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Debt | 6 Months Ended
--- | ---
Mar. 31, 2015
Debt Disclosure [Abstract] |
Debt | Debt The Company’s consolidated debt consists of the following:
|  | March 31, 2015 |  | September 30, 2014 |  |
|  | Amount |  | Rate |  | Amount |  | Rate |  | Interest rate
HRG |  |  |  |  |  |  |  |  |  |
7.875% Senior Secured Notes, due July 15, 2019 |  | $ | 604.4 |  |  | 7.9 | % |  | $ | 604.4 |  |  | 7.9 | % |  | Fixed rate
7.75% Senior Unsecured Notes, due January 15, 2022 |  | 750.0 |  |  | 7.8 | % |  | 750.0 |  |  | 7.8 | % |  | Fixed rate
Spectrum Brands |  |  |  |  |  |  |  |  |  |
Term Loan, due September 4, 2017 (Tranche A)* |  | 635.2 |  |  | 3.1 | % |  | 648.4 |  |  | 3.0 | % |  | Variable rate, see below
Term Loan, due September 4, 2019 (Tranche C)* |  | 508.6 |  |  | 3.6 | % |  | 509.9 |  |  | 3.6 | % |  | Variable rate, see below
CAD Term Loan, due December 17, 2019* |  | 30.5 |  |  | 5.1 | % |  | 34.2 |  |  | 5.1 | % |  | Variable rate, see below
Euro Term Loan, due September 4, 2019 (Tranche A)* |  | 242.5 |  |  | 3.8 | % |  | 283.3 |  |  | 3.8 | % |  | Variable rate, see below
Euro Term Loan, due December 19, 2021 (Tranche B)* |  | 163.3 |  |  | 3.8 | % |  | — |  |  | — | % |  | Variable rate, see below
6.375% Senior Notes, due November 15, 2020 |  | 520.0 |  |  | 6.4 | % |  | 520.0 |  |  | 6.4 | % |  | Fixed rate
6.625% Senior Notes, due November 15, 2022 |  | 570.0 |  |  | 6.6 | % |  | 570.0 |  |  | 6.6 | % |  | Fixed rate
6.75% Senior Notes, due March 15, 2020 |  | 300.0 |  |  | 6.8 | % |  | 300.0 |  |  | 6.8 | % |  | Fixed rate
6.125% Notes, due December 15, 2024 |  | 250.0 |  |  | 6.1 | % |  | — |  |  | — | % |  | Fixed rate
ABL Facility, expiring May 24, 2017 |  | 42.0 |  |  | 4.0 | % |  | — |  |  | 2.5 | % |  | Variable rate, see below
Other notes and obligations |  | 31.0 |  |  | 12.6 | % |  | 36.6 |  |  | 8.8 | % |  | Various
Capitalized lease obligations |  | 88.6 |  |  | 6.1 | % |  | 94.7 |  |  | 6.1 | % |  | Various
FGL |  |  |  |  |  |  |  |  |  |
6.375% Senior Notes, due April 1, 2021 |  | 300.0 |  |  | 6.4 | % |  | 300.0 |  |  | 6.4 | % |  | Fixed rate
FGL Credit Agreement |  | — |  |  | 5.3 | % |  | — |  |  | 5.3 | % |  | Variable rate, see below
Compass |  |  |  |  |  |  |  |  |  |
Compass Credit Agreement, due February 14, 2018 |  | 327.0 |  |  | 2.7 | % |  | 243.2 |  |  | 2.7 | % |  | Variable rate, see below
Salus |  |  |  |  |  |  |  |  |  |
Unaffiliated long-term debt of consolidated variable-interest entity |  | 193.0 |  |  | 6.6 | % |  | 193.0 |  |  | 6.7 | % |  | Variable rate, see below
Secured borrowings under non-qualifying loan participations |  | 102.2 |  |  | 10.9 | % |  | 106.8 |  |  | 10.8 | % |  | Fixed rate
Total |  | 5,658.3 |  |  |  |  | 5,194.5 |  |  |  |  |
Original issuance discounts on debt, net of premiums |  | (34.6 | ) |  |  |  | (36.7 | ) |  |  |  |
Total debt |  | 5,623.7 |  |  |  |  | 5,157.8 |  |  |  |  |
Less current maturities and short-term debt |  | 423.3 |  |  |  |  | 96.7 |  |  |  |  |
Non-current portion of debt |  | $ | 5,200.4 |  |  |  |  | $ | 5,061.1 |  |  |  |  |
________________________ *Together, defined as the "Term Loan" Spectrum Brands Interest terms Certain of Spectrum Brands’ debt instruments are subject to variable interest rates. The variable rates are weighted averages based on outstanding debt balances and corresponding rates in effect as of the period end. At March 31, 2015, Spectrum Brands’ variable interest rate terms were as follows: Tranche A was equal to LIBOR, subject to a 0.75% floor, plus 2.25%, with a Base option rate of 4.5%; Tranche C was equal to LIBOR, subject to a 0.75% floor, plus 2.75%, with a Base option rate of 5.0%; the Canadian Dollar ("CAD") Term Loan was equal to Canadian Dollar Offered Rate ("CDOR"), subject to a 1.25% floor (1.29% at March 31, 2015) plus 3.75%, with a Base option rate of 5.6%; Euro Term Loan Tranche A and Euro Term Loan Tranche B were equal to Europe Interbank Offered Rate ("EURIBOR"), subject to a 0.75% floor, plus 3.0%, with no Base option available; Spectrum Brands' asset based lending revolving credit facility (the “ABL Facility”) was