LensCrafters 2007 Annual Report Download - page 69

>68 | ANNUAL REPORT 2007
interest margin and defined a new maturity date of five years from the date of the amendment for
Tranche B and Tranche C. On February 2007, the Company exercised an option included in the
amendment to the term and revolving facility to extend the maturity date of Tranches B and C to
March 2012. Tranche A is a Euro 405.0 million amortizing term loan requiring repayment of nine
equal quarterly installments of principal of Euro 45.0 million beginning in June 2007, which is to be
used for general corporate purposes, including the refinancing of existing Luxottica Group S.p.A.
debt as it matures. Tranche B is a term loan of US$ 325.0 million which was drawn upon on
October 1, 2004 by U.S. Holdings to finance the purchase price for the acquisition of Cole. Tranche
B will mature in March 2012. Tranche C is a revolving credit facility of Euro 725.0 million-equivalent
multi-currency (Euro/U.S. Dollar). Amounts borrowed under Tranche C may be repaid and
reborrowed with all outstanding balances maturing in March 2012. On December 31, 2007, US$
645.0 million had been drawn from Tranche C by U.S. Holdings and US$ 185.0 million by Luxottica
Group S.p.A. The Company can select interest periods of one, two, three or six months with
interest accruing on Euro-denominated loans based on the corresponding Euribor rate and U.S.
Dollar-denominated loans based on the corresponding LIBOR rate, both plus a margin between
0.20% and 0.40% based on the “Net Debt/EBITDA” ratio, as defined in the agreement. The interest
rate on December 31, 2007 was 4.976% for Tranche A, 5.449% for Tranche B and 5.239% on
Tranche C amounts borrowed in U.S. Dollars. This credit facility contains certain financial and
operating covenants. The Company was in compliance with those covenants as of December 31,
2007. Euro 1,059.9 million was borrowed under this credit facility as of December 31, 2007.
In June 2005, the Company entered into nine interest rate swap transactions with an aggregate
initial notional amount of Euro 405.0 million with various banks which decrease by Euro 45.0 million
every three months beginning on June 3, 2007 (“Club Deal Swaps”). These swaps will expire on
June 3, 2009. The Club Deal Swaps were entered into as a cash flow hedge on Tranche A of the
credit facility discussed above. The Club Deal Swaps exchange the floating rate of Euribor for an
average fixed rate of 2.48% per annum.
During the third quarter of 2007, the Group entered into thirteen interest rate swap transactions
with an aggregate initial notional amount of US$ 325.0 million with various banks (“Tranche B
Swaps”). These swaps will expire on March 10, 2012. The Tranche B Swaps were entered into as a
cash flow hedge on Tranche B of the credit facility discussed above. The Tranche B Swaps
exchange the floating rate of Libor for an average fixed rate of 4.67% per annum.
In December 2005, the Company entered into an unsecured credit facility with Banca Popolare di
Verona e Novara Soc. Coop. a R.L. (LLC). The 18-month less one day credit facility consisted of a
revolving loan that provided borrowing availability of up to Euro 100.0 million. The final maturity of
the credit facility was June 1, 2007. We repaid the outstanding amount on the maturity date with
the proceeds of a new unsecured credit facility with Banca Popolare di Verona e Novara Soc.
Coop. a R.L. The new 18-month credit facility consists of a revolving loan that provides borrowing
availability of up to Euro 100.0 million. Amounts borrowed under the revolving portion can be
borrowed and repaid until final maturity. As of December 31, 2007, Euro 100.0 million was
borrowed under this credit facility. Interest accrues on the revolving loan at Euribor (as defined in
the agreement) plus 0.25% (4.98% on December 31, 2007). The Company can select interest
periods of one, three or six months. The final maturity of the credit facility is December 3, 2008.
On November 14, 2007, we completed our merger with Oakley, a worldwide specialist in sport
performance optics with brands including Dragon, Eye Safety Systems, Fox Racing, Mosley Tribes,
Oliver Peoples and Paul Smith Spectacles, and retail chains including Bright Eyes, Oakley Stores,
Sunglass Icon and The Optical Shop of Aspen, for a total purchase price of approximately US$ 2.1
billion. In accordance with the terms of the merger agreement, Oakley’s outstanding shares of