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Debt | 9 Months Ended
--- | ---
Jun. 30, 2013
Debt Disclosure [Abstract] |
Debt | Debt The Company’s consolidated debt consists of the following:
|  | June 30, 2013 |  | September 30, 2012
|  | Amount |  | Rate |  | Amount |  | Rate
HGI: |  |  |  |  |  |  |  |
7.875% Senior Secured Notes, due July 15, 2019 |  | $ | 700.0 |  |  | 7.9 | % |  | $ | — |  |  | — |
10.625% Senior Secured Notes, due November 15, 2015 |  | — |  |  | — |  |  | 500.0 |  |  | 10.6 | %
Spectrum Brands: |  |  |  |  |  |  |  |
Term loan, due December 17, 2019 |  | 757.5 |  |  | 4.6 | % |  | — |  |  | — | %
Former term loan facility |  | — |  |  | — | % |  | 370.2 |  |  | 5.1 | %
9.5% Senior Secured Notes, due June 15, 2018 |  | 950.0 |  |  | 9.5 | % |  | 950.0 |  |  | 9.5 | %
6.75% Senior Notes, due March 15, 2020 |  | 300.0 |  |  | 6.8 | % |  | 300.0 |  |  | 6.8 | %
6.375% Senior Notes, due November 15, 2020 |  | 520.0 |  |  | 6.4 | % |  | — |  |  | — | %
6.625% Senior Notes, due November 15, 2022 |  | 570.0 |  |  | 6.6 | % |  | — |  |  | — | %
ABL Facility, expiring May 24, 2017 |  | 69.5 |  |  | 2.1 | % |  | — |  |  | 4.3 | %
Other notes and obligations |  | 33.0 |  |  | 8.3 | % |  | 18.1 |  |  | 10.9 | %
Capitalized lease obligations |  | 29.9 |  |  | 6.2 | % |  | 26.7 |  |  | 6.2 | %
FGL |  |  |  |  |  |  |  |
6.375% Senior Notes, due April 1, 2021 |  | 300.0 |  |  | 6.4 | % |  | — |  |  | — |
EXCO/HGI Production Partners |  |  |  |  |  |  |  |
EXCO/HGI JV Credit Agreement, due February 14, 2018 |  | 274.9 |  |  | 2.7 | % |  | — |  |  | — |
Salus |  |  |  |  |  |  |  |
Unaffiliated long-term debt of consolidated variable-interest entity |  | 57.5 |  |  | 5.8 | % |  | — |  |  | — |
Total |  | 4,562.3 |  |  |  |  | 2,165.0 |  |  |
Original issuance (discounts) premiums on debt, net |  | (8.0 | ) |  |  |  | 2.0 |  |  |
Total debt |  | 4,554.3 |  |  |  |  | 2,167.0 |  |  |
Less current maturities |  | 40.8 |  |  |  |  | 16.4 |  |  |
Non-current portion of debt |  | $ | 4,513.5 |  |  |  |  | $ | 2,150.6 |  |  |
HGI In December 2012, the Company issued the 7.875% Notes and used part of the proceeds of the offering to accept for purchase $498.0 aggregate principal amount of its 10.625% Notes pursuant to a tender offer for the 10.625% Notes. Additionally, the Company deposited sufficient funds in trust with the trustee under the indenture governing the 10.625% Notes in satisfaction and discharge of the remaining $2.0 aggregate principal amount of the 10.625% Notes (the "Satisfaction and Discharge"). The remaining 10.625% Notes were redeemed by the trustee on January 23, 2013. In connection with the Tender Offer and Satisfaction and Discharge, HGI recorded $58.9 of charges to "Interest Expense" in the Condensed Consolidated Statements of Operations for the nine months ended June 30, 2013, consisting of $45.7 cash charges for fees and expenses related to the Tender Offer, $0.2 cash charges related to the Satisfaction and Discharge and $13.0 of non-cash charges for the write down of debt issuance costs and net unamortized discount. The 7.875% Notes were sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to certain persons in offshore transactions in reliance on Regulation S, under the Securities Act. The 7.875% Notes were issued at an aggregate price equal to 99.36% of the principal amount thereof, with a net original issue discount of $4.5. Interest on the 7.875% Notes is payable semi-annually, through July 15, 2019, but if the Company’s Preferred Stock has not been redeemed, repurchased or otherwise retired prior to May 13, 2018; then the 7.875% Notes will mature on May 13, 2018. The 7.875% Notes are collateralized with a first priority lien on substantially all of the assets directly held by HGI, including stock in HGI’s direct subsidiaries (with the exception of Zap.Com Corporation, but including Spectrum Brands, Harbinger F&G, LLC ("HFG") and HGI Funding LLC) and the HGI’s directly held cash and investment securities. In connection with the 7.875% Note offering the Company recorded $20.0 of fees during the nine months ended June 30, 2013. These fees are classified as "Other assets" in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013, and are being amortized to interest expense utilizing the effective interest method over the term of the 7.875% Notes. The Company has the option to redeem the 7.875% Notes prior to January 15, 2016 at a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. At any time on or after January 15, 2016, the Company may redeem some or all of the 7.875% Notes at certain fixed redemption prices expressed as percentages of the principal amount, plus accrued and unpaid interest. At any time prior to January 15, 2016, the Company may redeem up to 35% of the original aggregate principal amount of the 7.875% Notes with net cash proceeds received by us from certain equity offerings at a price equal to 107.875% of the principal amount of the 7.875% Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption, provided that redemption occurs within 90 days of the closing date of such equity offering, and at least 65% of the aggregate principal amount of the 7.875% Notes remains outstanding immediately thereafter. The Indenture governing the 7.875% Notes contains covenants limiting, among other things, and subject to certain qualifications and exceptions, the Company’s ability, and, in certain cases, the ability of the Company’s subsidiaries, to incur additional indebtedness; create liens; engage in sale-leaseback transactions; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; engage in transactions with affiliates; or consolidate or merge with, or sell substantially all of the Company’s assets to, another person. The Company is also required to maintain compliance with certain financial tests, including minimum liquidity and collateral coverage ratios that are based on the fair market value of the collateral, including the Company’s equity interests in Spectrum Brands and its other subsidiaries such as HFG and HGI Funding LLC. At June 30, 2013, the Company was in compliance with all covenants under the indenture governing the 7.875% Notes. On July 18, 2013, HGI entered into a Purchase Agreement, as amended by the Purchase Agreement Amendment dated as of July 19, 2013 (as so amended, the “Purchase Agreement”). In connection with the Purchase Agreement, on July 23, 2013, HGI issued $225.0 aggregate principal amount of 7.875% senior secured notes due 2019 (the “New Notes”). The New Notes were issued under the same indenture governing the 7.875% Notes. See Note 21, Subsequent Events, for additional information with respect to the New Notes. Spectrum Brands Term Loan In December 2012, Spectrum Brands entered into the Term Loan which matures on December 17, 2019, and provides borrowings in an aggregate principal amount of $800.0, with $100.0 in Canadian dollar equivalents in connection with the acquisition of the HHI Business from Stanley Black & Decker. A portion of the Term Loan proceeds were used to refinance the former term loan facility, which was scheduled to mature on June 17, 2016, and had an aggregate amount outstanding of $370.2 prior to refinancing. In connection with the refinancing, Spectrum Brands recorded accelerated amortization of portions of the unamortized discount and unamortized debt issuance costs related to the former term loan facility totaling $5.5 as an adjustment to interest expense during the nine months ended June 30, 2013. The Term Loan contains financial covenants with respect to debt, including, but not limited to, a fixed charge ratio. In addition, the Term Loan contains customary restrictive covenants, including, but not limited to, restrictions on Spectrum Brands' ability to incur additional indebtedness, create liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures and merge or acquire or sell assets. Pursuant to a guarantee and collateral agreement, Spectrum Brands, its domestic subsidiaries and its Canadian subsidiaries have guaranteed their respective obligations under the Term Loan and related loan documents and have pledged substantially all of their respective assets to secure such obligations. The Term Loan also provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness. In connection with the issuance of the Term Loan, Spectrum Brands recorded $0.2 and $19.3 of fees during the three and nine months ended June 30, 2013, respectively, of which $16.9, respectively, is classified as Debt issuance costs within "Other assets" in the accompanying Condensed Consolidated Balance Sheets and is being amortized as an adjustment to interest expense over the remaining life of the Term Loan with the remainder of $2.4 reflected as an increase to interest expense during the nine months ended June 30, 2013, respectively. 6.375% Notes and 6.625% Notes In December 2012, in connection with the Hardware Acquisition, Spectrum Brands assumed $520.0 aggregate principal amount of the 6.375% Notes, and $570.0 aggregate principal amount of the 6.625% Notes, previously issued by Spectrum Brands Escrow Corporation. The 6.375% Notes and the 6.625% Notes are unsecured and guaranteed by Spectrum Brands' parent company, SB/RH Holdings, LLC, as well as by existing and future domestic restricted subsidiaries. Spectrum Brands may redeem all or part of the 6.375% Notes and the 6.625% Notes, upon not less than 30 or more than 60 days notice, at specified redemption prices. Further, the indenture governing the 6.375% Notes and the 6.625% Notes (together, the "2020/22 Indenture"), requires Spectrum Brands to make an offer, in cash, to repurchase all or a portion of the applicable outstanding 6.375% Notes and 6.625% Notes for a specified redemption price, including a redemption premium, upon the occurrence of a change of control of Spectrum Brands, as defined in such indenture. The 2020/22 Indenture contains customary covenants that limit, among other things, the incurrence of additional indebtedness, payment of dividends on or redemption or repurchase of equity interests, the making of certain investments, expansion into unrelated businesses, creation of liens on assets, merger or consolidation with another company, transfer or sale of all or substantially all assets, and transactions with affiliates. In addition, the 2020/22 Indenture provides for customary events of default, including failure to make required payments, failure to comply with certain agreements or covenants, failure to make payments when due or on acceleration of certain other indebtedness, and certain events of bankruptcy and insolvency. Events of default under the 2020/22 Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the amounts due under the 6.375% Notes and the 6.625% Notes. If any other event of default under the 2020/22 Indenture occurs and is continuing, the trustee for the 2020/22 Indenture or the registered holders of at least 25% in the then aggregate outstanding principal amount of the 6.375% Notes, or the 6.625% Notes, may declare the acceleration of the amounts due under those notes. Spectrum Brands recorded $12.9 of fees in connection with the offering of the 6.375% Notes during the nine months ended June 30, 2013 and $14.1 of fees in connection with the offering of the 6.625% Notes during the nine months ended June 30, 2013. The fees are classified as "Other assets" in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013 and are being amortized as an adjustment to interest expense over the respective remaining lives of the 6.375% Notes and the 6.625% Notes. ABL Facility In December 2012, Spectrum Brands exercised its option to increase its asset based lending revolving credit facility (the "ABL Facility") from $300.0 to $400.0 and extend the maturity to May 24, 2017. In connection with the increase and extension, Spectrum Brands incurred $0.3 of fees during the nine months ended June 30, 2013, respectively. The fees are classified as "Other assets" in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013 and are being amortized as an adjustment to interest expense over the remaining life of the ABL Facility. In March 2013, Spectrum Brands amended its ABL Facility to conform certain provisions to reflect the acquisition of the HHI Business. In connection with the amendment, Spectrum Brands incurred $0.1 and $0.2 of fees during the three and nine months ended June 30, 2013, respectively. The fees are classified as "Other assets" in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013 and are being amortized as an adjustment to interest expense over the remaining life of the ABL Facility. As a result of borrowings and payments under the ABL Facility, at June 30, 2013, Spectrum Brands had aggregate borrowing availability of approximately $228.1, net of lender reserves of $7.9 and outstanding letters of credit of $38.5. FGL In March 2013, FGL issued $300.0 aggregate principal amount of its 6.375% senior notes due April 1, 2021, at par value. Interest is payable semi-annually on April 1 and October 1 of each year, commencing on October 1, 2013. FGL used a portion of the net proceeds from the issuance to pay a $73.0 dividend to HGI and expects to use the remainder for general corporate purposes, to support the growth of its subsidiary life insurance company. In connection with the offering, FGL capitalized $10.2 of debt issuance costs during the nine months ended June 30, 2013. The fees are classified as "Other assets" in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013 and are being amortized over the redemption date using the straight-line method over the remaining term of the debt. EXCO/HGI Production Partners In connection with its formation, the EXCO/HGI JV entered into the EXCO/HGI JV Credit Agreement which had an initial borrowing base of $400.0. Borrowings under the EXCO/HGI JV Credit Agreement are collateralized by first lien mortgages providing a security interest of not less than 80% of the Engineered Value (as defined in the agreement) of the oil and natural gas properties evaluated by the lenders for purposes of establishing the borrowing base. As of June 30, 2013, $369.0 was drawn under this agreement and HGI's proportionate share of the obligation was $274.9. The interest rate grid ranges from London Interbank Offered Rate ("LIBOR") plus 175 Basis Points ("bps") to 275 bps (or Alternate Base Rate ("ABR") plus 75 bps to 175 bps), depending on the percentages of drawn balances to the borrowing base as defined in the agreement. The borrowing base is redetermined semi-annually, with us and the lenders having the right to request interim unscheduled redeterminations in certain circumstances. The EXCO/HGI JV entered into the First Amendment to the EXCO/HGI JV Credit Agreement on March 5, 2013, which increased the borrowing base to $470.0 as a result of the acquisition of the shallow Cotton Valley assets from an affiliate of BG Group. The EXCO/HGI JV Credit Agreement matures on February 14, 2018. Pursuant to the agreement, within 60 days of formation of the EXCO/HGI JV, the partnership is required to enter into derivative financial instruments covering not less than 75% of its forecasted proved producing natural gas production for 2013 and 50% of such forecasted production for 2014. For future years, the EXCO/HGI JV is permitted to have derivative financial instruments covering no more than 100% of the forecasted production from proved developed producing reserves (as defined in the agreement) for any month during the first two years of the forthcoming five year period, 90% of the forecasted production from proved developed producing reserves for any month during the third year of the forthcoming five year period and 85% of the forecasted production from proved developed producing reserves for any month during the fourth and fifth year of the forthcoming five year period. The financial covenants contained in the EXCO/HGI JV Credit Agreement require that the EXCO/HGI JV:
• | maintain a consolidated current ratio (as defined in the agreement of at least 1.0 to 1.0 as of the end of any fiscal quarter; and
• | not permit the EXCO/HGI JV's ratio of consolidated funded indebtedness (as defined in the agreement) to consolidated EBITDAX (as defined in the agreement) to be greater than 4.5 to 1.0 at the end of any fiscal quarter.
As of June 30, 2013, the EXCO/HGI JV was in compliance with these covenants. Salus Long-term debt of the consolidated VIE include the unaffiliated obligations of a CLO VIE of $57.5, as of June 30, 2013. In February 2013, Salus completed a CLO securitization of collateralized loan obligations of up to $225.0 with a notional aggregate principal amount of $175.5 of the asset-backed loan receivables that it had originated through that date, of which $63.5 was taken up by unaffiliated entities. The obligations of the securitization is secured by the assets of the VIE, primarily asset-backed loan receivables, and carry a variable interest rate ranging from LIBOR plus 2.5% to LIBOR plus 10.5%. See Note 6, Securitizations and Variable Interest Entities, for additional information with respect to the securitization.

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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