equal to LIBOR plus 1.75%, with a Base option rate of 4.0%. Euro Term Loan Tranche B On December 19, 2014, Spectrum Brands amended the Term Loan, issuing the Euro Term Loan Tranche B maturing December 19, 2021, which provides for borrowings in an aggregate principal amount of €150.0. The Euro Term Loan Tranche B is guaranteed by Spectrum Brands' wholly owned subsidiary, SB/RH Holdings, LLC, as well as by the existing and future domestic subsidiaries of Spectrum Brands, Inc. ("SBI"), the borrower. The net proceeds from the amendment, together with the net proceeds of the 6.125% Notes, were used to fund acquisitions, repay certain amounts drawn under the revolving credit facility and for general corporate purposes, which may include, among other things, working capital needs, the refinancing of existing indebtedness and business expansion. The Euro Term Loan Tranche B was issued at a 0.25% discount and recorded net of the discount incurred. The €0.4 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 Euro Term Loan Tranche B, Spectrum Brands recorded $0.2 and $2.3 of fees during the three and six months ended March 31, 2015, respectively. The fees are classified as debt issuance costs within the accompanying unaudited Condensed Consolidated Statements of Operations and are being amortized as an adjustment to interest expense over the remaining life of the loan. 6.125% Notes On December 4, 2014, SBI issued $250.0 aggregate principal amount of 6.125% Notes at par value, due December 15, 2024. The 6.125% Notes are guaranteed by Spectrum Brands' wholly owned subsidiary, SB/RH Holdings, LLC, as well as by SBI's existing and future domestic subsidiaries. SBI may redeem all or a part of the 6.125% Notes, upon not less than 30 or more than 60 days notice, at specified redemption prices. Further, the indenture governing the 6.125% Notes (the “2024 Indenture”) requires SBI 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 SBI, as defined in the 2024 Indenture. The 2024 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 2024 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 2024 Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the amounts due under the 6.125% Notes. If any other event of default under the 2024 Indenture occurs and is continuing, the trustee for the 2024 Indenture or the registered holders of at least 25% in the then aggregate outstanding principal amount of the 6.125% Notes, may declare the acceleration of the amounts due under those notes. Spectrum Brands recorded $0.6 and $4.6 of fees in connection with the offering of the 6.125% Notes for the three and six months ended March 31, 2015, respectively. The fees were classified as debt issuance costs within the accompanying unaudited Condensed Consolidated Financial Statements and are amortized as an adjustment to interest expense over the remaining life of the 6.125% Notes. ABL Facility As a result of borrowings and payments under Spectrum Brands' ABL Facility, at March 31, 2015, Spectrum Brands had aggregate borrowing availability of approximately $257.6, net of lender reserves of $6.4 and outstanding letters of credit of $30.3. FGL As of March 31, 2015, FGL had a borrowing base of $150.0 under their three-year unsecured revolving credit facility (the "FGL Credit Agreement") with no unfunded investment commitments. If FGL were to draw on the revolver, the interest rate would be equal to a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.5%, (b) the rate of interest determined by Royal Bank of Canada as its prime commercial lending rate for USD loans in the U.S. for such day as the "U.S. Prime Rate", and (c) the Eurodollar rate for an interest period of one month beginning on such day (or if such day is not a business day, the business day immediately preceding such day) plus 1.00% per annum. As of March 31, 2015, the interest rate would be equal to 5.25%, had FGL drawn on the revolver. Compass As of March 31, 2015, Compass had $327.0 of outstanding indebtedness under the Compass Credit Agreement. The borrowing base is redetermined semi-annually, with Compass and the lenders having the right to request interim unscheduled redeterminations in certain circumstances. The interest rate grid ranges from LIBOR plus 175 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. On March 31, 2015, the one month LIBOR was 0.2% which resulted in an interest rate of approximately 2.7%. Borrowings under the 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 Compass Credit Agreement, of the oil and natural gas properties evaluated by the lenders for purposes of establishing the borrowing base. 