Cash America 2015 Annual Report Download - page 24

Some of the Company’s debt agreements also require the Company to maintain certain financial ratios and
have cross default provisions. The covenants and restrictions contained in the debt agreements could limit the
Company’s ability to fund its business, make capital expenditures, and make acquisitions or engage in certain other
transactions in the future. Any failure to comply with any of these financial and other affirmative and negative
covenants could constitute an event of default under the debt agreements, entitling the lenders to, among other
things, terminate future credit availability under the agreement, increase the interest rate on outstanding debt,
accelerate the maturity of outstanding obligations under that agreement and could result in a cross default under the
Company’s other debt agreements. For example, on June 26, 2015, Wilmington Savings Fund Society, FSB, as
trustee (the “Trustee”) under the Indenture, dated as of May 15, 2013, that governs the 2018 Senior Notes, among
the Company, the guarantors party thereto and the Trustee (the “2018 Senior Notes Indenture”), filed a lawsuit
against the Company in the United States District Court for the Southern District of New York. The lawsuit alleges
that the Enova Spin-off was not permitted by the 2018 Senior Notes Indenture, and the Trustee is seeking a remedy
equal to principal and accrued and unpaid interest, plus a make-whole premium, to be paid to the holders of the
2018 Senior Notes. The Company disagrees with the assertion in the lawsuit that the Enova Spin-off was not
permitted under the 2018 Senior Notes Indenture. The Company also disagrees that a make-whole premium would
be due to the holders of the 2018 Senior Notes even if it is determined that the Enova Spin-off was not permitted
under the 2018 Senior Notes Indenture. The Company believes the position taken by the Trustee is without merit,
and the Company intends to vigorously defend its position. This claim could be costly to defend, could be damaging
to the Company’s reputation, could be time consuming for management and could affect the Company’s ability to
obtain capital in the future. “Item 8. Financial Statements and Supplementary Data—Note 11” for additional
information regarding this lawsuit.
An inability to access the debt capital markets or obtain financing could reduce available capital.
In the past, the Company has accessed the debt capital markets or utilized its line of credit with banks to
obtain capital, to finance growth and to refinance existing debt obligations. Efficient access to this capital is critical
to the Company’s ongoing financial success; however, the Company’s future access to debt capital could become
restricted due to a variety of factors, such as a deterioration of the Company’s earnings, cash flows, balance sheet
quality, overall business or industry prospects, or reputation in the debt markets, a disruption or deterioration in the
state of the capital markets or a negative bias toward the Company’s industry. Banks and other credit providers
could restrict available lines of credit and require higher pricing upon renewal of the Company’s existing line of
credit. The Company’s ability to obtain additional financing in the future will depend in part upon prevailing capital
market conditions, and a potential disruption in the capital markets may adversely affect the Company’s efforts to
arrange additional financing on terms that are satisfactory to the Company. If adequate funds are not available, or
are not available on acceptable terms, the Company may not be able to grow its business, make future investments,
take advantage of potential acquisitions or other opportunities, make share repurchases or respond to competitive
challenges and this, in turn, could adversely affect the Company’s ability to advance its strategic plans. Additionally,
if the capital and credit markets experience volatility and the availability of funds is limited, third parties with whom
the Company does business may incur increased costs or business disruption and this could adversely affect the
Company’s business relationships with such third parties. If the Company is unable to obtain financing such
inability could have a Material Adverse Effect.
Current and future litigation or regulatory proceedings or adverse court interpretations of the laws under which
the Company operates could have a Material Adverse Effect.
The Company has been and is currently subject to lawsuits, which may include purported class actions, that
could cause the Company to incur substantial expenditures, generate adverse publicity and could significantly
impair the Company’s business, force the Company to cease doing business in one or more jurisdictions or cause it
to cease offering one or more products. The Company is also likely to be subject to further litigation in the future.
An adverse ruling in or a settlement of any current or future litigation against the Company or another lender could
cause the Company to have to refund fees and/or interest collected, forego collections of the principal amount of
loans, pay treble or other multiple damages, pay monetary penalties and/or modify or terminate the Company’s
operations in particular jurisdictions. Defense of any lawsuit, even if successful, could require substantial time and
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