Cash America 2014 Annual Report Download - page 37

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Some of the Company’s debt agreements contain financial covenants and other restrictions that may limit the
Company’s ability to operate its business, and failure to satisfy the Company’s debt obligations could have a
Material Adverse Effect.
As of December 31, 2014, the Company had $196.5 million total debt outstanding, as more fully described
under “Item 8. Financial Statements and Supplementary Data—Note 11.” Some of the Company’s debt agreements
contain various restrictive covenants, compliance with which is essential to continued credit availability. If the
Company is unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments
on these debt obligations or if it is in breach of the covenants contained in the debt agreements it would default
under the terms of the applicable agreement or indenture. These restrictive covenants, among other things, restrict
the Company’s ability to:
•incur additional debt;
•incur or permit certain liens to exist;
•make certain investments;
•merge or consolidate with or into, or convey, transfer, lease or dispose of all or substantially all of its
assets to, another company;
•make certain dispositions;
•make certain payments; and
•engage in certain transactions.
Some of the Company’s debt agreements also require the Company to maintain certain financial ratios and
have cross default provisions. The covenants and restrictions contained in the debt agreements could limit the
Company’s ability to fund its business, make capital expenditures, and make acquisitions or other investments in the
future. Any failure to comply with any of these financial and other affirmative and negative covenants could
constitute an event of default under the debt agreements, entitling the lenders to, among other things, terminate
future credit availability under the agreement, increase the interest rate on outstanding debt, accelerate the maturity
of outstanding obligations under that agreement and could result in a cross default under the Company’s other debt
agreements. For example, representatives of a small number of holders of the 2018 Senior Notes, which the
Company believes own less than a majority of the aggregate principal amount of the 2018 Senior Notes, have
indicated that they believe the Enova Spin-off was not permitted by the 2018 Senior Notes Indenture. These
noteholders have taken the position that the Company is in default under the Indenture and that a make-whole
premium is payable, in addition to principal and accrued interest. The Company disagrees with the assertion that a
default exists under the 2018 Senior Notes Indenture and also disagrees that a make-whole premium would be due
in the event of a default because, among other things, the 2018 Senior Notes Indenture provides that upon
acceleration of the 2018 Senior Notes due to a default, the repayment remedy is the repayment of principal and
accrued interest with no provision for a make-whole premium. The Company believes the position taken by these
noteholders is without merit and the Company intends to vigorously defend its position on these issues if formally
asserted. This claim could be costly to defend, could be damaging to the Company’s reputation, could be time
consuming for management and could affect the Company’s ability to obtain capital in the future. As of the date of
this Annual Report, the Company has ample liquidity and capital resources, including availability under the
Company’s Domestic and Multi-Currency Line of Credit, to repay the 2018 Senior Notes regardless of the outcome
of this claim.
An inability to access the debt capital markets or obtain financing could reduce available capital.
In the past, the Company has accessed the debt capital markets or utilized its line of credit with banks to
obtain capital, to finance growth and to refinance existing debt obligations. Efficient access to this capital is critical
to the Company’s ongoing financial success; however, the Company’s future access to debt capital could become
restricted due to a variety of factors, such as a deterioration of the Company’s earnings, cash flows, balance sheet
quality, overall business or industry prospects, or reputation in the debt markets, a disruption or deterioration in the
state of the capital markets or a negative bias toward the Company’s industry. Banks and other credit providers
could restrict available lines of credit and require higher pricing upon renewal of the Company’s existing line of
credit. The Company’s ability to obtain additional financing in the future will depend in part upon prevailing capital
market conditions, and a potential disruption in the capital markets may adversely affect the Company’s efforts to