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Debt | 12 Months Ended
--- | ---
Dec. 31, 2015
Debt Disclosure [Abstract] |
Debt |
7) | Debt
Long-term debt and short-term debt at December 31, 2015 and December 31, 2014 consisted of the following:
|  | December 31, 2015 |  |  | December 31, 2014 |
Borrowings under our $575.0 million Senior Secured Term Loan B bearing interest the greater of 1% or 3 month LIBOR (0.61270% at December 31, 2015) plus an applicable margin of 4.75% at December 31, 2015, expiring October 19, 2022, net of discount of $11.0 million. |  | $ | 562,580 |  |  | $ | — |
Borrowings under our $100.0 million Senior Secured Revolver bearing interest at LIBOR (0.4239% at December 31, 2015) plus an applicable margin of 3.50% at December 31, 2015, expiring October 19, 2020. |  |  | 6,462 |  |  |  | — |
Borrowings under our $250.0 million Senior Notes bearing interest at 10.25%, maturing on November 1, 2020, net of discount of $5.5 million. |  |  | 244,509 |  |  |  | — |
Borrowings under our $350.0 Term Loan B bearing interest at the greater of 1% or 3 month LIBOR (0.2560% at December 31, 2014) plus an applicable margin of 5.00% at December 31, 2014, expiring August 29, 2019 net of discount of $5.0 million. |  |  | — |  |  |  | 340,005 |
Borrowings under our $100.0 million ABL Revolver bearing interest at a floating rate equal to LIBOR (0.17125% at December 31, 2014) plus an applicable margin of 1.75% at December 31, 2014, expiring August 29, 2019. |  |  | — |  |  |  | — |
French Safeguard Obligations (Autocam) |  |  | 2,000 |  |  |  | 2,560 |
Brazilian lines of credit and equipment notes (Autocam) |  |  | 826 |  |  |  | 5,304 |
Chinese line of credit (Autocam) |  |  | 3,696 |  |  |  | 2,317 |
Total debt |  |  | 820,073 |  |  |  | 350,186 |
Less current maturities of long-term debt |  |  | 11,714 |  |  |  | 22,160 |
Long-term debt, excluding current maturities of long-term debt |  | $ | 808,359 |  |  | $ | 328,026 |
On October 19, 2015, concurrent with the PEP Acquisition, we: (i) entered into the New Term Loan Credit Facility; (ii) entered into the New Senior Secured Revolving Credit Facility; and (iii) issued the Senior Notes. Proceeds from the New Term Loan Credit Facility and the Senior Notes were used to finance the purchase price of the PEP Acquisition and pay down debt. The New Senior Credit Facilities replaced our existing credit facilities. On November 9, 2015, an incremental term loan of $50.0 million was drawn on the New Term Loan Credit Facility and the proceeds were used to repurchase approximately $50.0 million of the Senior Notes. As of December 31, 2015, $13.0 million of net capitalized deferred financing costs related to the New Senior Credit Facilities were recorded on the consolidated balance sheet within other non-current assets. The interest applicable to borrowings under the New Senior Credit Facilities are based upon a fluctuating rate of interest measured by reference to either, at our option, (i) a base rate, plus an applicable margin, or (ii) the greater of the London Interbank Offered Rate (“LIBOR”) or 1.0%, plus an applicable margin. The initial applicable margin for all borrowings under the New Term Loan Credit Facility is 3.75% per annum with respect to base rate borrowings and 4.75% per annum with respect to LIBOR borrowings. The initial applicable margin for New Senior Secured Revolving Credit Facility borrowings is 2.5% per annum with respect to base rate borrowings and 3.5% per annum with respect to LIBOR borrowings, which shall be in effect until we provide a compliance certificate, as required by the credit agreement. Thereafter, the applicable margin shall be determined by reference to a ratio of our consolidated leverage ratio. Our obligations under the New Senior Credit Facilities are guaranteed by certain of our direct and indirect, existing and future domestic subsidiaries, subject to customary exceptions and limitations. The New Senior Credit Facilities are secured by a first priority lien over substantially all of NN’s and each guarantor’s assets, subject to certain customary exceptions. The New Senior Credit Facilities are subject to negative covenants that, among other things subject to certain exceptions, limit our ability and the ability of its restricted subsidiaries to: (i) incur liens; (ii) incur indebtedness; (iii) make investments and acquisitions, (iv) merge, liquidate or dissolve, (v) sell assets, including capital stock of subsidiaries; (vi) pay dividends on capital stock or redeem, repurchase or retire capital stock; (viii) alter our business; (viii) engage in transactions with our affiliates; and (ix) enter into agreements limiting subsidiary dividends and distributions. In the event borrowings under the New Senior Secured Revolving Credit Facility exceed 30.0% of the aggregate commitments under the revolver, we will become subject to a financial covenant that requires us to maintain a specified consolidated net leverage ratio. The credit agreement provides that we have the right to request one or more increases in the revolving loan commitments or term loan commitment up to $100.0 million in the aggregate. In total, including the additional $50.0 million incremental term loan, we have paid original issue discount fees of $11.3 million, which are being amortized into interest expense over the life of the New Senior Credit Facilities. $12.5 million in net capitalized loan origination costs related to our $350.0 million credit facility were written off as of October 19, 2015. $0.4 million in net capitalized loan origination costs related to the $100.0 million asset backed revolver were also written off as of October 19, 