LensCrafters 2009 Annual Report Download - page 81

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 79 <
issued in three series (Series A, Series B and Series C). Interest on the Series A Notes accrued at 3.94
percent per annum and interest on Series B and Series C Notes accrues at 4.45 percent per annum. The
Series A and Series B Notes matured on September 3, 2008 and the Series C Notes mature on Septem-
ber 3, 2010. The Series A and Series C Notes require annual repayments beginning on September 3,
2006 through the applicable dates of maturity. The Notes are guaranteed on a senior unsecured basis
by the Company and Luxottica S.r.l., a wholly owned subsidiary. The Notes contain certain financial
and operating covenants. US Holdings was in compliance with those covenants as of December 31,
2009. In December 2005, US Holdings terminated three interest rate swaps that coincided with the
Notes and, as such, the final adjustment to the carrying amount of the hedged interest-bearing financial
instruments is being amortized as an adjustment to the fixed-rate debt yield over the remaining life of
the debt. The effective interest rate on the Series C Notes outstanding as December 31, 2009, is 5.44
percent for its remaining life. Amounts outstanding under these Notes were Euro 7.7 million and Euro
15.8 million as of December 31, 2009 and 2008, respectively.
On July 1, 2008, US Holdings closed a private placement of US$ 275 million senior unsecured guaran-
teed notes (the "2008 Notes"), issued in three series (Series A, Series B and Series C). The principal
amounts of Series A, Series B and Series C Notes are US$ 20 million, US$ 127 million and US$ 128
million, respectively. Series A Notes mature on July 1, 2013, Series B Notes mature on July 1, 2015
and Series C Notes mature on July 1, 2018. Interest on the Series A Notes accrues at 5.96 percent per
annum, interest on the Series B Notes accrues at 6.42 percent per annum and interest on the Series C
Notes accrues at 6.77 percent per annum. The proceeds from the 2008 Notes received on July 1, 2008,
were used to repay a portion of the Bridge Loan Facility which was amended on July 1, 2008. In addi-
tion, US Holdings extended the amended Bridge Loan (see (e) below) of US$ 150 million for a further 18
months starting from July 1, 2008.
(c) On June 3, 2004, as amended on March 10, 2006, the Company and US Holdings entered into a credit
facility with a group of banks providing for loans in the aggregate principal amount of Euro 740 million
and US$ 325 million. The five-year facility consists of three Tranches (Tranche A, Tranche B, Tranche C).
The March 2006 amendment increased the available borrowings, decreased the 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. On February 2008, 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 2013. Tranche A is a Euro 405 million amortizing term
loan requiring repayment of nine equal quarterly installments of principal of Euro 45 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 A expired on June 3, 2009 and was repaid in full.
Tranche B is a term loan of US$ 325 million which was drawn upon on October 1, 2004 by US Holdings to
finance the purchase price of the acquisition of Cole. Amounts borrowed under Tranche B will mature in
March 2013. Tranche C is a Revolving Credit Facility of Euro 725 million-equivalent multi-currency (Euro/
US Dollar). Amounts borrowed under Tranche C may be repaid and reborrowed with all outstanding
balances maturing in March 2013. 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 US Dollar denominated loans based on the corresponding LIBOR rate, both plus a margin between
0.20 percent and 0.40 percent based on the "Net Debt/EBITDA" ratio, as defined in the agreement.
The interest rate on December 31, 2009 was 0.634 percent for Tranche B and 0.829 percent on Tranche
C amounts borrowed in Euro. The credit facility contains certain financial and operating covenants.
The Company was in compliance with those covenants as of December 31, 2009. Under this credit
facility, Euro 751.8 million and Euro 1,001.4 million was borrowed as of December 31, 2009 and 2008,
respectively.