XML 109 R16.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Long-Term Debt | 12 Months Ended
--- | ---
Dec. 31, 2013
Long-Term Debt | Note 9—Long-term debt:
| December 31, |
| 2012 |  |  | 2013 |
| (In millions) |
Valhi: |  |  |  |  |  |  |
Snake River Sugar Company | $ | 250.0 |  |  | $ | 250.0 |
Contran credit facility |  | 157.6 |  |  |  | 206.5 |
Total Valhi debt |  | 407.6 |  |  |  | 456.5 |
Subsidiary debt: |  |  |  |  |  |  |
Kronos: |  |  |  |  |  |  |
Note payable to Contran |  | — |  |  |  | 170.0 |
Term loan |  | 384.5 |  |  |  | — |
Revolving North American credit facility |  | — |  |  |  | 11.1 |
Revolving European credit facility |  | 13.2 |  |  |  | — |
CompX: |  |  |  |  |  |  |
Promissory note payable to TIMET |  | 18.5 |  |  |  | — |
WCS: |  |  |  |  |  |  |
Financing capital lease |  | 69.9 |  |  |  | 68.6 |
6% promissory notes |  | 7.2 |  |  |  | 2.4 |
Tremont: |  |  |  |  |  |  |
Promissory note payable |  | — |  |  |  | 19.1 |
BMI: |  |  |  |  |  |  |
Bank note payable |  | — |  |  |  | 11.2 |
Landwell: |  |  |  |  |  |  |
Note payable to the City of Henderson |  | — |  |  |  | 3.1 |
Other |  | 9.2 |  |  |  | 10.5 |
Total subsidiary debt |  | 502.5 |  |  |  | 296.0 |
Total debt |  | 910.1 |  |  |  | 752.5 |
Less current maturities |  | 29.6 |  |  |  | 10.7 |
Total long-term debt | $ | 880.5 |  |  | $ | 741.8 |
Valhi —Snake River Sugar Company — Our $250 million in loans from Snake River Sugar Company are collateralized by our interest in The Amalgamated Sugar Company LLC. The loans bear interest at a weighted average fixed interest rate of 9.4% and are due in January 2027. At December 31, 2013, $37.5 million of the loans are recourse to us and the remaining $212.5 million is nonrecourse to us. Under certain conditions, Snake River has the ability to accelerate the maturity of these loans. See Note 4. Contran credit facility— We also have an unsecured revolving credit facility with Contran which, as amended, provides for borrowings from Contran of up to $275 million. The facility, as amended, bears interest at prime plus 1% (4.25% at December 31, 2013), and is due on demand, but in any event no earlier than December 31, 2015. The facility contains no financial covenants or other financial restrictions. Valhi pays an unused commitment fee quarterly to Contran on the available balance (except during periods during which Contran would be a net borrower from Valhi). In December 2012, we borrowed $157.6 million under this facility and used the proceeds to repay an intercompany note with our Chemicals Segment (which note was eliminated in the preparation of our Consolidated Financial Statements). During 2013 we borrowed an additional $48.9 million and at December 31, 2013 an additional $68.5 million was available for borrowings. Kronos—Term loan—In February 2013, Kronos voluntarily prepaid an aggregate $290 million principal amount of its term loan. We recognized a non-cash pre-tax interest charge of $6.6 million in the first of 2013 quarter related to this prepayment consisting of the write-off of the unamortized original issue discount costs and deferred financing costs associated with such prepayment. Funds for such prepayment were provided by $100 million of Kronos’ cash on hand as well as borrowings of $190 million under a new loan from Contran as described below. In July 2013 Kronos voluntarily prepaid the remaining $100 million principal amount outstanding under its term loan, using $50 million of its cash on hand as well as borrowings of $50 million under its North American revolving credit facility. We recognized a non-cash pre-tax interest charge of $2.3 million in the third quarter of 2013 related to this prepayment consisting of the write-off of the unamortized original issue discount costs and deferred financing costs associated with such prepayment. The average interest rate on the term loan for the year-to-date period ended July 30, 2013 (the payoff date) was 6.8%. The carrying value of the term loan at December 31, 2012 included unamortized original issue discount of $5.5 million. In February 2014, Kronos entered into a new $350 million term loan. Kronos used $170 million of the net proceeds of the new term loan to prepay the outstanding principal balance of its note payable to Contran (along with accrued and unpaid interest through the prepayment date), and such note payable was cancelled. The term loan was issued at 99.5% of the principal amount, or an aggregate of $348.25 million. The remaining $172.8 million net proceeds of the term loan are available for our general corporate purposes. The new term loan:
· | bears interest, at our option, at LIBOR (with LIBOR no less than 1.0%) plus 3.75%, or the base rate, as defined in the agreement, plus 2.75%;
