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Long-Term Debt and Capital Leases | 12 Months Ended
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Apr. 30, 2013
Long-Term Debt and Capital Leases |
10. | LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt and capital leases as of April 30, 2013 and 2012 consist of the following:
|  | April 30, |
|  | 2013 |  |  | 2012 |
Senior subordinated notes due February 15, 2019, bearing interest at 7.75%, interest payable semiannually, unsecured and unconditionally guaranteed (including unamortized discount of $1,735 and $0) |  | $ | 323,265 |  |  | $ | 200,000 |
Senior secured revolving credit facility, which provides for advances or letters of credit of up to $227,500, due March 18, 2016, bearing interest at LIBOR plus 3.75%, (approximately 3.95% at April 30, 2013 based on one month LIBOR), secured by substantially all of our assets |  |  | 123,200 |  |  |  | 69,600 |
Senior second lien notes, due July 15, 2014 and redeemed on November 8, 2012, bearing interest at 11.00%, interest payable semiannually, secured by second priority lien on substantially all of our assets (including unamortized discount of $0 and $2,572) |  |  | - |  |  |  | 177,428 |
Finance authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-2 due January 1, 2025, dated February 1, 2012, bearing interest at 6.25% through January 31, 2017, unsecured and guaranteed by our significant wholly-owned subsidiaires |  |  | 21,400 |  |  |  | 21,400 |
Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 due April 1, 2036, dated March 1, 2013, bearing interest at 4.75% through April 4, 2019, unsecured and guaranteed by our significant wholly-owned subsidiaires |  |  | 16,000 |  |  |  | - |
Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013 due April 1, 2029, dated March 1, 2013, bearing interest at BMA Index (approximately 0.28% at April 30, 2013) enhanced by an irrevocable, transferable direct-pay letter of credit (3.875% at April 30, 2013) |  |  | 5,500 |  |  |  | - |
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-1 due January 1, 2025, dated December 1, 2005, bearing interest at BMA Index (approximately 0.28% at April 30, 2013) enhanced by an irrevocable, transferable direct-pay letter of credit (3.875% at April 30, 2013) |  |  | 3,600 |  |  |  | 3,600 |
Notes payable in connection with businesses acquired, bearing interest at rates of 2.49% - 6.50%, due in monthly or annual installments varying to $575, maturing May 2013 through April 2017 |  |  | 1,228 |  |  |  | 2,033 |
Capital leases for facilities and equipment, bearing interest rates of up to 4.72%, due in monthly or annual installments varying to $78, expiring through January 2015 |  |  | 195 |  |  |  | 548 |
|  |  | 494,388 |  |  |  | 474,609 |
Less—current maturities |  |  | 857 |  |  |  | 1,228 |
|  | $ | 493,531 |  |  | $ | 473,381 |
Senior Secured Revolving Credit Facility The amended and restated senior secured revolving credit facility (the “2011 Revolver”) is a $227,500 revolving credit and letter of credit facility due March 18, 2016 (the “Senior Credit Facility”). We have the right to request, at our discretion, an increase in the amount of the Senior Credit Facility by an aggregate amount of $100,000, subject to certain conditions set forth in the Senior Credit Facility agreement. The Senior Credit Facility is guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries. We entered into a second amendment and consent under our Senior Credit Facility on September 20, 2012. The amendment provided us the ability to redeem our Second Lien Notes and adjusted our financial covenants. The Senior Credit Facility, as amended, is subject to customary affirmative, negative and financial covenants. We entered into a third amendment under our Senior Credit Facility on June 25, 2013 to further adjust our financial covenants. The amendment loosened our minimum interest coverage ratio and our maximum consolidated total funded debt to consolidated EBITDA ratio and tightened our maximum senior funded debt to consolidated EBITDA ratio and maximum allowed capital expenditures. As of April 30, 2013, these covenants restrict capital expenditures to 1.1 times our consolidated depreciation expense, depletion expense and landfill amortization expense, set a minimum interest coverage ratio of 2.15, a maximum consolidated total funded debt to consolidated EBITDA ratio of 5.85 and a maximum senior funded debt to consolidated EBITDA ratio of 2.50. In addition to the financial covenants described above, the Senior Credit Facility, as amended, also contains a number of important negative covenants which restrict, among other things, our ability to sell assets, pay dividends, invest in non-wholly owned entities, repurchase stock, incur debt, grant liens and issue preferred stock. As of April 30, 2013, we were in compliance with all covenants under the indenture governing the Senior Credit Facility and we do not believe that these restrictions impact our ability to meet future liquidity needs except that they may impact our ability to increase our investments in non-wholly owned entities, including the joint ventures to which we are already party. Further advances were available under the 2011 Revolver in the amount of $69,013 as of April 30, 2013. The available amount is net of outstanding irrevocable letters of credit totaling $35,287 as of April 30, 2013, at which date no amount had been drawn. Senior Subordinated Notes In the fiscal year ended April 30, 2012, we completed the offering of $200,000 of senior subordinated notes due February 15, 2019 (the “2019 Notes”). The net proceeds from the 2019 Notes, together with other available funds, were used to refinance our then outstanding senior subordinated notes due February 1, 2013 (the “2013 Notes”) and to pay related transaction costs. In the fiscal year ended April 30, 2013, we completed the offering of an additional $125,000 of 2019 Notes. The 2019 Notes were issued at a discount of $1,863, which is amortized to interest expense over the life of the 2019 Notes. The net proceeds from the offering of additional 2019 Notes, along with $50,000 of 2011 Revolver borrowings, $42,184 of net equity proceeds from the offering and sale of Class A common stock and other available funds were used to redeem our Second Lien Notes in full and to pay related transaction costs. As of April 30, 2013, we had outstanding $325,000 aggregate principal amount of the 2019 Notes, which will mature on February 15, 2019. The 2019 Notes accrue interest at the rate of 7.75% per annum and interest is payable semiannually in arrears on February 15 and August 15 of each year. The indenture governing the 2019 Notes contains certain negative covenants which restrict, among other things, our ability to sell assets, make investments in joint ventures, pay dividends, repurchase stock, incur debt, grant liens and issue preferred stock. As of April 30, 2013, we were in compliance with all covenants under the indenture governing the 2019 Notes and we do not believe that these restrictions impact our ability to meet future liquidity needs except that they may impact our ability to increase our investments in non-wholly owned entities, including the joint ventures to which we are already party. The 2019 Notes are fully and unconditionally guaranteed on a senior subordinated basis by substantially all of our existing and future domestic restricted subsidiaries that guarantee our Senior Credit Facility. Senior Second Lien Notes As of April 30, 2013, we did not have any aggregate principal amount of our 11% Second Lien Notes outstanding. In fiscal year 2013, we initiated a cash tender offer and consent solicitation for our Second Lien Notes (the “Tender Offer”). In the second quarter of fiscal year 2012, we repurchased $107,318 in aggregate principal amount of our then outstanding Second Lien Notes through the Tender Offer, leaving $72,682 in aggregate principal amount of Second Lien Notes outstanding. Holders who tendered the Second Lien Notes prior to the early tender date received $1,060 for each $1,000 in principal amount of Second Lien Notes repurchased, which included an early tender premium of $30 per $1,000 in principal amount of Second Lien Notes, plus accrued and unpaid interest to, but not including the early tender offer settlement date. In the third quarter of fiscal year 2013, we redeemed the remaining $72,682 in aggregate principal amount the outstanding Second Lien Notes. The remaining holders who tendered the Second Lien Notes received $1,055 for each $1,000 in principal amount of Second Lien Notes redeemed, plus accrued and unpaid interest to, but not including the redemption date. Maine Bonds In fiscal year 2006, we completed a financing transaction involving the issuance, by the Finance Authority of Maine (the “Authority”), of $25,000 aggregate principal amount of its Solid Waste Disposal Revenue Bonds Series 2005R-1 (the “Bonds”). The Bonds were issued pursuant to an indenture, dated as of December 1, 2005 and were enhanced by an irrevocable, transferable direct-pay letter of credit issued by Bank of America, N.A. Pursuant to a Financing Agreement, dated as of December 1, 2005, by and between us and the Authority, we have borrowed the proceeds of the Bonds to pay for certain costs relating to landfill development and construction, vehicle, container and related equipment acquisition for solid waste collection and transportation services, improvements to existing solid waste disposal, hauling, transfer station and other facilities, other infrastructure improvements, and machinery and equipment for solid waste disposal operations owned and operated by us, or a related party, all located in Maine. In the fourth quarter of fiscal year 2012, we converted the interest rate period on, and remarketed, $21,400 aggregate principal amount of the $25,000 Bonds. The mandatorily tendered Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-2 due January 1, 2025 (the “Converted Bonds”) were converted from a variable rate to a five year fixed term interest rate of 6.25% per annum and included additional covenants and credit support for the benefit of the holders of those Converted Bonds, including guarantees by certain of our subsidiaries. The Converted Bonds are no longer secured by a letter of credit issued by a bank. The remaining $3,600 of outstanding Bonds will remain as variable rate bonds secured by a letter of credit issued by a bank. The Bonds and Converted Bonds mature on January 1, 2025. Vermont Bonds In the fourth quarter of fiscal year 2013, we completed a financing transaction involving the issuance, by the Vermont Economic Development Authority, of $16,000 aggregate principal amount of its Solid Waste Disposal Long-Term Revenue Bonds Series 2013 (the “Vermont Bonds”). The Vermont Bonds were issued pursuant to an indenture, dated as of March 1, 2013. We