CDW 2014 Annual Report Download - page 19

Table of Contents
Restrictive covenants under our senior credit facilities and, to varying degrees, our indentures may adversely affect our operations and
liquidity.
Our senior credit facilities and, to varying degrees, our indentures contain, and any future indebtedness of ours may contain, various
covenants that limit our ability to, among other things:
As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage in
favorable business activities or finance future operations or capital needs. A breach of any of these covenants or any of the other restrictive
covenants would result in a default under our senior credit facilities. Upon the occurrence of an event of default under our senior credit facilities,
the lenders:
The acceleration of amounts outstanding under our senior credit facilities would likely trigger an event of default under our existing
indentures.
If we were unable to repay those amounts, the lenders under our senior credit facilities could proceed against the collateral granted to
them to secure our borrowings thereunder. We have pledged a significant portion of our assets as collateral under our senior credit facilities. If
the lenders under our senior credit facilities accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to
repay our senior credit facilities and our other indebtedness or the ability to borrow sufficient funds to refinance such indebtedness. Even if we
were able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.
In addition, under our Revolving Loan, we are permitted to borrow an aggregate amount of up to $1,250.0 million. However, our ability
to borrow under our Revolving Loan is limited by a borrowing base and a liquidity condition. The borrowing base at any time equals the sum of
up to 85% of CDW LLC and its subsidiary guarantors’ eligible accounts receivable (net of accounts reserves) (up to 30% of such eligible
accounts receivable which can consist of federal government accounts receivable) plus the lesser of (i) 75% of CDW LLC and its subsidiary
guarantors’ eligible inventory (valued at cost and net of inventory reserves) and (ii) the product of 85% multiplied by the net orderly liquidation
value percentage multiplied by eligible inventory (valued at cost and net of inventory reserves), less reserves (other than accounts reserves and
inventory
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• placing us at a competitive disadvantage compared to any of our less-
leveraged competitors;
• increasing our vulnerability to both general and industry-
specific adverse economic conditions; and
• limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or
other general corporate requirements and increasing our cost of borrowing.
•
incur or guarantee additional debt;
•
pay dividends or make distributions to holders of our capital stock or to make certain other restricted payments or investments;
•
repurchase or redeem capital stock;
•
make loans, capital expenditures or investments or acquisitions;
•
receive dividends or other payments from our subsidiaries;
•
enter into transactions with affiliates;
•
create liens;
•
merge or consolidate with other companies or transfer all or substantially all of our assets;
•
transfer or sell assets, including capital stock of subsidiaries; and
•
prepay, repurchase or redeem debt.
•
will not be required to lend any additional amounts to us;
• could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be due and payable;
or
•
could require us to apply all of our available cash to repay these borrowings.