) nothing thereafter. These provisions are subject to change upon the occurrence of certain specified events.

The Term Loan will bear interest, at the Company’s option, at a base rate or LIBOR rate, plus, in each case, an applicable margin. The applicable margin ranges from 9.00% to 10.00% for base rate borrowings and 10.00% to 11.00% for LIBOR borrowings. The Company is required to pay certain customary fees in connection with the Term Loan.

The Term Loan requires the Company to comply with financial covenants related to the maintenance of a minimum monthly fixed charge coverage ratio, maximum capital expenditures, minimum liquidity, and maximum leverage ratio. The Term Loan has other restrictive covenants which are substantively similar to those applicable to the ABL Facility. The Company was in compliance with all its debt covenants as of March 31, 2012.

The obligations under the Term Loan are secured by (i) a first priority security interest in all now or hereafter acquired domestic property and assets (excluding the ABL First Priority Collateral), the stock or other equity interests in each of the domestic subsidiaries and certain of the first-tier foreign subsidiaries, subject to certain exclusions, and (ii) a second priority security interest in the ABL First Priority Collateral.

The Company’s obligations under the Term Loan are guaranteed by certain of the Company’s non-dormant domestic subsidiaries.

Under the Term Loan, dividends shall be permitted only if the following conditions are met:

 

  •  

No default or event of default shall exist or shall result from such payment;

 

  •  

The Fixed Charge Ratio of the Company and its subsidiaries shall be, both before and after the dividend payment (on a pro forma basis), not less than 1.50 to 1.00; and

 

  •  

The Leverage Ratio of the Company and its subsidiaries shall be, both before and after the dividend payment (on a pro forma basis), less than 2.00 to 1.00.

The Company used the proceeds from the ABL Facility and the Term Loan to (i) repay outstanding balances under the Company’s existing $240 million secured revolving credit facility, dated as of April 25, 2007, as amended, which was to mature on April 25, 2012 (the “Prior Credit Agreement”); (ii) retire the Company’s private placement notes issued pursuant to the Note Purchase Agreement, dated as of June 1, 2009, as amended, and pursuant to the Master Note Purchase Agreement dated as of June 1, 2003, as amended (together, the “Prior Note Purchase Agreements”); (iii) finance the ongoing general corporate needs of the Company and its subsidiaries; and (iv) pay fees and expenses associated with repayment of amounts due under the Prior Credit Agreement and the Prior Note Purchase Agreements, including the payment of approximately $1.0 million in resulting breakage fees and premiums under the Prior Credit Agreement and Prior Note Purchase Agreements, and pay fees and expenses associated with the ABL Facility and the Term Loan.

In accounting for the classification of its outstanding debt as of December 31, 2011, the Company considered the guidance in ASC 470-10-45-14. As the Company had effectively refinanced short-term debt on a long-term basis subsequent to the condensed consolidated balance sheet date, the amounts outstanding under the Prior Credit Agreement and the Prior Note Purchase Agreements as of December 31, 2011 were reflected as a component of long-term borrowings and capital lease obligations on the Condensed Consolidated Balance Sheet.

As of December 31, 2011, $180.0 million was drawn on the Prior Credit Agreement leaving available borrowings of $49.1 million that includes $32.5 million of capacity used for existing letters of credit.

As of March 31, 2012, the available borrowing base under the ABL Facility was $76.4 million. As of March 31, 2012, there was $17.2 million in cash drawn and $30.8 million of undrawn letters of credit under the ABL Facility, reducing net availability for borrowings to $28.4 million.

As of March 31, 2012, $2.8 million was drawn against the Company’s non-U.S. lines of credit which provide for borrowings up to $15.3 million.

 

Aggregate maturities of total borrowings amount to approximately $3.0 million in 2012, $21.8 million in 2013, $32.4 million in 2014, $32.3 million in 2015, $32.3 million in 2016, and $113.8 million thereafter. These maturities primarily reflect the payment terms of the ABL Facility and the Term Loan. The fair values of aggregate borrowings were $235.6 million and $221.5 million at March 31, 2012 and December 31, 2011, respectively. Included in 2012 maturities are $2.8 million of other non-U.S. lines of credit and $0.2 million of capital lease obligations.

Upon execution of the Company’s new debt agreements in February 2012, the remaining unamortized deferred financing costs related to the old debt agreements were written off. In the first quarter of 2012, the Company recorded $1.6 million of costs related to the termination of its prior debt agreements. The costs included $1.0 million of make-whole interest payments and a write-off of deferred financing costs of $0.6 million.

The Company has incurred $8.1 million of debt issuance costs associated with the execution of its new debt agreements through March 31, 2012. Financing costs incurred related to the new debt agreements are deferred and amortized over the remaining life of the new debt. At March 31, 2012 and December 31, 2011, deferred financing fees totaled $7.9 million and $1.0 million, respectively, and are included in deferred charges and other assets on the condensed consolidated balance sheet.