INTL FCStone 2011 Annual Report Download - page 94

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INTL FCSTONE INC.Form10K80
PART II
ITEM 8 Consolidated Financial Statements and Supplementary Data
NOTE 12 Credit Facilities
As of September30,2011, the Company had four committed
credit facilities under which the Company may borrow up to
$375.0million, subject to certain conditions. Additionally,
the Company had an uncommitted forward contract for
commodities agreement under which the Company may borrow
up to $50.0million to fund forward contract commodity
transactions. e amounts outstanding under these credit facilities
are short term borrowings and carry variable rates of interest,
thus approximating fair value.
e Company’s credit facilities as of September30,2011 consisted
of the following:
A one-year revolving syndicated committed loan facility
established on September22,2010 and renewed by amendment
on September21,2011, under which the Company’s subsidiary,
INTL Commodities,Inc. (“INTL Commodities”) is entitled
to borrow up to $140million, subject to certain conditions.
e loan proceeds are used to fi nance the activities of INTL
Commodities and are secured by its assets. Unused portions of the
loan facility require a commitment fee of 0.75% on the unused
commitment. e borrowings outstanding under the facility
bear interest at the Eurodollar Rate, as defi ned and 0.375% as
of September30,2011, plus 2.875% for the applicable term, at
INTL Commodities’ election. e agreement contains fi nancial
covenants related to INTL Commodities’ working capital, equity
and leverage ratio, as defi ned. e Company was in compliance
with these covenants as of September30,2011. e Company
paid debt issuance costs of $1.1million in connection with the
renewal of this credit facility, which are being amortized over
the twelve month term of the facility. e facility is guaranteed
by the Company.
A three-year syndicated committed loan facility established on
October29,2010 and amended on September30,2011 to
increase the amount under which the Company is entitled to
borrow up to $85million, subject to certain conditions. e
loan proceeds are used to fi nance working capital needs of the
Company and certain subsidiaries. e line of credit is secured by
a pledge ofshares held in certain of the Company’s subsidiaries.
Unused portions of the loan facility require a commitment fee
of 0.625% on the unused commitment. Borrowings under the
facility may bear interest at the Eurodollar Rate, as defi ned, plus
3.00% or Base Rate, as defi ned, plus 2.00%. e agreement
contains fi nancial covenants related to consolidated tangible net
worth, consolidated domestic tangible net worth, consolidated
interest coverage ratio and consolidated net unencumbered liquid
assets, as defi ned. e Company was in compliance with these
fi nancial covenants as of September30,2011. e agreement
also includes a negative covenant prohibiting consolidated capital
expenditures to exceed $3.5million annually. e Company’s
consolidated capital expenditures during fi scal2011 exceeded
$3.5million, and the Company requested and was granted a
waiver from the lenders, dated September27,2011, waiving the
limitation on consolidated capital expenditures for the fi scal year
ended September30,2011. e Company intends to discuss
amendment of the consolidated capital expenditures covenant
with the lender in fi scal2012. e Company paid debt issuance
costs of $1.2million in connection with the issuance of this credit
facility, which are being amortized over the thirty-six month
term of the facility. is committed loan facility replaced two
previous lines of credit with a commercial bank under which the
Company was entitled to borrow up to $60million.
An unsecured syndicated committed line of credit, established on
June21,2010 and renewed by amendment on June20,2011,
under which FCStone,LLC may borrow up to $75million.
is line of credit is intended to provide short term funding of
margin to commodity exchanges as necessary. is line of credit
is subject to annual review, and the continued availability of this
line of credit is subject to FCStone,LLC’s fi nancial condition
and operating results continuing to be satisfactory as set forth
in the agreement. Unused portions of the margin line require
a commitment fee of 0.50% on the unused commitment.
Borrowings under the margin line are on a demand basis and bear
interest at the Base Rate, as defi ned, plus 2.0%, which was5.25% as
of September30,2011. e agreement contains fi nancial covenants
related to FCStone,LLC’s tangible net worth, leverage ratio, and
net capital, as defi ned. FCStone,LLC was in compliance with
these covenants as of September30,2011. FCStone,LLC paid fees
and other debt issuance costs of $0.1million in connection with
the renewal of this credit facility, which are being amortized over
the twelve month term of the facility. e facility is guaranteed
by the Company.
A one-year syndicated committed borrowing facility established
on December2,2010, and renewed by amendment on
October11,2011, under which the Company’s subsidiary,
FCStone Financial,Inc. (“FCStone Financial”) is entitled to
borrow up to $75million, subject to certain conditions. e loan
proceeds are used to fi nance traditional commodity fi nancing
arrangements or the purchase of eligible commodities from sellers
who have agreed to sell and later repurchase such commodities
from FCStone Financial, and are secured by its assets. Unused
portions of the borrowing facility require a commitment fee of
0.50% on the unused commitment. e borrowings outstanding
under the facility bear interest at a rate per annum equal to
the Base Rate plus Applicable Margin, as defi ned, which was
2.73% as of September30,2011. e agreement contains
fi nancial covenants related to tangible net worth, as defi ned.
FCStone Financial was in compliance with this covenant as of
September30,2011. FCStone Financial paid debt issuance costs
of less than $0.1million in connection with this credit facility,
which are being amortized over the twelve month term of the
facility. e facility is guaranteed by the Company.
An uncommitted forward contract for commodities agreement
established on June23,2011, under which the Company’s subsidiary,