have borrowed the proceeds of the Vermont Bonds to repay borrowings under our 2011 Revolver for qualifying property, plant and equipment assets purchased in Vermont since October 5, 2011. The Vermont Bonds, which are guaranteed by certain of our subsidiaries, accrue interest at 4.75% per annum through April 4, 2019, at which time they may be converted from a fixed rate to a variable rate. The Vermont Bonds mature on April 1, 2036. New Hampshire Bonds In the fourth quarter of fiscal year 2013, we completed a financing transaction involving the issuance, by the Business Finance Authority of the State of New Hampshire, of $5,500 aggregate principal amount of its Solid Waste Disposal Revenue Bonds Series 2013 (the “New Hampshire Bonds”). The New Hampshire Bonds were issued pursuant to an indenture, dated as of March 1, 2013. We have borrowed the proceeds of the New Hampshire Bonds to repay borrowings under our 2011 Revolver for qualifying property, plant and equipment assets purchased in New Hampshire since October 5, 2011. The New Hampshire Bonds are variable rate bonds secured by a letter of credit issued by our administrative agent bank. The New Hampshire Bonds also contain a drawdown structure that allows us to issue up to an additional $5,500 of bonds at a future date. The New Hampshire Bonds mature on April 1, 2029. Loss on Debt Extinguishment In the fiscal year ended April 30, 2013, we recorded a charge of $15,584 as a loss on debt extinguishment related to the full refinancing of our Second Lien Notes. The loss on debt extinguishment consisted of a $2,667 non-cash write off of deferred financing costs, a $2,074 non-cash write off of the unamortized original issue discount and a $10,743 charge associated with the early tender premium and tender fees associated with the redemption of the Second Lien Notes. In the fiscal year ended April 30, 2012, we recorded a charge of $300 as a loss on debt extinguishment related to the non-cash write off of unamortized deferred financing costs associated with the original issuance of the Bonds. In the fiscal year ended April 30, 2011, we recorded a charge of $7,390 as a loss on debt extinguishment associated with fiscal year 2011 refinancing efforts, which include the write off of $1,415 and $1,812 in deferred financing costs associated with the senior secured term B loan due April 9, 2014 (the “2009 Term Loan”) and the 2013 Notes, the write-off of the $4,976 discount and $1,706 premium associated with the 2009 Term Loan and 2013 Notes, a $1,043 gain associated with the discount on the tender of the 2013 Notes and a $1,821 loss associated with the consent payment on the 2013 Notes. Also included in this loss is a charge attributable to the $115 non-cash write-off of unamortized financing costs associated with the repayment of financing lease obligations and other costs. Interest Expense The components of interest expense for the fiscal years ended April 30, 2013, 2012 and 2011 are as follows:
|  | Fiscal Year Ended April 30, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Interest expense on debt, capital lease and financing lease obligations |  | $ | 36,955 |  |  | $ | 40,156 |  |  | $ | 42,021 |
Amortization of debt financing costs |  |  | 3,325 |  |  |  | 3,307 |  |  |  | 3,424 |
Amortization of debt discounts |  |  | 626 |  |  |  | 964 |  |  |  | 801 |
Amortization of debt premium |  |  | - |  |  |  | - |  |  |  | (611 | )
Letter of credit fees |  |  | 1,032 |  |  |  | 988 |  |  |  | 986 |
Less: capitalized interest |  |  | (368 | ) |  |  | (407 | ) |  |  | (1,078 | )
Total interest expense |  | $ | 41,570 |  |  | $ | 45,008 |  |  | $ | 45,543 |
Fair Value of Debt As of April 30, 2013, the fair value of our fixed rate debt, including the 2019 Notes, the Converted Bonds and the Vermont Bonds was approximately $360,665 and the carrying value was $353,100. The fair value of the 2019 Notes is considered to be Level 1 within the fair value hierarchy as the fair value is based off of a quoted market price in an active market. The fair value of the Converted Bonds is considered to be Level 2 within the fair value hierarchy as the fair value is determined using market approach pricing that utilizes pricing models and pricing systems, mathematical tools and judgment to determine the evaluated price for the security based on the market information of the Converted Bonds or securities with similar characteristics. The fair value of the Vermont Bonds is considered to be Level 2 within the fair value hierarchy as the fair value is determined based on changes in the pricing of an observable five year municipal bond index. As of April 30, 2013, the fair value of the 2011 Revolver approximated its carrying value of $123,200 based on current borrowing rates for similar types of borrowing arrangements. Future Maturities of Debt As of April 30, 2013, debt and capital leases mature as follows:
2014 |  | $ | 857 |
2015 |  |  | 328 |
2016 |  |  | 123,410 |
2017 |  |  | 28 |
2018 |  |  | - |
Thereafter (1) |  |  | 369,765 |
|  | $ | 494,388 |
(1) | Includes unamortized discount of $1,735 on 2019 Notes.

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- Definition The entire disclosure for debt and capital lease obligations can be reported. 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. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References No definition available. + Details
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