Radio Shack 2012 Annual Report Download - page 56

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As with the Original 2016 Credit Facility, revolving
borrowings under the Restated 2016 Credit Facility bear
interest at our choice of a bank’s prime rate plus 1.25% to
1.75% or LIBOR plus 2.25% to 2.75%. The applicable rates
in these ranges are based on the aggregate average
availability under the facility. The Restated 2016 Credit
Facility also contains a $200 million sub-limit for the
issuance of standby and commercial letters of credit. The
issuance of letters of credit reduces the amount available
under the facility. Letter of credit fees are 2.25% to 2.75%
for standby letters of credit and 1.125% to 1.375% for
commercial letters of credit. We pay commitment fees to
the lenders at an annual rate of 0.50% of the unused
amount of the facility.
The maximum availability for revolving borrowings under
the 2016 Credit Facility is determined at the end of each
month and is calculated as the lesser of:
• $450 million, or
• Our borrowing base for revolving borrowings less
$45 million (calculated as $597.8 million at
December 31, 2012), or
• Our borrowing base for revolving borrowings up to a
maximum amount of $450 million less the greater of
12.5% (currently $56.3 million) or $45 million if we
do not meet a specified consolidated fixed charge
coverage ratio during a trailing twelve-month period
(calculated as $393.7 million at December 31, 2012).
As of December 31, 2012, our maximum availability for
revolving borrowings under the 2016 Credit Facility was
$393.7 million as a result of us not meeting the
consolidated fixed charge coverage ratio at December 31,
2012. As of December 31, 2012, no revolving borrowings
had been made under the facility, and letters of credit
totaling $3.1 million had been issued, resulting in $390.6
million of availability for revolving borrowings under the
2016 Credit Facility. We believe that we will not meet the
consolidated fixed charge coverage ratio for at least the
next twelve months.
If at any time the outstanding revolving borrowings and
term loans under the 2016 Credit Facility exceed the sum of
the revolving borrowing base and the term loan borrowing
base, we will be required to repay an amount equal to such
excess. No payments (whether optional or mandatory) may
be made in respect of the principal amount of term loans
unless all revolving borrowings have been repaid, any
outstanding letters of credit have been cash collateralized,
and all other commitments under the Restated 2016 Credit
Facility have been repaid or otherwise satisfied. The
revolving borrowing base and term loan borrowing base are
subject to customary reserves that may be implemented by
the administrative agent at its permitted discretion.
The Restated 2016 Credit Facility contains customary
affirmative and negative covenants and events of default
that are substantially consistent with those contained in the
Original 2016 Credit Facility. These covenants could,
among other things, restrict certain payments, including
dividends and share repurchases. We do not believe the
limitations contained in the credit facility will, in the
foreseeable future, adversely affect our ability to use the
credit facility and execute our business plan.
Credit Facility Term Loan Due January 2016: The
Restated 2016 Credit Facility allowed us to borrow $50.0
million in August of 2012 under a term loan agreement,
which is subject to the term loan borrowing base and bears
interest at our choice of a bank’s prime rate plus 3.5% or
LIBOR plus 4.5%. For this term loan, interest is payable on
the interest rate reset dates, which will be on at least a
quarterly basis. This term loan is secured by the same
assets that secure the Restated 2016 Credit Facility and
matures on January 4, 2016. Net proceeds from this term
loan were $48.5 million, after fees and expenses of $1.5
million incurred in connection with the Restated 2016 Credit
Facility, and will be used for working capital and general
corporate purposes. This term loan may not be repaid until
all revolving borrowings, letters of credit, or other
commitments under the Restated 2016 Credit Facility have
been repaid or otherwise satisfied.
Credit Facility Term Loan Due September 2017: The
Restated 2016 Credit Facility allowed us to borrow $25.0
million in October 2012 under a term loan agreement,
which is subject to the term loan borrowing base and bears
interest at our choice of a bank’s prime rate plus 3.5% or
LIBOR plus 4.5%. For this term loan, interest is payable on
the interest rate reset dates, which will be on at least a
quarterly basis. This term loan is secured by the same
assets that secure the Restated 2016 Credit Facility and
matures on September 27, 2017. Net proceeds from this
term loan were $24.0 million, after fees and expenses of
$1.0 million, and will be used for working capital and
general corporate purposes.
Term Loan Due September 2017: In September 2012 we
borrowed $100 million, due on September 27, 2017, under
a new term loan credit agreement (“2017 Term Loan”) with
two lenders and Wells Fargo, N. A., as administrative and
collateral agent. The 2017 Term Loan bears interest at a
rate of 10.0% plus adjusted LIBOR for a one, two, or three
month interest period, but never less than 11.0%. Interest is
payable on a monthly basis.
Net proceeds of the 2017 Term Loan were $95.2 million,
after fees and expenses of $4.8 million, and will be used for
working capital and general corporate purposes. Beginning
with the fiscal quarter ending December 31, 2014, the term
loan is subject to quarterly principal payments of
$1,667,500.