Aarons 2013 Annual Report Download - page 65

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NOTE 6: CREDIT FACILITIES
Following is a summary of the Company’s credit facilities at December 31:
(In Thousands) 2013 2012
Senior Unsecured Notes $125,000 $125,000
Capital Lease Obligation:
with Related Parties 7,412 6,122
with Unrelated Parties 7,042 7,156
Other Debt 3,250 3,250
$142,704 $141,528
Bank Debt
On October 8, 2013, the Company entered into the fifth amendment to its revolving credit agreement dated May 23, 2008, as
previously amended. The amendment changes the “Restricted Payments” negative covenant, which imposes certain restrictions
on the amount of payments that can be made in respect of dividends, distributions, redemptions and stock repurchases paid in
cash, to make such covenant less restrictive.
The Company’s revolving credit agreement, which expires December 13, 2017, is with several banks and provides for
unsecured borrowings up to $140 million (including a letter of credit and swingline loan subfacility). Amounts borrowed bear
interest at the lower of the lender’s prime rate or one-month LIBOR plus a margin ranging from 1.0% to 1.5% as determined by
the Company’s ratio of total debt to EBITDA. At December 31, 2013 and 2012, there was a zero balance under the Company’s
revolving credit agreement. The Company pays a commitment fee on unused balances, which ranges from 0.15% to 0.30% as
determined by the Company’s ratio of total debt to EBITDA.
The revolving credit agreement, senior unsecured notes discussed below and franchise loan program discussed in Note 8
contain financial covenants which, among other things, prohibit the Company from exceeding certain debt to EBITDA levels
and require the maintenance of minimum fixed charge coverage ratios. If the Company fails to comply with these covenants,
the Company will be in default under these agreements, and all amounts would become due immediately. Under the Company’s
revolving credit agreement, senior unsecured notes and franchise loan program, the Company may pay cash dividends in any
year so long as, after giving pro forma effect to the dividend payment, the Company maintains compliance with its financial
covenants and no event of default has occurred or would result from the payment.
At December 31, 2013, the Company was in compliance with all covenants.
Senior Unsecured Notes
On October 8, 2013, the Company entered into Amendment No. 2 to a note purchase agreement dated as of July 5, 2011 with
several insurance companies. Pursuant to the note purchase agreement, the Company and certain of its subsidiaries as co-
obligors, issued $125.0 million in senior unsecured notes to the purchasers in a private placement. The notes bear interest at the
rate of 3.75% per year and mature on April 27, 2018. Payments of interest are due quarterly, commencing July 27, 2011, with
principal payments of $25.0 million each due annually commencing April 27, 2014.
The amendment revises the note purchase agreement to, among other things, (i) remove the “Minimum Consolidated Net
Worth” financial covenant which previously required that the Company maintain a certain minimum consolidated net worth and
(ii) change the “Restricted Payments” negative covenant, which imposes certain restrictions on the amount of payments that can
be made in respect of dividends, distributions, redemptions and stock repurchases paid in cash, to make such covenant less
restrictive. The Company remains subject to other financial covenants under the note purchase agreement, including
maintaining a minimum ratio of debt to earnings before interest, taxes, depreciation, and amortization and a minimum fixed
charge coverage ratio.