Invacare 2008 Annual Report Download - page 86

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-Term Debt
Debt as of December 31, 2008 and 2007 consist of the following (in thousands):
2008 2007
$250,000,000 term loan facility at 2.25% above local interbank offered rates (LIBOR),
expires February 12, 2013 ................................................. $160,000 $197,500
$150,000,000 revolving credit facility at 2.25% above LIBOR, expires February 12,
2012 .................................................................. — 19,488
$175,000,000 senior notes at 9.75%, due in February 2015 ......................... 173,193 172,896
$135,000,000 convertible senior subordinated debentures at 4.125%, due in February
2027 .................................................................. 135,000 135,000
Other notes and lease obligations ............................................. 10,627 12,968
478,820 537,852
Less current maturities of long-term debt ....................................... (18,699) (24,510)
$460,121 $513,342
On February 12, 2007, the company completed a new financing program which provided the company with
total capacity of approximately $710 million, the net proceeds of which were used to refinance substantially all
of the company’s then existing indebtedness and pay related fees and expenses. The refinancing was made
necessary, in part, because on November 6, 2006, the company determined that it was in violation of a financial
covenant contained in three Note Purchase Agreements between the company and various institutional lenders
(the “Note Purchase Agreements”). The Note Purchase Agreements related to an aggregate principal amount of
$330 million in long-term debt of the company. The financial covenant limited the ratio of consolidated debt to
consolidated operating cash flow. The company believed the limit was exceeded as a result of borrowings by the
company in early October, 2006 under its $500 million credit facility dated January 14, 2005 with various banks
(the “Credit Facility”). The violation of the covenant under the Note Purchase Agreements also may have
constituted a default under both the Credit Facility and the company’s separate $100 million trade receivables
securitization facility (collectively, all of these loan facilities are referred to as the “Loan Facilities”). The
company obtained the necessary waivers of the covenants that were violated.
As part of the new financing, the company entered into a $400,000,000 senior secured credit facility
consisting of a $250,000,000 term loan facility and a $150,000,000 revolving credit facility. The company’s
obligations under the new senior secured credit facility are secured by substantially all of the company’s assets
and are guaranteed by its material domestic subsidiaries, with certain obligations also guaranteed by its material
foreign subsidiaries. Borrowings under the new senior secured credit facility will generally bear interest at
LIBOR plus a margin of 2.25%, including an initial facility fee of 0.50% per annum on the facility.
The company also completed the sale of $175,000,000 principal amount of its 9.75% Senior Notes due 2015
to qualified institutional buyers pursuant to Rule 144A and to non-U.S. persons outside the United States in
reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The notes are
unsecured senior obligations of the company guaranteed by substantially all of the company’s domestic
subsidiaries, and pay interest at 9.75% per annum on each February 15 and August 15. The net proceeds to the
company from the offering of the notes, after deducting the initial purchasers’ discount and the offering expenses
payable by the company, were approximately $167,000,000.
Also, as part of the refinancing, the company completed the sale of $135,000,000 principal amount of its
Convertible Senior Subordinated Debentures due 2027 to qualified institutional buyers pursuant to Rule 144A
under the Securities Act. The debentures are unsecured senior subordinated obligations of the company
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