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. As of March 31, 2015, the financial covenants contained in the Credit Agreement, required 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 total indebtedness to consolidated earnings before tax, interest, depreciation, depletion, amortization and exploration expenses ("EBITDAX") (as defined in the Compass Credit Agreement) to be greater than 4.5 to 1.0 at the end of any fiscal quarter.
Based upon the results of the quarter ended March 31, 2015 and the inclusion of those results in the trailing four quarter total EBITDAX, Compass' Consolidated total indebtedness to EBITDAX ratio exceeded the maximum ratio allowed under the Compass Credit Agreement of 4.5 to 1.0. In addition, based on the semi-annual borrowing base redetermination, the borrowing base under the Compass Credit Agreement was adjusted by the lender group from $400.0 to $340.0. As a result of the non-compliance with the debt covenant as of March 31, 2015, the $327.0 debt under the Compass Credit Agreement was classified as current in the table above. As disclosed in Note 17, Subsequent Events, on May 7, 2015, Compass entered into an amendment to the terms of the Compass Credit Agreement that included a) modification of the Company's Consolidated Leverage Ratio whereby the Consolidated Leverage Ratio covenant is not tested for the period ending March 31, 2015 and the permitted ratio limit is increased to 5.75 to 1.0 for the periods ending June 30, 2015 and September 30, 2015, and b) an additional financial covenant added in the form of Consolidated Cash Interest Coverage Ratio, whereby as of the periods ending June 30, 2015 and September 30, 2015 the Consolidated EBITDAX to Consolidated Interest Expense for the trailing four quarters will not be less than 3.50 to 1.0. Concurrently with such amendment, HGI Funding, a wholly-owned subsidiary of the Company, provided a guarantee of a limited portion of the debt under the Compass Credit Agreement until the date of Compass’ next borrowing base redetermination (which is scheduled to occur at the beginning of the fourth quarter of calendar 2015) and committed to make a debt or equity contribution to Compass on such date in an amount to be determined based on the amount of the borrowing base at such time, which amount shall not exceed $80.0 (plus certain interest charges on unpaid amounts under the guaranty and reimbursement of enforcement expenses), but may be less depending on the amounts outstanding under the Compass Credit Agreement at that time. As a result of these amendments to the Compass Credit Agreement, Compass returned to good standing under the covenants specified in the Compass Credit Agreement, as amended. Compass is presently current on all obligation related to the Compass Credit Agreement. The Compass Credit Agreement matures on February 14, 2018. See Note 17, Subsequent Events for additional information. Salus Salus 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 March 31, 2015, Salus had $102.2 of such secured borrowings to co-lenders outstanding related to non-qualifying "participating interests." In February 2013, September 2013 and February 2015, Salus completed a collateralized loan obligation ("CLO") securitization of up to $578.5 notional aggregate principal amount. The CLO was funded with $331.1 of the asset-based loan receivables that Salus had initially originated, of which $193.0 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%.

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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 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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