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Debt | 9 Months Ended
--- | ---
Jun. 30, 2016
Debt Disclosure [Abstract] |
Debt | Debt The Company’s consolidated debt consists of the following:
|  | June 30, 2016 |  | September 30, 2015 |  |
|  | Amount |  | Rate |  | Amount |  | Rate |  | Interest rate
|  |  |  |  |  | (As Adjusted) |  |
HRG |  |  |  |  |  |  |  |  |  |
7.875% Senior Secured Notes, due July 15, 2019 |  | $ | 864.4 |  |  | 7.9 | % |  | $ | 864.4 |  |  | 7.9 | % |  | Fixed rate
7.75% Senior Unsecured Notes, due January 15, 2022 |  | 890.0 |  |  | 7.8 | % |  | 890.0 |  |  | 7.8 | % |  | Fixed rate
Spectrum Brands |  |  |  |  |  |  |  |  |  |
Term Loan, due June 23, 2022 |  | 1,103.1 |  |  | 3.6 | % |  | 1,226.9 |  |  | 3.9 | % |  | Variable rate, see below
CAD Term Loan, due June 23, 2022 |  | 57.4 |  |  | 4.6 | % |  | 55.7 |  |  | 4.4 | % |  | Variable rate, see below
Euro Term Loan, due June 23, 2022 |  | 116.7 |  |  | 3.5 | % |  | 255.8 |  |  | 3.5 | % |  | 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
6.125% Notes, due December 15, 2024 |  | 250.0 |  |  | 6.1 | % |  | 250.0 |  |  | 6.1 | % |  | Fixed rate
5.75% Notes, due July 15, 2025 |  | 1,000.0 |  |  | 5.8 | % |  | 1,000.0 |  |  | 5.8 | % |  | Fixed rate
Revolver Facility, expiring June 23, 2020 |  | 198.5 |  |  | 3.6 | % |  | — |  |  | — | % |  | Variable rate, see below
Other notes and obligations |  | 15.4 |  |  | 11.9 | % |  | 11.2 |  |  | 10.2 | % |  | Variable
Obligations under capitalized leases |  | 107.9 |  |  | 5.5 | % |  | 88.2 |  |  | 5.7 | % |  | Various
Compass |  |  |  |  |  |  |  |  |  |
Compass Credit Agreement, due February 14, 2018 |  | 125.0 |  |  | 3.8 | % |  | 327.0 |  |  | 3.0 | % |  | Variable rate, see below
HGI Energy |  |  |  |  |  |  |  |  |  |
9.0% HGI Energy Note to FGL*, due February 14, 2021 |  | 50.0 |  |  | 9.0 | % |  | 50.0 |  |  | 9.0 | % |  | Fixed rate
Salus |  |  |  |  |  |  |  |  |  |
Unaffiliated long-term debt of consolidated variable-interest entity |  | 40.4 |  |  | — | % |  | 40.4 |  |  | — | % |  | Variable rate, see below
Long-term debt of consolidated variable-interest entity with FGL* |  | 148.9 |  |  | 6.0 | % |  | 274.0 |  |  | 3.9 | % |  | Variable rate, see below
Unaffiliated secured borrowings under non-qualifying loan participations |  | 2.2 |  |  | — | % |  | 8.8 |  |  | 10.5 | % |  | Fixed rate
Secured borrowings under non-qualifying loan participations with FGL* |  | — |  |  | — | % |  | 4.2 |  |  | 4.5 | % |  | Variable rate, see below
Promissory note to FGL* |  | — |  |  | — | % |  | 2.5 |  |  | 5.3 | % |  | Fixed rate
Total |  | 6,059.9 |  |  |  |  | 6,439.1 |  |  |  |  |
Original issuance discounts on debt, net of premiums |  | (23.8 | ) |  |  |  | (25.7 | ) |  |  |  |
Unamortized debt issue costs |  | (91.6 | ) |  |  |  | (102.9 | ) |  |  |  |
Total debt |  | 5,944.5 |  |  |  |  | 6,310.5 |  |  |  |  |
Less current maturities and short-term debt |  | 37.5 |  |  |  |  | 45.1 |  |  |  |  |
Non-current portion of debt |  | $ | 5,907.0 |  |  |  |  | $ | 6,265.4 |  |  |  |  |
* The debt balances included in the accompanying Condensed Consolidated Balance Sheets and in the table above reflect transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the close of the FGL Merger. Such transactions are not eliminated in the Condensed Consolidated Financial Statements in order to appropriately reflect the continuing operations and balances held for sale. Spectrum Brands Interest terms Certain of Spectrum Brands’ debt instruments are subject to variable interest rates. At June 30, 2016, Spectrum Brands’ variable interest rate terms were as follows: (i) for the U.S. dollar denominated term loan facility (the “USD Term Loan”), either adjusted LIBOR, subject to a 0.75% floor, plus 2.75% per annum, or base rate plus 1.75% per annum; (ii) for the CAD denominated term loan facility (the “CAD Term Loan”), either Canadian Dollar Offered Rate, subject to a 0.75% floor plus 3.5% per annum, or base rate plus 2.5% per annum; (iii) for the Euro denominated term loan facility (the “Euro Term Loan”), Euro Interbank Offered Rate, subject to a 0.75% floor, plus 2.75% per annum, with no base rate option available; and (iv) for the revolving credit facility (the “Revolver Facility”), either adjusted LIBOR plus 2.75% per annum or base rate plus 1.75% per annum. As a result of borrowings and payments under the Revolver Facility, at June 30, 2016, the Company had borrowing availability of $276.9, net outstanding