Cash America 2009 Annual Report Download - page 127

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
99
Company’s option, at either LIBOR plus a margin of 10.0% or at the agent’s base rate plus a margin of 10.0%
through March 31, 2010 at which time the pricing was to increase through rate and fee changes. The notes
were payable in full at maturity in November 2012 or could be prepaid at the Company’s option at any time
without penalty. The Company prepaid the full $10.0 million balance owed on the notes on May 20, 2009
without penalty.
In May 2008, the Company established a line of credit facility (the “GBP Line of Credit”) of up to
£7.5 million with a foreign commercial bank, due in November 2009. The Company repaid the outstanding
balance of £5.3 million (approximately $8.4 million) on October 28, 2009. Interest on the GBP Line of Credit
was charged, at the Company’s option, at either Pound Sterling LIBOR plus a margin or at the agent’s base
rate. The margin on the GBP Line of Credit varied from 1.10% to 1.575% based on the Company’s cash flow
leverage ratios.
On December 3, 2008, the Company entered into an interest rate cap agreement with a notional
amount of $15.0 million to hedge the Company’s outstanding floating rate line of credit for a term of 36
months at a fixed rate of 3.25%. On March 27, 2009, the Company entered into an interest rate cap
agreement with a notional amount of $15.0 million of the Company’s outstanding floating rate line of credit
for a term of 36 months at a fixed rate of 3.25%.
On May 19, 2009, the Company completed the offering of $115.0 million aggregate principal amount
of 5.25% Convertible Senior Notes due May 15, 2029 (the “2009 Convertible Notes”), which includes its
offering of $100.0 million aggregate principal amount of its 2009 Convertible Notes and an additional $15.0
million aggregate principal amount of its 2009 Convertible Notes that were sold pursuant to the exercise of an
over-allotment option by the initial purchasers. The 2009 Convertible Notes were sold to certain qualified
institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. The 2009 Convertible
Notes are senior unsecured obligations of the Company.
Upon the issuance of the 2009 Convertible Notes, the Company received net proceeds of
approximately $111.1 million, after deducting the initial purchasers’ discount and the estimated offering
expenses payable by the Company. The Company used a portion of the net proceeds of the offering to repay
existing indebtedness, including outstanding balances under its revolving credit facility. The remaining
portion was used for general corporate purposes.
The 2009 Convertible Notes bear interest at a rate of 5.25% per year, payable semi-annually on May
15 and November 15 of each year, commencing November 15, 2009. The 2009 Convertible Notes will be
convertible, in certain circumstances, at an initial conversion rate of 39.2157 shares per $1,000 aggregate
principal amount of 2009 Convertible Notes (which is equivalent to a conversion price of approximately
$25.50 per share), subject to adjustment upon the occurrence of certain events, into either, at the Company’s
election: (i) shares of common stock or (ii) cash up to their principal amount and shares of its common stock
in respect of the remainder, if any, of the conversion value in excess of the principal amount. This represents
a conversion premium of approximately 27.5% relative to the closing price of the Company’s common stock
on May 13, 2009. The Company may not redeem the 2009 Convertible Notes prior to May 14, 2014. The
Company may, at its option, redeem some or all of the 2009 Convertible Notes on or after May 15, 2014
solely for cash. Holders of the 2009 Convertible Notes will have the right to require the Company to
repurchase some or all of the outstanding 2009 Convertible Notes, solely for cash, on May 15, 2014, May 15,
2019 and May 15, 2024 at a price equal to 100% of the principal amount plus any accrued and unpaid interest.
The 2009 Convertible Notes were accounted for under ASC 470-20-65, Transition Related to FASB
Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon