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Debt | 12 Months Ended
--- | ---
Sep. 30, 2014
Debt Disclosure [Abstract] |
Debt | Debt The Company’s consolidated debt consists of the following:
|  | September 30, 2014 |  | September 30, 2013
|  | Amount |  | Rate |  | Amount |  | Rate
HGI: |  |  |  |  |  |  |  |
7.875% Senior Secured Notes, due July 15, 2019 |  | $ | 604.4 |  |  | 7.9 | % |  | $ | 925.0 |  |  | 7.9 | %
7.75% Senior Unsecured Notes, due January 15, 2022 |  | 750.0 |  |  | 7.8 | % |  | — |  |  | — | %
Spectrum Brands: |  |  |  |  |  |  |  |
CAD Term Loan, due December 17, 2019 |  | 34.2 |  |  | 5.1 | % |  | 81.4 |  |  | 5.1 | %
Term Loan, due September 4, 2017 (Tranche A) |  | 648.4 |  |  | 3.0 | % |  | 850.0 |  |  | 3.0 | %
Term Loan, due September 4, 2019 (Tranche C) |  | 509.9 |  |  | 3.6 | % |  | 300.0 |  |  | 3.6 | %
Term Loan, due December 17, 2019 (Tranche B) |  | — |  |  | — | % |  | 513.3 |  |  | 4.6 | %
Euro Term Loan, due September 4, 2019 |  | 283.3 |  |  | 3.8 | % |  | — |  |  | — | %
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 | % |  | 520.0 |  |  | 6.4 | %
6.625% Senior Notes, due November 15, 2022 |  | 570.0 |  |  | 6.6 | % |  | 570.0 |  |  | 6.6 | %
ABL Facility, expiring May 24, 2017 |  | — |  |  | 2.5 | % |  | — |  |  | 5.7 | %
Other notes and obligations |  | 36.6 |  |  | 8.8 | % |  | 28.5 |  |  | 8.5 | %
Capitalized lease obligations |  | 94.7 |  |  | 6.1 | % |  | 67.4 |  |  | 6.2 | %
FGH |  |  |  |  |  |  |  |
6.375% Senior Notes, due April 1, 2021 |  | 300.0 |  |  | 6.4 | % |  | 300.0 |  |  | 6.4 | %
Compass |  |  |  |  |  |  |  |
Compass Credit Agreement, due February 14, 2018 |  | 243.2 |  |  | 2.7 | % |  | 271.2 |  |  | 2.7 | %
Salus |  |  |  |  |  |  |  |
Unaffiliated long-term debt of consolidated variable-interest entity |  | 193.0 |  |  | 6.7 | % |  | 182.9 |  |  | 6.6 | %
Secured borrowings under non-qualifying loan participations |  | 106.8 |  |  | 10.8 | % |  | — |  |  | — | %
Total |  | 5,194.5 |  |  |  |  | 4,909.7 |  |  |
Original issuance (discounts) premiums on debt, net |  | (36.7 | ) |  |  |  | (13.6 | ) |  |
Total debt |  | 5,157.8 |  |  |  |  | 4,896.1 |  |  |
Less current maturities |  | 96.7 |  |  |  |  | 102.9 |  |  |
Non-current portion of debt |  | $ | 5,061.1 |  |  |  |  | $ | 4,793.2 |  |  |
Aggregate scheduled maturities of debt as of September 30, 2014 are as follows:
Fiscal Year |  | Scheduled Maturities
|  | HGI - Parent Only |  | Consolidated
2015 |  | $ | — |  |  | $ | 97.4 |
2016 |  | — |  |  | 77.6 |
2017 |  | — |  |  | 563.7 |
2018 |  | — |  |  | 256.3 |
2019 |  | 604.4 |  |  | 1,470.9 |
Thereafter |  | 750.0 |  |  | 2,728.6 |
|  | $ | 1,354.4 |  |  | $ | 5,194.5 |
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 Consolidated Statements of Operations for Fiscal 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. 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, but including Spectrum Brands, FSHoldco, HGI Energy and HGI Funding) 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 Fiscal 2013. These fees were classified as “Other assets” in the accompanying Consolidated Balance Sheets as of September 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 FGL and HGI Funding. At September 30, 2014, 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 7.875% Notes were issued under the same indenture governing the 7.875% Notes by and between the Company and Wells Fargo Bank, National Association, a national banking association, as trustee. The New 7.875% Notes were priced at 101.50% of par plus accrued interest from July 15, 2013. In connection with the New 7.875% Notes offering the Company recorded $5.1 of fees during Fiscal 2013. These fees were classified as “Other assets” in the accompanying Consolidated Balance Sheets as of September 30, 2013, and are being amortized to interest expense utilizing the effective interest method over the term of the New 7.875% Notes. In January 2014, the Company issued $200.0 aggregate principal amount of 7.75% senior unsecured notes due 2022. The 7.75% Notes were priced at 100% of par plus accrued interest from January 21, 2014. Interest on the 7.75% Notes is payable semi-annually, in January and July. In connection with the 7.75% Notes offering, the Company recorded $5.6 of fees during Fiscal 2014. These fees were classified as "Other assets" in the accompanying Consolidated Balance Sheets as of September 30, 2014, and are being amortized to interest expense utilizing the effective interest method over the term of the 7.75% Notes. In May 2014, HGI exchanged $320.6 of its outstanding Senior Secured Notes for $350.0 aggregate principal amount of Additional 7.75% Notes. On May 30, 2014, participating holders received $1,091.7 principal amount of Additional 7.75% Notes for each $1,000 principal amount of Senior Secured Notes. As part of the exchange the Company also received modifications to the indenture governing the Senior Secured Notes, increasing the Company’s ability to make certain restricted payments, such as repurchases of the Company's common stock. Following settlement, HGI had $604.4 in aggregate principal amount of the Senior Secured Notes outstanding and $550.0 in aggregate principal amount of 7.75% Notes due 2022 outstanding. In September 2014, the Company issued $200.0 aggregate principal amount of 7.75% senior unsecured notes due 2022. The September 2014 Notes were priced at 100% of par plus accrued interest from July 15, 2014. Interest on the 7.75% Notes is payable semi-annually, in January and July. In connection with the September 2014 Notes offering, the Company recorded $3.7 of fees during Fiscal 2014. These fees were classified as "Other assets" in the accompanying Consolidated Balance Sheets as of September 30, 2014, and are being amortized to interest expense utilizing the effective interest method over the term of the September 2014 Notes. The September 2014 Notes were incremental to, and will vote together with the $550.0 aggregate principal amount of the 7.75% Notes. The terms are the same as those of the 7.75% Notes except that the September 2014 Notes were subject to a separate registration rights agreement and were issued initially under a CUSIP number that is different from that of the existing notes. The Company has the option to redeem the 7.75% Notes prior to January 15, 2017 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, 2017, the Company may redeem some or all of the 7.75% 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, 2017, the Company may redeem up to 35% of the original aggregate principal amount of the 7.75% Notes with net cash proceeds received by us from certain equity offerings at a price equal to 107.75% of the principal amount of the 7.75% 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 7.75% Notes remains outstanding immediately thereafter. Spectrum Brands Term Loan In December 2012, Spectrum Brands entered into a senior term loan facility, which matures on December 17, 2019, and provides for borrowings in an aggregate principal amount of $800.0, with $100.0 in Canadian dollar equivalents (the "HHI Term Loan") in connection with the acquisition of the HHI Business from Stanley Black & Decker. A portion of the HHI Term Loan proceeds was 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 Fiscal 2013. On September 4, 2013, Spectrum Brands amended the senior term loan facility, issuing a tranche maturing September 4, 2017, which provides for borrowings in an aggregate principal amount of $850.0, and a tranche maturing September 4, 2019, which provides borrowings in an aggregate principal amount of $300.0, (together with the HHI Term Loan, the "Term Loan"). The proceeds from the amendment were used to extinguish the former 9.5% Notes, which were scheduled to mature on June 15, 2018, and for general corporate purposes. The 9.5% Notes had an outstanding amount of $950.0 prior to extinguishment. In December 2013, Spectrum Brands amended the Term Loan, issuing two tranches maturing September 4, 2019 which provide for borrowings in aggregate principal amounts of $215.0 and €225.0 (the "Euro Term Loan Debt"). The proceeds from the amendment were used to refinance a portion of the Term Loan (formerly Tranche B) which was scheduled to mature December 17, 2019 and had an aggregate amount outstanding of $513.3 prior to refinancing. The $215.0 additional U.S. dollar denominated portion was combined with the existing Tranche C maturing September 4, 2019. Spectrum Brands recorded accelerated amortization of portions of the unamortized discount and unamortized debt issuance costs related to the refinancing of the Term Loan totaling $9.2 as an adjustment to interest expense during Fiscal 2014. The additional Tranche C and Euro Term Loan debt were issued at a 0.125% discount and recorded net of the discount incurred. Of this discount, $0.5 is reflected as an adjustment to the carrying value of principal, and is being amortized with a corresponding charge to interest expense over the remaining life of the debt, and the remainder of $0.1 is reflected as an increase to interest expense during Fiscal 2014. In connection with the refinancing of a portion of the Term Loan, Spectrum Brands recorded $7.2 of fees during Fiscal 2014, of which $5.2 is classified as debt issuance costs within the accompanying 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 $2.1 reflected as an increase to interest expense during Fiscal 2014. 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. The HHI Term Loan was issued at a 1.0% discount and recorded net of the $8.0 discount incurred. The discount is reflected as an adjustment to the carrying value of principal, and is being amortized with a corresponding charge to interest expense over the remaining life of the debt. In connection with the issuance of the HHI Term Loan, Spectrum Brands recorded $19.3 of fees during Fiscal 2013, of which $16.9, were classified as Debt issuance costs within “Other assets” in the accompanying Consolidated Balance Sheets and is being amortized as an adjustment to interest expense over the remaining life of the HHI Term Loan with the remainder of $2.4 reflected as an increase to interest expense during Fiscal 2013. The tranches related to the amendment of the Term Loan were issued at a 0.5% discount and recorded net of the $5.8 discount incurred. The discount is reflected as an adjustment to the carrying value of principal, and is being amortized with a corresponding charge to interest expense over the remaining life of the debt. In connection with the amendment of the Term Loan, Spectrum Brands recorded $16.4 of fees during Fiscal 2013 which were classified as Debt issuance costs within “Other assets” in the accompanying Consolidated Balance Sheets and is being amortized as an adjustment to interest expense over the remaining life of the Term Loan. 6.75% Notes In March 2012, Spectrum Brands issued $300.0 aggregate principal amount of its 6.75% Senior Notes due 2020 (the “6.75% Notes”) at par. The 6.75% Notes are unsecured and guaranteed by Spectrum Brands’ parent company, SB/RH Holdings, LLC, as well as by existing and future domestic restricted subsidiaries of Spectrum Brands. Spectrum Brands may redeem all or part of the 6.75% Notes, upon not less than 30 or more than 60 days notice, at specified redemption prices. Further, the indenture governing the 6.75% Notes (the “2020 Indenture”) requires Spectrum Brands to make an offer, in cash, to repurchase all or a portion of the applicable outstanding 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. In addition, the 2020 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 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 Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the amounts due under the 6.75% Notes. If any other event of default under the 2020 Indenture occurs and is continuing, the trustee for the 2020 Indenture or the registered holders of at least 25% in the then aggregate outstanding principal amount of the 6.75% Notes may declare the acceleration of the amounts due under those notes. Spectrum Brands recorded $6.3 of fees in connection with the offering of the 6.75% Notes during Fiscal 2012. The fees are classified as Debt issuance costs within the accompanying Consolidated Statements of Financial Position and are amortized as an adjustment to interest expense over the remaining life of the 6.75% Notes. 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 Fiscal 2014 and $14.1 of fees in connection with the offering of the 6.625% Notes during Fiscal 2013. The fees were classified as “Other assets” in the accompanying Consolidated Balance Sheets 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 Fiscal 2013. The fees were classified as “Other assets” in the accompanying Consolidated Balance Sheets 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 $0.2 of fees during Fiscal 2013. The fees were classified as “Other assets” in the accompanying Consolidated Balance Sheets and are being amortized as an adjustment to interest expense over the remaining life of the ABL Facility. In connection with the December 2013 amendment of the Term Loan, Spectrum Brands amended its asset based lending revolving credit facility to obtain certain consents to the amendment of the senior credit agreement. In connection with the amendment, Spectrum Brands incurred fees and expenses that were included in the amounts recorded above related to the amendment of the Term Loan. As a result of borrowings and payments under the ABL Facility, at September 30, 2014, Spectrum Brands had aggregate borrowing availability of approximately $266.9, net of lender reserves of $6.4 and outstanding letters of credit of $51.0. FGL In March 2013, FGH issued $300.0 aggregate principal amount of 6.375% senior notes due April 1, 2021, at par (the “FGL Senior Notes”). 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. In connection with the offering, FGL capitalized $10.2 of debt issuance costs during Fiscal 2013. The fees were classified as “Other assets” in the accompanying Consolidated Balance Sheets and are being amortized to the redemption date using the straight-line method over the remaining term of the debt. The indenture governing the FGL Senior Notes contains a number of covenants that, among other things, limit or restrict FGH’s ability and the ability of FGH’s restricted subsidiaries to incur debt, incur liens, make certain asset dispositions or dispositions of subsidiary stock, enter into transactions with affiliates, enter into mergers, consolidations or transfers of all or substantially all assets, declare or pay dividends, redeem stock or prepay certain indebtedness, make investments or enter into restrictive agreements. The indenture governing the FGL Senior Notes also contains certain affirmative covenants, including financial and other reporting requirements. Most of these covenants will cease to apply for so long as the FGL Senior Notes have investment grade ratings from both Moody’s and S&P. FGH is in compliance with all such covenants. In August 2014, FGH, as borrower, and FGL as guarantor, entered into a three-year $150.0 unsecured revolving credit facility (the “FGL Credit Agreement”) with certain lenders and RBC Capital Markets, LLC and Credit Suisse Securities (USA) LLC, acting as joint lead arrangers. The loan proceeds from the credit facility may be used for working capital and general corporate purposes. As of September 30, 2014, FGL had not drawn on the revolver. The FGL Credit Agreement contains a number of covenants that, among other things, limit or restrict the ability of FGH and its subsidiaries to incur debt and issue certain capital stock, incur liens, make certain asset dispositions or dispositions of subsidiary stock, enter into transactions with affiliates, change the nature of its business, enter into mergers, consolidations or transfers of all or substantially all assets, declare or pay dividends, redeem stock or prepay certain indebtedness (including the FGL Senior Notes), make investments, modify certain agreements, enter into restrictive agreements or change its accounting policies. The FGL Credit Agreement also contains certain affirmative covenants, including financial and other reporting requirements. In addition, under the FGL Credit Agreement, FGH is required to comply with the following financial maintenance covenants at the end of each fiscal quarter: (1) FGH’s total shareholders’ equity (as defined in the FGL Credit Agreement) shall not be less than the sum of (a) $910.0, (b) 50% of FGH’s consolidated net income (as defined in the FGL Credit Agreement) since the closing date and (c) 50% of all equity issuances of FGL since the closing date and (2) FGH’s debt to total capitalization (as defined in the FGL Credit Agreement) shall not be more than 35%. FGH is in compliance with all such covenants. Compass Credit Agreement In connection with its formation, Compass entered into the Compass Credit Agreement which had an initial borrowing base of $400.0. Borrowings under Compass 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 September 30, 2014, $327.0 was drawn under this agreement and HGI’s proportionate share of the obligation was $243.2. 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 Compass and the lenders having the right to request interim unscheduled redeterminations in certain circumstances. In October 2014, the borrowing base of $400.0 was reaffirmed as a result of the semi-annual redetermination. The Compass Credit Agreement matures on February 14, 2018. Pursuant to the agreement, within 60 days of formation of Compass, the partnership was 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. Compass 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 Compass Credit Agreement sets forth the term and conditions under which Compass is permitted to pay a cash distribution to the holders of equity interests and provides that Compass may declare and pay a cash distribution to the extent of available cash, as defined in the Compass Credit Agreement, so long as, in each case, on the date of and after giving effect to such distributions, (i) no default exists, (ii) borrowing base usage, as defined in the Compass Credit Agreement, is not greater than 90%, and (iii) Compass is in compliance with the financial covenants. The financial covenants contained in the Compass Credit Agreement require that Compass:
• | 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 Compass’ 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 September 30, 2014, Compass was in compliance with these covenants. Salus Long-term debt of the consolidated VIE include the unaffiliated obligations of a CLO VIE of $193.0, as of September 30, 2014. In February 2013 and September 2013, Salus completed a CLO securitizations of collateralized loan obligations of up to $550.0 notional aggregate principal amount (of which $484.0 notional aggregate principal amount was drawn on September 30, 2014.)The CLO was funded with $331.1 of the asset-based loan receivables that it had originated through that date, of which $182.9 was taken up by unaffiliated entities. The obligations of the securitization is secured by the assets of the VIE, primarily asset-based loan receivables, and carry a variable interest rate ranging from LIBOR plus 2.25% to LIBOR plus 11.50%. See Note 7, Securitizations and Variable Interest Entities, for additional information with respect to the securitization. Salus also acts as co-lender under some of the asset-based loans that it originates, and such loans are structured to meet the definition of a "participating interest" as defined under ASC 860-10, Transfers and Servicing. For loans originated with co-lenders that have terms that result in such a co-lender not having a qualifying "participating interest", Salus recognizes the whole, undivided loan. Salus also reflects a secured borrowing owing to the co-lender representing their share in the undivided whole loan. As of September 30, 2014, Salus had $106.8 of such secured borrowings to co-lenders outstanding related to non-qualifying "participating interests".

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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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