CDW 2012 Annual Report Download - page 72

Table of Contents CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
second priority interest in substantially all inventory (excluding inventory collateralized under the inventory floorplan arrangements as
described in Note 5), deposits, and accounts receivable, and by a first priority interest in substantially all other assets. The Term Loan
contains negative covenants that, among other things, place restrictions and limitations on the ability of Parent and each of CDW LLC's
direct and indirect, 100% owned, domestic subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations,
prepay other indebtedness, make distributions or other restricted payments, create liens, make equity or debt investments, make
acquisitions, engage in mergers or consolidations, or engage in certain transactions with affiliates. The Term Loan also includes a senior
secured leverage ratio requirement. The senior secured leverage ratio is required to be maintained on a quarterly basis. Compliance may
be determined after giving effect to a designated equity contribution to the Company to be included in the calculation of Adjusted
EBITDA. The senior secured leverage ratio for the four quarters ended December 31, 2012 was required to be at or below 6.75
. For the
four quarters ended December 31, 2012 , the senior secured leverage ratio was 2.4 .
The Company is required to maintain interest rate derivative arrangements to fix or cap the interest rate on at least 50% of the
outstanding principal amount of the Term Loan through maturity, subject to certain limitations currently in effect. With the interest rate
cap agreements in effect at December 31, 2012 as described in Note 8, the Company has satisfied this requirement through January 14,
2015.
8.0% Senior Secured Notes due 2018 (“Senior Secured Notes”)
The Senior Secured Notes were issued on December 17, 2010 and will mature on December 15, 2018. At December 31, 2012 , the
outstanding principal amount of the Senior Secured Notes was $500.0 million .
CDW LLC and CDW Finance Corporation are the co-issuers of the Senior Secured Notes and the obligations under the notes are
guaranteed by Parent and each of CDW LLC's direct and indirect, 100% owned, domestic subsidiaries. The Senior Secured Notes are
secured on a pari passu basis with the Term Loan by a second priority interest in substantially all inventory (excluding inventory
collateralized under the inventory floorplan arrangements as described in Note 5), deposits, and accounts receivable, and by a first
priority interest in substantially all other assets. The Senior Secured Note indenture contains negative covenants that, among other
things, place restrictions and limitations on the ability of Parent and each of CDW LLC's direct and indirect, 100% owned, domestic
subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make
distributions or other restricted payments, create liens, make equity or debt investments, make acquisitions, engage in mergers or
consolidations, or engage in certain transactions with affiliates. The Senior Secured Note indenture does not contain any financial
covenants.
11.0% Senior Exchange Notes due 2015 (“Senior Exchange Notes”); 11.5% / 12.25% Senior PIK Election Exchange Notes due 2015
(“PIK Election Notes” together with the Senior Exchange Notes, the “Senior Notes due 2015”)
At December 31, 2012 , there were no outstanding Senior Notes due 2015.
On April 13, 2011, the Company completed a cash tender offer (the “Initial Senior Notes due 2015 Tender Offer”) and purchased
$665.1 million aggregate principal amount of Senior Notes due 2015 comprised of $519.2 million of the Senior Exchange Notes and
$145.9 million of the PIK Election Notes. The Company concurrently issued $725.0 million
aggregate principal amount of Senior Notes
(as defined below). The proceeds from this offering, together with cash on hand and borrowings under the then-outstanding revolving
loan credit facility, were used to fund the purchase of the tendered Senior Notes due 2015, including $665.1 million aggregate principal
amount of Senior Notes due 2015, $59.9 million in tender offer premium and $36.5 million of accrued and unpaid interest, along with
transaction fees and expenses.
On May 20, 2011, the Company completed a follow-on cash tender offer (the “Follow-on Senior Notes due 2015 Tender Offer,” and
together with the Initial Senior Notes due 2015 Tender Offer, the “Senior Notes due 2015 Tender Offers”) and purchased an additional
$412.8 million aggregate principal amount of Senior Notes due 2015 comprised of $321.4 million of the Senior Exchange Notes and
$91.4 million of the PIK Election Notes. The Company concurrently issued $450.0 million in aggregate principal amount of additional
Senior Notes. The proceeds from this offering, together with cash on hand and borrowings under the then-outstanding revolving loan
credit facility, were used to fund the purchase of the tendered Senior Notes due 2015, including $412.8 million aggregate principal
amount of Senior Notes due 2015, $37.2 million in tender offer premium and $4.5 million of accrued and unpaid interest, along with
transaction fees and expenses.
In connection with the Senior Notes due 2015 Tender Offers, the Company recorded a loss on extinguishment of long-term debt of
$114.1 million in the Company's consolidated statement of operations for the year ended December 31,
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