Supercuts 2010 Annual Report Download - page 67

Table of Contents
New Financing Arrangements
Fiscal Year 2010
On July 8, 2009, the Company entered into an agreement to sell to underwriters $150 million aggregate principal amount of 5.0 percent
convertible senior notes due 2014, and 11,500,000 shares of its common stock at $12.37 per share, which was the closing price per share on
July 8, 2009. The Company completed the agreement on July 14, 2009. In addition, under the July 8, 2009 agreement, the Company granted
the underwriters an over-allotment option to purchase up to an additional $22.5 million aggregate principal amount of notes, and up to an
additional 1,725,000 shares of common stock, on the same terms and conditions. The underwriters exercised such options in their entirety and,
on July 21, 2009, the Company completed the issuance of the additional shares and notes for the exercise by the underwriters of the over-
allotment option of $22.5 million aggregate principal amount of notes and an additional 1,725,000 shares of common stock.
The notes are unsecured, senior obligations of the Company and interest will be payable semi-annually at a rate of 5.0 percent per year.
The notes will mature on July 15, 2014. The notes will be convertible subject to certain conditions at an initial conversion rate of 64.6726
shares of the Company's common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $15.46
per share of the Company's common stock), subject to adjustment in certain circumstances.
The net proceeds to the Company from the offerings of convertible senior notes and common stock were approximately $323.8 million
after deducting underwriting discounts and before estimated offering expenses. The Company utilized the proceeds to repay $267.0 million of
private placement senior term notes of varying maturities and $30.0 million of senior term notes under the Private Shelf Agreement. As a result
of the repayment of a portion of the senior term notes during the twelve months ended June 30, 2010, the Company incurred $12.8 million in
make-whole payments and other fees along with $5.2 million in interest rate swap settlements, as discussed in Note 9 to the Consolidated
Financial Statements, totaling $18.0 million that was recorded as interest expense within the Consolidated Statement of Operations. The
remaining proceeds were used for general corporate purposes including the repayment of bank debt.
In connection with the offerings above, on July 14, 2009, the Company amended the Fourth Amended and Restated Credit Agreement, the
Term Loan Agreement and the Amended and Restated Private Shelf Agreement, all subject to the completion of the issuances of the
convertible senior notes and common stock discussed above. The amendments included increasing the Company's minimum net worth
covenant from $675 to $800 million, lowering the fixed charge coverage ratio requirement from 1.5x to 1.3x, amending certain definitions,
including EBITDA and Fixed Charges, and limiting the Company's Restricted Payments to $20 million if the Company's Leverage Ratio is
greater than 2.0x. In addition, the amendments to the Fourth Amended and Restated Credit Agreement reduced the borrowing capacity of the
revolving credit facility from $350.0 to $300.0 million and the amendments to the Restated Private Shelf Agreement incorporated a risk based
capital fee calculated on the daily average outstanding principal amount equal to an annual rate of 1.0 percent which commences one year after
the effective date of the amendment. We were in compliance with all covenants and other requirements of our credit agreement and senior
notes as of June 30, 2010.
Fiscal Year 2009
During fiscal year 2009, we completed a $85 million term loan that matures in July 2012. The monthly interest payments are based on a
one-month LIBOR plus a 1.75 percent spread. The term loan includes customary financial covenants including a leverage ratio, fixed charge
ratio and minimum net equity test. We used the proceeds from the term loan to pay down our revolving line of credit
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