letters of credit of $24.6. Compass As of June 30, 2016, Compass had $125.0 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 294 bps to 375 bps (or Alternate Base Rate (“ABR”) plus 475 bps to 575 bps), depending on the percentages of drawn balances to the borrowing base as defined in the agreement. On June 30, 2016, the one month LIBOR was 0.5% which resulted in an interest rate of approximately 3.8%. On November 13, 2015, Compass entered into an amendment to the terms of the Compass Credit Agreement that included a modification of the Consolidated Leverage Ratio (as defined in the Compass Credit Agreement) whereby the maximum permitted ratio at the end of each quarter was increased to 6.00 to 1.00 through September 30, 2016. The maximum permitted Consolidated Coverage Ratio (as defined in the Compass Credit Agreement) for each quarter ending after October 1, 2016 will be 4.50 to 1.00. The amendment also provided for the reduction of the borrowing base to $320.0 on November 13, 2015. Following the completion of the Compass Asset Sale and paydown of Compass’ indebtedness, the borrowing base under the Compass Credit Agreement was further reduced to $175.0. Concurrently with such amendment, HRG’s wholly-owned subsidiary, HGI Funding, LLC (“HGI Funding”), determined to amend its guarantee in order to continue to provide a guarantee (the “Guarantee”) of a limited portion, up to $30.0, of the debt under the Compass Credit Agreement until the date of Compass’ May 2016 borrowing base redetermination and committed to make a debt or equity contribution to Compass on the date of such redetermination in an amount to be determined based on the amount of the borrowing base at such time. The guarantee was also amended to provide that HGI Funding may elect to guaranty an additional portion of the debt under the Compass Credit Agreement (the “Optional Guarantee”) in order to cure defaults under the Consolidated Leverage Ratio on any test date through September 30, 2016. This provision was removed in a further amendment (as detailed below). The secured amount is secured by a pledge of assets chosen by the Company that may consist of a combination of cash and marketable securities with a determined value equal to the maximum secured amount then applicable. In measuring the determined value of the pledged assets, cash is valued at 100.0% and marketable securities are valued at 33.3% of fair market value thereafter (measured as the 20 day average close price of such marketable securities). On December 23, 2015, Compass received the consent of the lenders under the Compass Credit Agreement to delay the delivery of Compass’ unqualified audited financial statements for the fiscal year ended September 30, 2015 until March 31, 2016. Such financial statements had previously been required to be delivered within 90 days following the end of such fiscal year. On March 29, 2016, Compass entered into a further amendment to the terms of the Compass Credit Agreement that included a modification of the Applicable Spread (as defined in the Compass Credit Agreement) whereby (i) the ABR Spread (as defined in the Compass Credit Agreement) was increased from a range of 0.75%-1.75%, based on the Borrowing Base Usage (as defined in the Compass Credit Agreement), to a spread of 1.25%-2.25% and (ii) the Eurodollar spread was increased from a range of 1.75%-2.75% to a range of 2.25%-3.25%. Additionally, the commitment fee was raised to 0.50% at all Borrowing Base Usage levels, up from 0.375% when the Borrowing Base Usage was less than 50.0%. The amendment further provided for a redetermination of Compass’ borrowing base on or about May 16, 2016 with scheduled redeterminations to begin December 1, 2016 and proceed every June 1 and December 1 thereafter. Finally, the amendment included a limited waiver of the event of default that would have occurred due to the existence of a going concern qualification in the audited consolidated financial statements of Compass for the fiscal year ended September 30, 2015. On May 20, 2016, Compass entered into a further amendment to the terms of the Compass Credit Agreement that, among other things, reintroduced a covenant to maintain a consolidated cash interest coverage ratio of no more than 1.10 to 1.00, determined as of the end of each fiscal quarter ending on or after June 30, 2016 through and including the fiscal quarter ending June 30, 2017. The amendment also provided that the consolidated leverage ratio will not be tested for any quarter ending prior to September 30, 2017 and reduced the borrowing base to $135.0. In connection with the reduction in the borrowing base, Compass was required to prepay $35.0 towards the outstanding amounts under the Compass Credit Agreement prior to June 3, 2016, which funds were contributed by HRG as an equity contribution, and will be required to make a further prepayment of $12.5 on or prior to December 30, 2016. The December 30 prepayment will coincide with an automatic reduction in the commitments of the lenders under the Compass Credit Agreement on a dollar-for-dollar basis. The amendment added requirements that Compass increase mortgage coverage on properties calculated in the borrowing base from 80.0% to 90.0% of the then-current borrowing base value and place control agreements on non-excluded deposit accounts of Compass. Finally, the amendment included a limited waiver of the event of default which occurred due to the late delivery of the audited consolidated financial statements of Compass for the fiscal year ended September 30, 2015. As of June 30, 2016, $125.0 was drawn under the Compass Credit Agreement. The Compass Credit Agreement matures on February 14, 2018. In connection with the amendment detailed in the foregoing paragraph, HGI Funding entered into an amendment of its Guarantee of a portion of the debt under the Compass Credit Agreement and agreed to extend the Guarantee. The expiration date of the Guarantee occurs on the first day, on or following the December 2016 borrowing base redetermination, on which no borrowing base deficiency exists. Following such amendment, HGI Funding is required to maintain secured amounts in its collateral account equal to two times the amount of the Guarantee and the maximum aggregate obligations of HGI Funding increased to $40.0. The amendment also removed the ability of HGI Funding to make Optional Guarantees in order to cure defaults with respect to the Consolidated Leverage Ratio since the Consolidated Leverage Ratio has been suspended until September 30, 2017. As of June 30, 2016, Compass was in good standing under the covenants specified in the Compass Credit Agreement, as amended. Compass is presently current on all obligations related to the Compass Credit Agreement. HGI Energy In February 2013, in connection with the Company’s acquisition of an interest in Compass, HGI Energy entered into note purchase agreements, one of which was with FGL for $50.0 notional aggregate principal amount due February 14, 2021 (the “HGI Energy Note to FGL”). The HGI Energy Note to FGL earns interest at 9.0% per annum, payable semi-annually in arrears on January 1 and July 1. The HGI Energy Note to FGL is subordinated in seniority to the Compass Credit Agreement. 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 June 30, 2016 and September 30, 2015, Salus had $2.2 and $8.8, respectively, of such secured borrowings to unaffiliated co-lenders outstanding related to non-qualifying “participating interests.” As of June 30, 2016, Salus had no secured borrowings under non-qualifying loan participation with FGL and as of September 30, 2015, the balance was $4.2. 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. At June 30, 2016 and September 30, 2015, the outstanding notional aggregate principal amount was $232.5 and $357.7, respectively, of which $40.4 was taken up by unaffiliated entities and consisted entirely of subordinated debt, and $148.9 and $274.0, respectively, was taken up by FGL and included in “Assets of business held for sale” in the accompanying Condensed Consolidated Balance Sheets. The obligations of the securitization is secured by the assets of the Variable Interest Entity (“VIE”), primarily asset-based loan receivables, and at June 30, 2016 carried a variable interest rate ranging from LIBOR plus 2.4% to LIBOR plus 11.5% for the senior tranches. The subordinated tranches carry residual interest subject to maintenance of certain covenants. Due to losses incurred in the CLO, at June 30, 2016 and September 30, 2015, the CLO was not accruing interest on the subordinated debt. In February 2015, Salus signed a $2.5 senior secured promissory note with FGL originally due on May 29, 2015 with fixed interest of 5.3% to be paid semi-annually. The note was repaid in full during the nine months ended June 30, 2016.

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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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