American Home Shield 2008 Annual Report Download - page 20

Table of Contents
sell certain assets, or, in the case of any borrower under the Credit Facilities, consolidate, merge, sell or otherwise dispose of all or substantially
all of its assets;
create liens;
in the case of the Term Loan Facility, enter into agreements restricting dividends or other distributions by subsidiaries to ServiceMaster; and
in the case of the Revolving Credit Facility, make acquisitions, enter into agreements restricting our ability to incur liens securing the Revolving
Credit Facility and change our business or ServiceMaster's fiscal year.
The indenture governing our 10.75%/11.50% senior toggle notes maturing in 2015 (the "Permanent Notes") also contains restrictive covenants that,
among other things, limit our ability and the ability of our restricted subsidiaries to:
incur more debt;
repurchase our debt;
pay dividends, redeem stock or make other distributions;
make investments;
create liens;
transfer or sell assets;
merge or consolidate; and
enter into certain transactions with our affiliates.
The restrictions in the indenture governing the Permanent Notes, the Credit Facilities and the instruments governing our other debt may prevent us from
taking actions that we believe would be in the best interest of our business and may make it difficult for us to execute our business strategy successfully or
effectively compete with companies that are not similarly restricted. We may also incur future debt obligations that might subject us to additional restrictive
covenants that could affect our financial and operational flexibility. We cannot assure you that we will be able to refinance our debt, at maturity or otherwise,
on terms acceptable to us, or at all.
Our ability to comply with the covenants and restrictions contained in the Credit Facilities, the indenture governing the Permanent Notes and the
instruments governing our other debt may be affected by economic, financial and industry conditions beyond our control including credit or capital market
disruptions. The breach of any of these covenants or restrictions could result in a default that would permit the applicable lenders or noteholders, as the case
may be, to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. If we are unable to repay debt, lenders
having secured obligations, such as the lenders under the Credit Facilities, could proceed against the collateral securing the debt. In any such case, we may be
unable to borrow under the Credit Facilities and may not be able to repay the amounts due under the Credit Facilities and the Permanent Notes. This could
have serious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent.
Our ability to generate the significant amount of cash needed to pay interest and principal on our debt and our ability to refinance all or a portion of
our debt or obtain additional financing depends on many factors beyond our control.
As a holding company, we have no independent operations or material assets other than our ownership of equity interests in our subsidiaries, and we will
depend on our subsidiaries to distribute funds to us so that we may pay our obligations and expenses, including satisfying our obligations under our debt. Our
ability to make scheduled payments on, or to refinance our
18
•
•
•
•
•
•
•
•
•
•
•
•