· | requires quarterly principal repayments of $875,000 commencing in June 2014, other mandatory principal repayments of formula-determined amounts under specified conditions with all remaining principal balance due in February 2020. Voluntary principal prepayments are permitted at any time, provided that a call premium of 1% of the principal amount of such prepayment applies to any voluntary prepayment made on or before February 2015 (there is no prepayment penalty applicable to any voluntary prepayment after February 2015);
· | is collateralized by, among other things, a first priority lien on (i) 100% of the common stock of certain of Kronos' U.S. wholly-owned subsidiaries, (ii) 65% of the common stock or other ownership interest of Kronos' Canadian subsidiary (Kronos Canada, Inc.) and certain first-tier European subsidiaries (Kronos Titan GmbH and Kronos Denmark ApS) and (iii) a $395.7 million unsecured promissory note issued by Kronos’ wholly-owned subsidiary, Kronos International, Inc. (KII) to Kronos’;
· | is also collateralized by a second priority lien on all of the U.S. assets which collateralize Kronos' new North American revolving facility, as discussed below;
· | contains a number of covenants and restrictions which, among other things, restrict Kronos’ ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of Kronos’ assets to, another entity, contains other provisions and restrictive covenants customary in lending transactions of this type (however, there are no ongoing financial maintenance covenants); and
· | contains customary default provisions, including a default under any of Kronos’ other indebtedness in excess of $50 million.
Note payable to Contran—As discussed above, in February 2013 Kronos entered into a promissory note with Contran. This new loan from Contran contained terms and conditions similar to the terms and conditions of the term loan, except that the loan from Contran was unsecured and contained no financial maintenance covenant. The independent members of Kronos’ board of directors approved the terms and conditions of the loan from Contran. The note required quarterly principal payments of $5.0 million which commenced in March 2013, with any remaining outstanding principal due by June 2018. Voluntary principal prepayments were permitted at any time without penalty. The note bore interest at LIBOR (with LIBOR no less than 1%) plus 5.125%, or the base rate (as defined in the agreement) plus 4.125%. Kronos was required to use the base rate method until such time as both (1) the term loan discussed above had been fully repaid and (2) the European credit facility had terms satisfactory to Contran, at which time Kronos would have had the option to use either the base rate or LIBOR rate methods. In 2013, Kronos borrowed $190 million and subsequently repaid $20 million on the note. The average interest rate on these borrowings as of and for the period from issuance to December 31, 2013 was 7.375%. As discussed above, in February 2014 Kronos used $170 million of the proceeds from its new term loan and prepaid the remaining balance owed to Contran under this note payable, and the note payable to Contran was cancelled. In accordance with GAAP, since Kronos has refinanced the note payable to Contran with a portion of the net proceeds from its new term loan, current maturities of long-term debt at December 31, 2013, as it relates to the note payable to Contran, is based upon the required quarterly principal repayments of the new term loan. Senior Secured Notes —In March 2011, Kronos redeemed €80 million of its €400 million 6.5% Senior Secured Notes at 102.17% of the principal amount for an aggregate of $115.7 million, including a $2.5 million call premium. During the third and fourth quarters of 2011, Kronos repurchased in open market transactions an aggregate of €40.8 million principal amount of the Senior Notes for an aggregate of €40.6 million (an aggregate of $57.6 million when repurchased). Following such partial redemption and repurchases, €279.2 million principal amount of Senior Notes remained outstanding. We recognized a $3.3 million pre-tax interest charge related to the redemption of €80 million of the 6.5% Senior Secured Notes consisting of the call premium, the write-off of unamortized deferred financing costs and original issue discount associated with the redeemed Senior Notes. We recognized a $.2 million net gain on the €40.8 million principal amount of Senior Notes repurchased in open market transactions. We borrowed under our European revolving credit facility in order to fund the redemption in March 2011, while we used cash on hand to fund the open market repurchases. Immediately upon the June 2012 issuance of Kronos' prior term loan discussed above, we sent a request to the trustee under the indenture for the Senior Notes, asking that all remaining €279.2 million principal amount outstanding of