CDW 2014 Annual Report Download - page 84

Table of Contents CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
most restrictive restricted payment provisions in the Company’s various credit agreements and indentures, CDW LLC and its restricted
subsidiaries are generally restricted from paying dividends and making other restricted payments. For the purpose of determining
restricted payment capacity, consolidated net income or loss includes certain adjustments that are defined in the applicable indenture. At
December 31, 2014 , the amount of cumulative consolidated net income free of restrictions under the credit agreements and indentures
("Restricted Payment Capacity") was $230.3 million .
Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”)
At December 31, 2014 , the Company had no outstanding borrowings under the Revolving Loan, $2.1 million of undrawn letters of
credit and $312.3 million reserved related to the floorplan sub-facility.
On June 6, 2014, the Company entered into the Revolving Loan, a new five-year $1,250.0 million senior secured asset-based revolving
credit facility, with the facility being available to the Company for borrowings, issuance of letters of credit and floorplan financing for
certain vendor products. The Revolving Loan matures on June 6, 2019, subject to an acceleration provision discussed below. The
Revolving Loan replaces the Company’s previous revolving loan credit facility that was to mature on June 24, 2016. The Revolving
Loan (i) increases the overall revolving credit facility capacity available to the Company from $900.0 million to $1,250.0 million , (ii)
increases the maximum aggregate amount of increases that may be made to the revolving credit facility from $200.0 million to $300.0
million , (iii) maintains a maturity acceleration provision based upon excess cash availability whereby the Revolving Loan may mature
45 days prior to the final maturity of any then outstanding senior debt if excess cash availability does not exceed the outstanding
borrowings of the subject maturing debt at the time of the test plus $150.0 million , (iv) decreases the fee on the unused portion of the
revolving credit facility from either 37.5 or 50 basis points, depending on the amount of utilization, to 25 basis points, (v) decreases the
applicable interest rate margin by 50 basis points, and (vi) amends the existing inventory floorplan sub-facility as discussed below. In
connection with the termination of the previous facility, the Company recorded a loss on extinguishment of long-term debt of $0.4
million in the consolidated statement of operations for the year ended December 31, 2014 , representing a write-off of a portion of
unamortized deferred financing costs. Fees of $6.4 million related to the Revolving Loan were capitalized as deferred financing costs
and are being amortized over the five-year term of the facility on a straight-line basis.
The Revolving Loan incorporates the previous inventory floorplan sub-facility and related Revolving Loan inventory financing
agreement while removing the previous $400.0 million limit on the size of the floorplan sub-facility and the in-transit reserve of 15%
of
open orders. At December 31, 2014 , the financial intermediary reported an outstanding balance of $312.3 million under the Revolving
Loan inventory financing agreement. The amount included on the Company's consolidated balance sheet as of December 31, 2014 as
accounts payable-inventory financing related to the Revolving Loan inventory financing agreement of $330.1 million includes a $17.8
million accrual for amounts in transit.
Borrowings under the Revolving Loan bear interest at a variable interest rate plus an applicable margin. The interest rate margin is
based on one of two indices, either (i) LIBOR, or (ii) the Alternate Base Rate (“ABR”) with the ABR being the greater of (a) the prime
rate, (b) the federal funds effective rate plus 50 basis points or (c) the one-month LIBOR plus 1.00% . The applicable margin varies
( 1.50% to 2.00% for LIBOR borrowings and 0.50% to 1.00% for ABR borrowings) depending upon average daily excess cash
availability under the agreement evidencing the Revolving Loan and is subject to a reduction of 0.25% if, and for as long as, CDW
LLC's corporate credit rating from Standard & Poor’s Rating Services is BB or better and CDW LLC's corporate family rating from
Moody’s Investors Service, Inc. is Ba3 or better (in each case with stable or better outlook).
Under the new Revolving Loan, the Company is permitted to borrow an aggregate amount of $1,250.0 million ; however, its ability to
borrow under the Revolving Loan is limited by a borrowing base. The borrowing base is (a) the sum of the products of the applicable
advance rates on eligible accounts receivable and on eligible inventory as defined in the agreement less (b) any reserves. At
December 31, 2014 , the borrowing base was $1,253.4 million based on the amount of eligible inventory and accounts receivable
balances as of November 30, 2014. The Company could have borrowed up to an additional $935.6 million under the Revolving Loan at
December 31, 2014 .
The ability to borrow under the Revolving Loan also remains limited by a minimum liquidity condition which provides that, if excess
cash availability is less than the lesser of (i) $125.0 million and (ii) the greater of (A) 10.0% of the borrowing base and (B) $100.0
million , the lenders are not required to lend any additional amounts under the Revolving Loan unless the consolidated fixed charge
coverage ratio (as described in the agreement evidencing the Revolving Loan) is at least 1.00 to 1.00 .
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