2015. The Senior Notes will mature on November 1, 2020. Interest will be payable semi-annually in arrears on May 1 and November 1 of each year, commencing May 2016. Under the Senior Notes, we received funds of $293.3 million, net of a discount of $6.8 million, which is being amortized into interest expense over the life of the Senior Notes. The Senior Notes will be guaranteed by each existing direct and indirect domestic restricted subsidiaries (excluding immaterial subsidiaries). The Senior Notes and guarantees will be senior unsecured obligations of the issuer and the guarantors, respectively, and will rank pari passu in right of payments with all existing and future senior debt and senior to all existing and future subordinated debt of the issuer and guarantors. The Senior Notes and guarantees will be effectively subordinated to all existing and future secured debt of the issuer and guarantors to the extent of the assets securing such debt. In addition, the Senior Notes and the guarantees will be structurally subordinated to all indebtedness and other liabilities and preferred stock of our subsidiaries that do not guarantee the Senior Notes. The Senior Notes have not been registered under the Securities Act of 1933, as amended, or any state securities law and may not be offered or sold within the United States or to, or for the benefit of, a U.S. person (as defined by Regulation S under the Securities Act) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. The Senior Notes were offered and sold only to persons reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) and to persons outside the United States under Regulations S. We will use our commercially reasonable efforts to register notes having substantially identical terms (other than restrictions on transfer and additional interest) as the Senior Notes with the Commission as part of an offer to exchange freely tradable exchange notes for the Senior Notes. We will use our commercially reasonable effort to file a registration statement for the exchange notes with the Commission and cause that registration statement to be declared effective 300 days of the issue date of the Senior Notes. If we fail to register the Senior Notes, than annual interest rate on the Senior Notes will increase by 0.25%. The annual interest rate on the Senior Notes will increase by an additional 0.25% for each subsequent 90-day period during which a registration default continues, up to a maximum additional interest rate of 1.0% per year. Concurrent with the Autocam acquisition, on August 29, 2014 we entered into two new credit facilities consisting of a $350.0 million term loan facility (“Term Loan”) and a $100.0 million asset backed revolver (“ABL”). Borrowings under our New Senior Credit Facilities were used to satisfy all of our obligations under the Term Loan and the ABL. Under the Term Loan, we received funds of $344.8 million, net of a discount of $5.3 million, which is being amortized into interest expense over the life of the Term Loan. These new facilities were utilized to fund the Autocam acquisition and to provide for short-term cash flow needs. Additionally, these new facilities replaced the $100.0 million revolving credit facility and the $20.0 million fixed rate agreement both of which were paid off with proceeds from the Term Loan. $1.4 million in net capitalized loan origination costs related to the $100.0 million facility was written off as of August 29, 2014. $30 thousand in net capitalized loan origination costs related to the $20.0 million fixed rate agreements was also written off as of August 29, 2014. Our Term Loan had a seven year maturity with a 5% per annum repayment. The agreement relating to the Term Loan was a covenant lite agreement with no financial covenants and contained customary restrictions on, among other things, additional indebtedness, liens on our assets, sales or transfers of assets, investments, issuance of equity securities, and merger, acquisition and other fundamental changes in our business including a “material adverse change” clause, which if triggered would have given the lenders the right to accelerate the maturity of the debt. Costs associated with entering into the credit facility were capitalized and will be amortized into interest expense over the life of the facility. As of December 31, 2014, $8.0 million of net capitalized loan origination costs related to the Term Loan were recorded on the consolidated balance sheet within other non-current assets. Our ABL had a five year maturity and has one springing financial covenant in the event our availability on the ABL fell below $8.0 million. The ABL contained customary restrictions on, among other things, additional indebtedness, liens on our assets, sales or transfers of assets, investments, issuance of equity securities, and mergers, acquisitions and other fundamental changes in our business including a “material adverse change” clause, which if triggered would have given the lenders the right to accelerate the maturity of the debt. The facility had a swing line feature to meet short term cash flow needs. Borrowings under this swing line were considered short term. We incurred costs as a result of issuing the ABL which have been recorded on the consolidated balance sheet within other non-current assets and are being amortized over the term of the notes. The unamortized balance at December 31, 2014 was $1.0 million. We believe the book values of the credit facilities described above approximate their fair values given the interest rates are variable and we entered into these facilities very close to the year ended December 31 2015 and 2014, at the then market rates for a company with our credit profile. Regarding the Senior Notes, since they are not syndicated and are currently not tradable, the present value is the face value of the outstanding Senior Notes. As part of the merger with Autocam, we assumed certain foreign credit facilities. These facilities relate to local borrowings in France, Brazil and China. These facilities are with financial institutions in the countries in which foreign plants operate and are meant to fund working capital and equipment purchases in those countries. Below is a description of the credit facilities. In 2008, Autocam filed “Procedure de Sauvegarde” (“Safeguard”) on behalf of each of their French subsidiaries, Autocam France, SARL and Bouverat Industries, SAS (“Bouverat”). They reached agreement with their creditors with claims subject to Safeguard protection in 2009. Provisions of the agreements allowed, at each creditor’s option, for the payment of a portion of the obligation in January 2010, or the entire obligation over a ten-year period. The liabilities carry a zero percent interest rate and are being paid annually until 2019. Amounts due as of December 31, 2015, to those creditors opting to be paid over a ten-year period totaled $2.0 million and are included in Current Maturities of Long-Term debt $0.4 million and long-term debt excluding current maturities of long-term debt $1.6 million. The Brazilian lines of credit include facilities with certain Brazilian banks used to fund working capital needs, while the equipment notes represent borrowings from certain Brazilian banks to fund equipment purchases for Autocam’s Brazilian plants. The lines of credit have interest rates of 2.5% to 9.1%. The Chinese line of credit is a working capital line of credit with a Chinese bank bearing an interest rate of 4.95%. The aggregate maturities of long-term debt including current portion for each of the five years subsequent to December 31, 2015 are as follows:
Year ending December 31, |
2016 |  | $ | 11,714 |
2017 |  |  | 6,426 |
2018 |  |  | 6,426 |
2019 |  |  | 6,418 |
2020 |  |  | 255,259 |
Thereafter |  |  | 533,830 |
Total |  | $ | 820,073 |
On June 1, 2004, our wholly owned subsidiary, NN Asia, entered into a twenty year lease agreement with Kunshan Tian Li Steel Structure Co. LTD for the lease of land and building (approximately 110,000 square feet) in the Kunshan Economic and Technology Development Zone, Jiangsu, The People’s Republic of China. The fair value of the land and building were estimated to be approximately $0.5 million and $1.9 million (at current exchange rates), respectively and undiscounted annual lease payments are approximately $0.3 million (approximately $5.6 million aggregate non-discounted lease payments over the twenty year term). The lease is cancelable after the fifth, ninth, and fourteenth years without payment or penalty by us. In addition, after the end of year five and each succeeding year we can buy the land for a preset price per square meter value and the building for actual cost less depreciation. On October 1, 2011, our wholly owned subsidiary, NN Asia, entered into a twenty year lease agreement with Kunshan Tian Li Steel Structure Co. LTD for the lease of land and building adjacent to the current leased facility (approximately 75,000 square feet) in the Kunshan Economic and Technology Development Zone, Jiangsu, The People’s Republic of China. This lease was entered into to expand the production capacity of our current leased facility. The fair value of the land and building were estimated to be approximately $0.8 million and $1.1 million (at current exchange rates), respectively and undiscounted annual lease payments are approximately $0.2 million (approximately $3.6 million aggregate non-discounted lease payments over the twenty year term). The lease is cancelable after the fifth, ninth, and fourteenth years without payment or penalty by us. In addition, after the end of year five and each succeeding year we can buy the land for a preset price per square meter value and the building for actual cost less depreciation. Below are the aggregate minimum future lease payments under both capital leases together with the present value of the net minimum lease payments as of December 31, 2015:
Year ending December 31, |
2016 |  | $ | 460 |
2017 |  |  | 460 |
2018 |  |  | 460 |
2019 |  |  | 460 |
2020 |  |  | 460 |
Thereafter |  |  | 2,893 |
Total minimum lease payments |  |  | 5,193 |
Less interest included in payments above |  |  | (1,935 | )
Present value of minimum lease payments |  | $ | 3,258 |
With the Autocam acquisition, we assumed capital leases on certain buildings and equipment. The cost of the assets subject to capital lease obligations as reflected in Property, Plant and Equipment, net in our Consolidated Balance Sheet was $25.0 million as of December 31, 2014. The accumulated depreciation of such assets as reflected in Property, Plant and Equipment, net in our Consolidated Balance Sheet was $2.6 million and $0.6 million as of December 31, 2015 and 2014. Below are the minimum future lease payments under the assumed capital leases together with the present value of the net minimum lease payments as of December 31, 2015:
Year ending December 31, |
2016 |  | $ | 4,498 |
2017 |  |  | 3,536 |
2018 |  |  | 2,539 |
2019 |  |  | 817 |
2020 |  |  | — |
Thereafter |  |  | — |
Total minimum lease payments |  |  | 11,390 |
Less interest included in payments above |  |  | (979 | )
Present value of minimum lease payments |  | $ | 10,411 |

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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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