the Senior Notes be called for redemption on July 20, 2012. We also directed that a portion of the proceeds from the prior term loan be irrevocably sent to the trustee, in an amount sufficient to pay the principal, call premium at 1.01083% of the principal amount and all accrued and unpaid interest due through the July 20, 2012 redemption date. Upon the trustee’s confirmation of receipt of such funds on June 14, 2012, the trustee discharged our obligations under the indenture and released the liens on all collateral thereunder. Because we were released as being the primary obligor under the indenture as of June 14, 2012, the Senior Notes were derecognized as of that date along with the funds irrevocably sent to the trustee to effect the July 20, 2012 redemption. We recognized an aggregate $7.2 million pre-tax charge related to the early extinguishment of debt in the second quarter of 2012, consisting of the call premium paid, interest from the June 14, 2012 indenture discharge date to the July 20, 2012 redemption date and the write-off of unamortized deferred financing costs and original issue discount associated with the redeemed Senior Notes. Revolving North American credit facility—Also in June 2012, Kronos entered into a $125 million revolving bank credit facility which matures June 2017. Borrowings under the revolving credit facility are available for our general corporate purposes. Available borrowings on this facility are based on formula-determined amounts of eligible trade receivables and inventories, as defined in the agreement, of certain of Kronos’ North American subsidiaries less any outstanding letters of credit up to $15 million issued under the facility (with revolving borrowings by Kronos’ Canadian subsidiary limited to $25 million). Any amounts outstanding under the revolving credit facility bear interest, at Kronos’ option, at LIBOR plus a margin ranging from 1.5% to 2.0% or at the applicable base rate, as defined in the agreement, plus a margin ranging from .5% to 1.0%. The credit facility is collateralized by, among other things, a first priority lien on the borrowers’ trade receivables and inventories. The facility contains a number of covenants and restrictions which, among other things, restricts the borrowers’ ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer all or substantially all of their assets to, another entity, contains other provisions and restrictive covenants customary in lending transactions of this type and under certain conditions requires the maintenance of a specified financial covenant 1.0 to 1.0. During 2013, Kronos borrowed $162.1 million and repaid an aggregate of $151.0 million under this facility. The average interest rate on these borrowings as of and for the period from borrowing to December 31, 2013 was 2.69% and 3.75%, respectively. At December 31, 2013 approximately $89.1 million was available for borrowing under this revolving facility. Revolving European credit facility—Kronos’ operating subsidiaries in Germany, Belgium, Norway and Denmark have a €120 million secured revolving bank credit facility that, matures in September 2017. Kronos may denominate borrowings in Euros, Norwegian kroner or U.S. dollars. Outstanding borrowings bear interest at LIBOR plus 1.90%. The facility is collateralized by the accounts receivable and inventories of the borrowers, plus a limited pledge of all of the other assets of the Belgian borrower. The facility contains certain restrictive covenants that, among other things, restrict the ability of the borrowers to incur debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer all or substantially all of the assets to, another entity, and requires the maintenance of certain financial ratios. In addition, the credit facility contains customary cross-default provisions with respect to other debt and obligations of the borrowers, KII and its other subsidiaries. During 2013, Kronos borrowed €10 million ($12.8 million when borrowed) and repaid the entire outstanding balance of €20 million ($26.5 million when repaid) under its European credit facility. The average interest rate on these borrowings for the year-to-date period ended August 31, 2013 when paid off was 2.02%. At December 31, 2013, there were no outstanding borrowings under this facility. Our European credit facility requires the maintenance of certain financial ratios. At September 30, 2013, and based on the earnings before income tax, interest, depreciation and amortization expense (EBITDA) of the borrowers, we would not have met the financial covenant test if the borrowers had any net debt outstanding. In December 2013, the lenders under Kronos’ European revolving credit facility granted a waiver until June 30, 2014 with respect to the financial test, but Kronos’ ability to borrow any amounts under the facility is subject to the requirement that the borrowers maintain a specified level of EBITDA. At December 31, 2013 Kronos is in compliance with the minimum EBITDA set forth in the waiver, and our borrowing availability was 50% of the credit facility, or €60 million ($82.8 million). Effective January 1, 2014, per the waiver, Kronos’ borrowing availability is 75% of the credit facility, or €90 million ($124.1 million). Canada—In December 2011, Kronos’ Canadian subsidiary entered into a Cdn. $10.0 million loan agreement with the Bank of Montreal for the limited purpose of issuing letters of credit. The facility renews annually. Letters of credit are collateralized by restricted deposits at the Bank of Montreal ($7.4 million at December 31, 2013). See Note 7. The facility contains certain restrictive covenants which, among other things, restrict the subsidiary from incurring additional indebtedness in excess of Cdn. $35 million. At December 31, 2013, an aggregate of Cdn. $7.9 million letters of credit were outstanding under this facility. In December 2011, Kronos’ Canadian subsidiary entered into an agreement with an economic development agency of the Province of Quebec, Canada pursuant to which we may borrow up to Cdn. $7.1 million from such agency. Borrowings may only be used to fund capital improvements at its Canadian plant and are limited to a specified percentage of such capital improvements. Borrowings are non-interest bearing, with monthly payments commencing in 2017. The agreement contains certain restrictive covenants, which, among other things, restricts the subsidiary’s ability to sell assets or enter into mergers, and requires Kronos’ subsidiary to maintain certain financial ratios and maintain specified levels of employment. At December 31, 2013 Kronos had Cdn. $1.8 million (USD $1.7 million) outstanding under this agreement. CompX—Note payable to Timet Finance Management Company—Prior to 2011, CompX purchased and/or cancelled certain shares of its Class A common stock from Timet Finance Management Company (“TFMC”). TFMC is a wholly-owned subsidiary of Titanium Metals Corporation, which was one of our affiliates until December 20, 2012. CompX paid for the shares acquired in the form of a promissory note which, as amended, bore interest at LIBOR plus 1% and provided for quarterly principal repayments of $250,000, with the balance due at maturity in September 2014. The promissory note was prepayable, in whole or in part, at any time at CompX’s option without penalty. In July 2013, CompX prepaid the remaining outstanding principal amount of the note, plus accrued interest, without penalty. The average interest rate on the promissory note payable for the year-to-date period ended July 18, 2013 (the pay-off date) was 1.3%. WCS—Financing capital lease—In December 2010, WCS closed under a Sale and Purchase Agreement with the County of Andrews, whereby WCS sold certain real and personal property constituting a substantial portion of its property and equipment (“Transferred Assets”) to the County for gross proceeds of $75 million. WCS used the net proceeds received under the Agreement to finance the construction of its Federal and Texas Compact LLRW disposal facilities. As a condition under the Agreement, in December 2010 WCS also concurrently entered into a Lease Agreement (“Lease”) with the County pursuant to which WCS agreed to lease the Transferred Assets back from the County for a period of 25 years. The Lease requires monthly rental payments payable from December 2010 through August 2035, and during the Lease term WCS is responsible for all costs associated with the use, occupancy, possession and operation of the Transferred Assets. Under the terms of the Agreement, WCS was also required to pay all of the County’s costs associated with the transactions, and the proceeds WCS received from the County upon closing under the Sale and Purchase Agreement were net of the County’s cost, which aggregated approximately $2.6 million At the end of the Lease term, title to the Transferred A ssets automatically reverts back to WCS without further payment obligation. Prior to the end of the Lease term, WCS may, at its option, terminate the Lease early upon payment of specified amounts to the County, at which time the Transferred Assets would also revert back to WCS. For financial reporting purposes, we have accounted for these transactions in tandem as a financing capital lease, in which we continue to recognize the Transferred Assets on our Consolidated Balance Sheet and our rental payments due under the Lease are accounted for as debt. The capital lease has an effective interest rate of approximately 7.0%. At the inception of the Lease, WCS was required to prepay to the County an amount ($6.2 million) equal to its aggregate lease rentals due to the County in the final year of the Lease, the County will hold the funds as a prepaid deposit. The deposit serves as collateral for WCS’ performance under the Lease and is included in our other noncurrent assets. See Notes 7 and 16. 6% promissory notes —As part of the termination of a contract with a former customer regarding various contractual and legal claims, in April 2010 WCS issued the former customer a $12.0 million long-term promissory note. The note is unsecured, bears interest at a fixed rate of 6% and is payable in five equal annual installments of principal plus accrued interest that began on December 31, 2010. WCS has the right to prepay the note at any time without penalty. A substantial portion of the principal amount of the promissory note issued was offset against deferred revenue that was unearned by WCS. The remaining $1.1 million we recognized in contract termination expense related to this agreement in the first quarter of 2010. At December 31, 2013, the outstanding principal balance of this promissory note was $2.4 million, which is payable in December 2014. In December 2010, WCS issued a vendor, in final settlement of certain accrued construction retainage owed to such vendor, a $6.6 million non-interest bearing promissory note due on December 31, 2013. WCS made payments of $1.7 million in 2011, $2.4 million in 2012 and $2.5 million in 2013, respectively. The note calls for a final payment of $2.5 million on December 31, 2013. While the note is non-interest bearing, it does provide for a 6% discount rate in the event we elect, at our option, to prepay the promissory note. For financial reporting purposes, we discounted the note to its present value of $5.82 million at issuance based on this 6% discount rate. The amount of accrued construction retainage payable we had previously recognized was approximately $1.4 million greater than such $5.82 million amount, and as part of the settlement we reduced the value of our property and equipment by such excess to reflect the final cost. At December 31, 2013, our obligation to the vendor under this promissory note has been fully paid. Other. Tremont’s promissory note payable is discussed in Notes 3 and 16. In January 2013, BMI entered into an $11.9 million bank note payable with Meadows Bank. The proceeds of the note were used to refinance previously outstanding debt obligations. The note requires monthly installments of $.1 million through the maturity date in January 2025. The note bears interest at a variable rate equal to the prime rate with a floor of 3.25% and a ceiling of 9.0%. The note is secured by certain real property and water rights. In addition we are required to maintain cash collateral of $750,000 with the lender, which collateral is classified as noncurrent restricted cash in our December 31, 2013 Consolidated Balance Sheet. At December 31, 2013 the note had an outstanding balance of $11.2 million. The interest rate at December 31, 2013 was 3.25%. In May 2012, Landwell entered into a $3.9 million promissory note payable with the City of Henderson, Nevada. The note requires semi-annual principal payments of $250,000 payable solely from cash received from certain specified revenue sources with any remaining unpaid balance due in October 2020. The loan bears interest at a 3% fixed rate. Due to the uncertainty in timing of the cash to be received from the specified revenue sources, the outstanding balance of $3.1 million is deemed to be maturing in 2020. Aggregate maturities of long-term debt at December 31, 2013 Aggregate maturities of debt at December 31, 2013 are presented in the table below. Such maturities, as they relate to Kronos note payable to Contran, are based upon the required quarterly principal repayments of its new term loan.
Years ending December 31, |  | Amount |
|  | (In millions) |
Gross amounts due each year: |  |  |  |
2014 |  | $ | 15.2 |
2015 |  |  | 219.2 |
2016 |  |  | 13.1 |
2017 |  |  | 22.4 |
2018 |  |  | 11.3 |
2019 and thereafter |  |  | 535.6 |
Subtotal |  |  | 816.8 |
Less amounts representing interest on capital leases |  |  | 64.3 |
Total long-term debt |  | $ | 752.5 |
After considering the effect of the new term loan Kronos obtained in February 2014 and the application of the net proceeds as discussed above, our aggregate maturities of long-term debt would be:
Years ending December 31, |  | Amount |
|  | (In millions) |
Gross amounts due each year: |  |  |  |
2014 |  | $ | 15.2 |
2015 |  |  | 219.2 |
2016 |  |  | 13.1 |
2017 |  |  | 22.4 |
2018 |  |  | 11.3 |
2019 and thereafter |  |  | 715.6 |
Subtotal |  |  | 996.8 |
Less amounts representing interest on capital leases |  |  | 64.3 |
Total long-term debt |  | $ | 932.5 |

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 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 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration