Aarons 2014 Annual Report Download - page 77

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On December 9, 2014, the Company entered into the first amendment to this agreement to, among other things, (i) extend the
maturity date for an additional five year period, (ii) increase the revolving credit commitments to an aggregate principal amount
of up to $225.0 million, (iii) provide for the extension of an additional term loan advance in the aggregate amount of
$1.9 million, (iv) modify the amortization payments in respect of the term loan facility to provide for equal quarterly
installments of $3.1 million, payable on the last day of each March, June, September and December, commencing on December
31, 2014, (v) provide for the joinder of certain new banks and other financial institutions as lenders, (vi) amend and restate
certain schedules, (vii) modify certain financial covenants and related financial terms consistent with the financial covenant
modifications in the franchise loan program discussed in Note 8 and (viii) add and modify certain other terms, covenants and
representations and warranties.
The revolving credit and term loan agreement, which expires December 9, 2019, permits the Company to borrow, subject to
certain terms and conditions, on an unsecured basis up to $225.0 million in revolving loans and also provides for an
uncommitted incremental facility increase option which, subject to certain terms and conditions, permits the Company at any
time prior to the maturity date to request an increase in extensions of credit available thereunder (whether through additional
term loans and/or revolving credit commitments or any combination thereof) by an aggregate additional principal amount of up
to $200.0 million, with such additional credit extensions provided by one or more lenders thereunder at their sole discretion.
The revolving credit borrowings and term loans bear interest at the lower of the lender's prime rate or one-month LIBOR plus a
margin ranging from 1.75% to 2.25% as determined by the Company's ratio of total debt to EBITDA. The weighted-average
interest rate for revolving credit borrowings and term loans outstanding as of December 31, 2014 was approximately 2.16%.
The Company pays a commitment fee on unused balances, which ranges from .15% to .30% as determined by the Company's
ratio of total debt to EBITDA. As of December 31, 2014, $155.9 million was available for borrowings under the revolving
credit agreement.
The revolving credit and term loan agreement, senior unsecured notes discussed below and franchise loan program discussed in
Note 8 contain financial covenants. These covenants include requirements that the Company maintain ratios of (i) EBITDA
plus lease expense to fixed charges of no less than 1.75:1.00 through December 31, 2015 and 2.00:1.00 thereafter and (ii) total
debt to EBITDA of no greater than 3.25:1.00 through December 31, 2015 and 3.00:1.00 thereafter. In each case, EBITDA refers
to the Company’s consolidated net income before interest and tax expense, depreciation (other than lease merchandise
depreciation), amortization expense and other non-cash charges.
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 and term loan 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, 2014, the Company was in compliance with all covenants.
Senior Unsecured Notes
2011 Note Purchase Agreement
On April 14, 2014, the Company entered into the third amendment to its 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 previously issued $125.0 million in senior unsecured notes to the purchasers in a private placement. Payments of
interest commenced on July 27, 2011 and are due quarterly, and principal payments of $25.0 million commenced on April 27,
2014 and are due annually until maturity. The maturity of the note purchase agreement remained at April 27, 2018.
The amendment revised the 2011 note purchase agreement to, among other things, replace the interest rate of 3.75% per year
with an interest rate of 3.95% commencing April 28, 2014, conform the covenants, representations, warranties and events of
default to the changes reflected in the revolving credit and term loan agreement, to contemplate the acquisition of Progressive
and to authorize the new 2014 senior unsecured notes.
2014 Note Purchase Agreements
On April 14, 2014, the Company entered into note purchase agreements with several insurance companies, pursuant to which
the Company and certain of its subsidiaries as co-obligors issued $300.0 million in aggregate principal amount of senior
unsecured notes in a private placement. The notes bear interest at the rate of 4.75% per year and mature on April 14, 2021.
Payments of interest are due quarterly, commencing July 14, 2014, with principal payments of $60.0 million each due annually
commencing April 14, 2017.