U-Haul 2005 Annual Report Download - page 64

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63 I AMERCO ANNUAL REPORT
•฀ On฀ a฀ quarterly฀ basis,฀ the฀ obligors฀ cannot฀ allow฀ EBITDA฀
minus฀ capital฀ expenditures฀ (as฀ defined)฀ to฀ fall฀ below฀
specified฀levels.
•฀ The฀ obligors฀ are฀ restricted฀ in฀ the฀ amount฀ of฀ capital฀
expenditures฀that฀they฀can฀make฀in฀any฀fiscal฀year.
•฀ The฀obligors’฀ability฀to฀incur฀additional฀indebtedness฀
is฀restricted.฀
•฀ The฀obligors’฀ability฀to฀create,฀incur,฀assume฀or฀permit฀to฀
exist฀any฀lien฀on฀or฀against฀any฀of฀the฀secured฀assets฀is฀
restricted.
•฀ The฀ obligors’฀ ability฀ to฀ convey,฀ sell,฀ lease,฀ assign,฀
transfer฀ or฀ otherwise฀ dispose฀ of฀ any฀ of฀ the฀ secured฀
assets฀is฀restricted.
•฀ The฀ obligors฀ cannot฀ enter฀ into฀ any฀ merger,฀
consolidation,฀ reorganization,฀ or฀ recapitalization฀
(subject฀ to฀ exceptions)฀ and฀ they฀ cannot฀ liquidate,฀
wind฀up฀or฀dissolve฀any฀of฀their฀subsidiaries฀that฀are฀a฀
borrower฀under฀the฀abovementioned฀loan฀agreements,฀
unless฀the฀assets฀of฀the฀dissolved฀entity฀are฀transferred฀
to฀ another฀ subsidiary฀ that฀ is฀ a฀ borrower฀ under฀ the฀
abovementioned฀ loan฀ agreements฀ and฀ certain฀ other฀
conditions฀are฀met.
•฀ The฀ obligors฀ability฀ to฀guarantee฀the฀obligations฀of฀ the฀
insurance฀subsidiaries฀or฀any฀third฀party฀is฀restricted.
•฀ The฀obligors฀ability฀to฀prepay,฀redeem,฀defease,฀purchase฀
or฀otherwise฀acquire฀any฀of฀their฀indebtedness฀or฀any฀
indebtedness฀of฀a฀subsidiary฀that฀is฀a฀borrower฀under฀
the฀abovementioned฀loan฀agreements฀is฀restricted.
•฀ The฀ Company’s฀ credit฀ facility฀ and฀ its฀ senior฀ note฀
indentures฀limit฀the฀Company’s฀ability฀to฀pay฀dividends฀
and฀ accordingly,฀ the฀ Company฀ does฀ not฀ anticipate฀
declaring฀and฀ paying฀dividends฀on฀ its฀common฀stock฀
in฀the฀foreseeable฀future.
As฀ of฀ March฀ 31,฀ 2005฀ and฀ 2004฀ the฀ Company฀ was฀ in฀
compliance฀with฀these฀covenants.
The W.P.Carey Transaction
In฀ 1999,฀ AMERCO฀ and฀ U-Haul฀ and฀ Real฀ Estate฀
entered฀ into฀ financing฀agreements฀ for฀the฀ purchase฀ and฀
construction฀ of฀ self-storage฀ facilities฀ with฀ the฀ Bank฀ of฀
Montreal฀ and฀ Citibank฀ (the฀ “leases”฀ or฀ the฀ “synthetic฀
leases”).฀Title฀to฀the฀real฀property฀subject฀to฀these฀leases฀
was฀held฀by฀non-affiliated฀entities.
