Aarons 2015 Annual Report Download - page 45

Debt Financing
In connection with the Company's acquisition of Progressive on April 14, 2014, the Company amended and restated its revolving credit agreement, amended
certain other financing agreements and entered into two new note purchase agreements. On December 9, 2014, the Company amended the amended and
restated revolving credit agreement, the senior unsecured notes and the franchise loan agreement. On September 21, 2015, the Company entered into certain
amendments related to the DAMI acquisition. The April 2014, December 2014, and September 2015 amendments are discussed in further detail in Note 7 to
the Company's consolidated financial statements. In connection with acquiring DAMI on October 15, 2015, the Company also assumed a secured revolving
credit facility (the "DAMI credit facility"), which is discussed in further detail in Note 7 to the Company's consolidated financial statements.
As of December 31, 2015, $109.4 million and $75.0 million of term loans and revolving credit balances, respectively, were outstanding under the revolving
credit agreement. Our current revolving credit facility matures December 9, 2019 and the total available credit on the facility as of December 31, 2015 was
$150.0 million. The revolving credit and term loan agreement includes an uncommitted incremental facility increase option (an "accordion facility") which,
subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available
thereunder by an aggregate additional principal amount of up to $200.0 million.
As of December 31, 2015, $41.8 million was outstanding under the DAMI credit facility. The DAMI credit facility is currently set to mature on October 15,
2017 and the total available credit on the facility as of December 31, 2015 was $7.3 million, in addition to letter of credit not to exceed $2.0 million. In
addition, the DAMI credit facility includes an accordion facility, which, subject to certain terms and conditions, permits DAMI at any time prior to the
maturity date to request an increase in the maximum facility of up to $25.0 million.
As of December 31, 2015, the Company had outstanding $300.0 million in aggregate principal amount of senior unsecured notes issued in a private
placement in connection with the April 14, 2014 Progressive acquisition. The notes bear interest at the rate of 4.75% per year and mature on April 14, 2021.
Payments of interest are due quarterly, commencing July 14, 2014, with principal payments of $60.0 million each due annually commencing April 14, 2017.
As of December 31, 2015, the Company had outstanding $75.0 million in senior unsecured notes originally issued in a private placement in July 2011.
Effective April 28, 2014, the notes bear interest at the rate of 3.95% per year and mature on April 27, 2018. Quarterly payments of interest commenced July
27, 2011, and annual principal payments of $25.0 million commenced April 27, 2014.
Our revolving credit and term loan agreement and senior unsecured notes, and our franchise loan agreement discussed below, contain certain financial
covenants. These covenants include requirements that the Company maintain ratios of (i) EBITDA plus lease expense to fixed charges of no less than
1.75:1.00 through December 31, 2015 and 2.00:1.00 thereafter and (ii) total debt to EBITDA of no greater than 3.25:1.00 through December 31, 2015 and
3.00:1.00 thereafter. In each case, EBITDA refers to the Company’s consolidated earnings before interest and tax expense, depreciation (other than lease
merchandise depreciation), amortization expense and other non-cash charges. On September 21, 2015, the Company amended the existing revolving credit
and term loan agreement and the senior unsecured note agreements to exclude DAMI financial information from the calculation of financial debt covenants,
among other things. If we fail to comply with these covenants, we will be in default under these agreements, and all amounts will become due immediately.
We are in compliance with these covenants at December 31, 2015 and we believe that we will continue to be in compliance in the future.
The DAMI credit facility includes financial covenants that, among other things, require DAMI to maintain (i) an EBITDA ratio of not less than 1.7 to 1.0 and
(ii) a senior debt to capital base ratio of not more than 2.0 to 1.0. We are in compliance with these covenants at December 31, 2015. Furthermore, the DAMI
credit facility restricts DAMI's ability to transfer funds by limiting intercompany dividends to an amount not to exceed the amount of capital the Company
has invested in DAMI. The aggregate amount of such dividends made in a calendar year are limited to 75% of DAMI's net income for the immediately
preceding calendar year.
Share Repurchases
We purchase our stock in the market from time to time as authorized by our Board of Directors. In December 2013, the Company paid $125.0 million under
an accelerated share repurchase program with a third party financial institution and received an initial delivery of 3,502,627 shares. In February 2014, the
accelerated share repurchase program was completed and the Company received an additional 1,000,952 shares of common stock. As of December 31, 2015,
the Company has 10,496,421 shares authorized for repurchase.
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