Invacare 2015 Annual Report Download - page 94

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-22
may not exceed an amount equal to (a) 85% of the European Borrower’s eligible accounts receivable, less (b) the European
Borrower’s borrowings and swing line loans outstanding under the European Credit Facility, less (c) the European Borrower’s
letters of credit issued and undrawn under the European Credit Facility, less (d) a $3,000,000 minimum availability reserve, less
(e) other reserves required by the European Agent, and in each case subject to the definitions and limitations in the Amended and
Restated Credit Agreement. As of December 31, 2015, as determined pursuant to the borrowing base formula, the aggregate
borrowing base available to the European Borrowers under the European Credit Facility was approximately $21,528,000, with
aggregate borrowing availability of approximately $15,153,000, taking into account the $3,000,000 minimum availability reserve
and a $3,375,000 dominion trigger amount described below.
The aggregate principal amount of the European Credit Facility may be increased by up to $10,000,000 to the extent requested
by the company and agreed to by any Lender or Lenders that wish to increase their lending participation or, if not agreed to by
any Lender, a new financial institution that agrees to join the European Credit Facility and that is approved by the Administrative
Agent and the European Agent.
Interest will accrue on outstanding indebtedness under the European Credit Facility at an adjusted LIBOR rate, plus a margin
ranging from 2.50% to 3.00%, or for swing line loans, at the overnight LIBOR rate, plus a margin ranging from 2.50% to 3.00%.
The margin will be adjusted quarterly based on utilization. Borrowings under the European Credit Facility are subject to commitment
fees of between 0.25% and 0.375% per year, depending on utilization.
The European Credit Facility is secured by substantially all of the personal property assets of the UK Borrower and its in-
country subsidiaries, and all of the receivables of the French Borrower and its in-country subsidiaries. The UK and French facilities
(which comprise the European Credit Facility) are cross collateralized, and the US personal property assets previously pledged
under the Existing Credit Facility also serve as collateral for the European Credit Facility.
The European Credit Facility is subject to customary representations, warranties and covenants generally consistent with
those applicable to the Existing Credit Facility. Exceptions to the operating covenants in the Amended and Restated Credit
Agreement provide the company with flexibility to, among other things, enter into or undertake certain sale/leaseback transactions,
dispositions of assets, additional credit facilities, sales of receivables, additional indebtedness and intercompany indebtedness, all
subject to limitations set forth in the Amended and Restated Credit Agreement. The Amended and Restated Credit Agreement also
contains a covenant requiring the European Borrowers to maintain undrawn availability under the European Credit Facility of not
less than the greater of (i) 11.25% of the maximum amount that may be drawn under the European Credit Facility for five (5)
consecutive business days, or (ii) $3,000,000 on any business day. The European Borrowers also are subject to cash dominion
triggers under the European Credit Facility requiring the European Borrower to maintain borrowing capacity of not less than
$3,375,000 on any business day or 12.50% of the maximum amount that may be drawn under the European Credit Facility for
five (5) consecutive business days in order to avoid triggering full control by an agent for the Lenders of the European Borrower’s
cash receipts for application to its obligations under the European Credit Facility.
The European Credit Facility is subject to customary default provisions, with certain grace periods and exceptions, consistent
with those applicable to the Existing Credit Facility, which provide that events of default include, among other things, failure to
pay amounts due, breach of covenants, representations or warranties, cross-default, bankruptcy, the occurrence of a material adverse
effect, exclusion from any medical reimbursement program, and an interruption in the operations of any material manufacturing
facility for more than 10 consecutive days.
The proceeds of the European Credit Facility will be used to finance the working capital and other business needs of the
company.
Convertible senior subordinated debentures
In 2007, the company issued $135,000,000 principal amount of Convertible Senior Subordinated Debentures due 2027. The
debentures are unsecured senior subordinated obligations of the company guaranteed by substantially all of the company’s domestic
subsidiaries (which guarantees were released effective February 16, 2016, see "Subsequent Events"), pay interest at 4.125% per
annum on each February 1 and August 1, and are convertible upon satisfaction of certain conditions into cash, common shares of
the company, or a combination of cash and common shares of the company, subject to certain conditions. The debentures allow
the company to satisfy the conversion using any combination of cash or stock, and at the company’s discretion. In the event of
such a conversion, the company intends to satisfy the accreted value of the debentures using cash. Assuming adequate cash on
hand at the time of conversion, the company also intends to satisfy the conversion spread using cash, as opposed to stock. As of