American Home Shield 2009 Annual Report Download - page 22

Table of Contents
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 position, results of operations and cash flows 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 obligations under, our debt will depend on the ability of our subsidiaries to make distributions and
dividends to us, which, in turn, will depend on their operating results, cash requirements and financial condition, general business conditions and any legal
and regulatory restrictions on the payment of dividends to which they may be subject, many of which may be beyond our control, and as described under
"Risks Relating to Our Business and Our Industry" above. The payment of ordinary and extraordinary dividends by our subsidiaries that are regulated as
insurance, home service, or similar companies is subject to applicable state law limitations. If we cannot receive sufficient distributions from our subsidiaries,
we may not be able to meet our obligations to fund general corporate expenses or service our debt obligations.
If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell
assets, seek to obtain additional equity capital, elect to pay PIK Interest or restructure our debt. In the future, our cash flow and capital resources may not be
sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet our
scheduled debt service obligations.
The Revolving Credit Facility will mature on July 24, 2013 and the Term Loan Facilities will mature on July 24, 2014. The Permanent Notes will mature
on July 15, 2015. We cannot assure you that we will be able to refinance any of our debt or obtain additional financing, particularly because of our high levels
of debt. It is our understanding that a significant amount of global indebtedness related to the leveraged buy-out boom will mature between 2012 and 2015,
when significant
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