The฀$350฀million฀amortizing฀term฀loan฀requires฀monthly฀
principal฀ payments฀ of฀ $291,667฀ and฀ periodic฀ interest฀
payments฀with฀the฀balance฀due฀on฀maturity฀in฀2009.฀The฀
interest฀rate฀per฀the฀provisions฀of฀the฀term฀loan฀agreement฀
is฀defined฀as฀the฀3-month฀London฀Inter฀Bank฀Offer฀Rate฀
(“LIBOR”),฀ plus฀ 3.5%,฀ the฀ sum฀ of฀ which฀ at฀ March฀ 31,฀
2005฀ was฀ 6.46%.฀ Advances฀ under฀ the฀ revolving฀ credit฀
facility฀ are฀ based฀ on฀ a฀ borrowing฀ base฀ formula,฀ which฀
is฀ based฀ on฀ a฀ percentage฀ of฀ the฀ value฀ of฀ our฀ eligible฀
real฀ estate.฀ On฀ March฀ 31,฀ 2005,฀ outstanding฀ advances฀
under฀ the฀revolving฀credit฀facility฀ totaled฀ $84.9฀million฀
and฀$115.1฀million฀was฀available฀to฀borrow.฀The฀interest฀
rate฀ per฀ the฀ provisions฀ of฀ the฀ revolving฀ credit฀ facility฀
agreements฀are฀defined฀as฀the฀prime฀rate฀(“Prime”)฀plus฀
1.0%,฀the฀sum฀of฀which฀at฀March฀31,฀2005฀was฀6.75%฀or฀
LIBOR฀plus฀3.5%.฀The฀Senior฀Secured฀Facility฀is฀secured฀
by฀a฀first฀priority฀position฀in฀substantially฀all฀of฀the฀assets฀
of฀ AMERCO฀ and฀ its฀ subsidiaries,฀ except฀ for฀ our฀ notes฀
receivable฀from฀SAC฀Holdings,฀certain฀real฀estate฀held฀for฀
sale,฀the฀capital฀stock฀of฀our฀insurance฀subsidiaries,฀real฀
property฀ previously฀ mortgaged฀ to฀ Oxford฀ and฀ vehicles฀
subject฀to฀certain฀lease฀financing฀arrangements.
9.0% Second Lien Senior Secured Notes
The฀ Company฀issued฀and฀has฀ outstanding฀$200฀million฀
aggregate฀principal฀amount฀of฀9.0%฀Second฀Lien฀Senior฀
Secured฀Notes฀due฀2009.฀These฀senior฀notes฀are฀secured฀
by฀ a฀ second฀ priority฀ position฀ in฀ the฀ same฀ collateral฀
which฀ secures฀ our฀ obligations฀ under฀ the฀ First฀ Lien฀
Senior฀ Secured฀ Notes.฀ No฀ principal฀ payments฀ are฀ due฀
on฀the฀Second฀Lien฀Senior฀Secured฀Notes฀until฀maturity.฀
Interest฀is฀paid฀quarterly.
Senior Subordinated Notes
The฀ Company฀ issued฀ and฀ has฀ outstanding฀ $148.6฀
million฀ aggregate฀ principal฀ amount฀ of฀ 12.0%฀ Senior฀
Subordinated฀Notes฀due฀2011฀(the฀“Senior฀Subordinated฀
Notes”).฀ No฀ principal฀ payments฀ are฀ due฀ on฀ the฀ Senior฀
Subordinated฀ Notes฀ until฀ maturity.฀ These฀ senior฀ notes,฀
which฀are฀subordinated฀to฀all฀of฀the฀senior฀indebtedness฀
of฀ AMERCO฀ (including฀ the฀ First฀ Lien฀ Senior฀ Secured฀
Notes฀and฀ the฀ Second฀Lien฀Senior฀Secured฀ Notes,฀ both฀
due฀ 2009),฀ are฀ secured฀ by฀ certain฀ assets฀ of฀ AMERCO,฀
including฀the฀capital฀stock฀of฀Oxford,฀certain฀real฀estate฀
held฀ for฀ sale฀ and฀ payments฀ from฀ notes฀ receivable฀ from฀
SAC฀Holdings฀having฀an฀aggregate฀outstanding฀principal฀
balance฀at฀March฀31,฀2005฀of฀$203.7฀million.฀Interest฀is฀
paid฀quarterly.
Restrictive Covenants
Under฀the฀abovementioned฀loan฀agreements,฀the฀Company฀
is฀ required฀ to฀ comply฀ with฀ a฀ number฀ of฀ affirmative฀
and฀ negative฀ covenants.฀ These฀ covenants฀ apply฀ to฀ the฀
obligors,฀and฀provide฀that,฀among฀other฀things:
Amerco and Consolidated Entities
Notes to Consolidated Financial Statements, continued