Seagate 2002 Annual Report Download - page 40

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Liquidity and Capital Resources
The following is a discussion of our principal liquidity requirements and capital resources.
The 2002 Refinancing
In May 2002, we refinanced all of our then outstanding indebtedness. This refinancing consisted of:
•
the repurchase of all of our $210 million principal amount 12½% senior subordinated notes due 2007;
•
the issuance and private placement of $400 million in principal amount of 8% senior notes due 2009 by Seagate Technology HDD
Holdings and our unconditional guarantee, on a senior unsecured basis, of such notes;
•
the repayment of approximately $673 million under our previously existing senior secured credit facilities;
•
the entry by Seagate Technology HDD Holdings, a direct subsidiary of Seagate Technology, and Seagate Technology (US) Holdings,
an indirect subsidiary of Seagate Technology, into new senior secured credit facilities, which consist of a $350 million term loan
facility that has been drawn in full and a $150 million revolving credit facility, of which $31 million had been used for outstanding
letters of credit and bankers
’
guarantees as of June 27, 2003;
•
the distribution of $167 million to our shareholders who consisted of New SAC and employees who have exercised options granted
under our share option plan; and
In connection with the 2002 refinancing, including the distribution of $32 million to deferred compensation plan participants in May
2002, we recognized $112 million of non-recurring expenses in the quarter ended June 28, 2002. This included:
•
the payment of approximately $32 million to deferred compensation plan participants, consisting of members of the management
group.
•
a $93 million loss on the extinguishment of debt, which was comprised of:
•
$50 million related to the premium paid in the repurchase of Seagate Technology International’s 12
1
/
2
% senior subordinated
notes due 2007;
•
$7 million to write off unamortized discount on those notes;
•
$31 million to write off capitalized debt issuance costs on both the 12
1
/
2
% senior subordinated notes due 2007 and the former
senior secured credit facilities of Seagate Technology International and Seagate Technology (US) Holdings, Inc.;
•
a $4 million loss on an interest rate swap on one of the term loans included in the former senior secured credit facilities of
Seagate Technology International and Seagate Technology (US) Holdings, Inc.;
•
$1 million of other costs and expenses; and
The borrowers under the new senior secured credit facility are Seagate Technology HDD Holdings and Seagate Technology (US)
Holdings, Inc. Both of these companies are our wholly-owned direct or indirect subsidiaries. The new senior secured credit facilities are
secured by a first priority pledge of substantially all the tangible and intangible assets of Seagate Technology HDD Holdings and many of its
subsidiaries as well as a pledge of the shares of Seagate Technology HDD Holdings and many of its subsidiaries, which in the case of non-
U.S.
subsidiaries of Seagate Technology (US) Holdings, Inc. is limited to a pledge of 65% of the shares of those subsidiaries, in each case subject to
a number of exceptions. Seagate Technology and many of the direct and indirect subsidiaries of Seagate Technology HDD Holdings have
guaranteed the obligations under the credit agreement that governs our new senior secured credit facilities.
35
•
$19 million of compensation expense related to the distribution of $32 million to deferred compensation plan participants, net of a
$13 million income tax benefit.