Memorex 2012 Annual Report Download - page 39

$1.0 million during 2012 and 2010, respectively, were due to cash payments made to amend and extend our line of credit.
These issuance costs were capitalized in our Consolidated Balance Sheets.
Credit Facility
On March 30, 2006, we entered into a credit agreement with a group of banks (the Credit Agreement). Subsequently, we
entered into various amendments which, among other things, added Imation Europe B.V. as a borrower (European Borrower).
On May 18, 2012, we entered into an amendment (the Amendment) to the Credit Agreement (as amended to date, the
Amended Credit Agreement). The Amendment modified the Credit Agreement by extending the expiration date of the
borrowing arrangement to May 18, 2017, requiring that the equity interests of material foreign subsidiaries be pledged to
support the obligations, if any, of the European Borrower, lowered the applicable margin on interest, lowered the Company’s
minimum required Consolidated Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) to be
maintained as well as provided for certain other less significant changes.
The Amended Credit Agreement includes a senior revolving credit facility that allows for the borrowing of amounts up to
a maximum of $200 million, including sublimits of $150 million in the United States and $50 million in Europe. Borrowings in
both the United States and Europe are limited to the lesser of the sublimit(s) and the borrowing base as defined in the
Amended Credit Agreement and are payable upon expiration of the Amended Credit Agreement or immediately, but only to
the extent the applicable sublimit(s) are reduced to an amount less than the amount borrowed at that time. Our borrowing
base is calculated each quarter unless our outstanding loan amount is greater than $5.0 million in which our borrowing base is
calculated monthly. Our borrowing base is based on our amounts of receivables, inventories and other factors that influence
the borrowing base and, to the extent any outstanding borrowing exceed the borrowing base, any such excess is due and
payable immediately. As of December 31, 2012, our borrowing capacity under this arrangement was $76.4 million in the
United States and $13.9 million in Europe.
Prior to August 15, 2012, borrowings bore interest at an interest rate equal to (1) the Eurodollar Rate (as defined in the
Amended Credit Agreement) plus 2.00 percent or (2) the Base Rate (as defined in the Amended Credit Agreement) plus 1.00
percent. After August 15, 2012, the applicable margins for the Eurodollar Rate and the Base Rate are subject to adjustments
based on average daily availability (as defined in the Amended Credit Agreement).
Our U.S. obligations under the Amended Credit Agreement are guaranteed by the material domestic subsidiaries of
Imation Corp. (the Guarantors) and are secured by a first priority lien (subject to customary exceptions) on the real property
comprising Imation Corp.’s corporate headquarters and all of the personal property of Imation Corp., its subsidiary Imation
Enterprises Corp., which is also an obligor under the Amended Credit Agreement, and the Guarantors. Borrowings under the
U.S. portion of the Credit Facility are limited to the lesser of (a) $150 million and (b) the “U.S. borrowing base.” The
U.S. borrowing base is equal to the following:
• up to 85 percent of eligible accounts receivable; plus
• up to the lesser of 65 percent of eligible inventory or 85 percent of the appraised net orderly liquidation value of
eligible inventory; plus
• up to 60 percent of the appraised fair market value of eligible real estate (the Original Real Estate Value), such
Original Real Estate Value to be reduced each calendar month by 1/120th, provided, that the Original Real Estate
Value shall not exceed $40 million; plus
• such other classes of collateral as may be mutually agreed upon and at advance rates as may be determined by the
Agent; minus
• such reserves as the Agent may establish in good faith.
Our European obligations under the Credit Agreement are secured by a first priority lien on substantially all of the material
personal property of the European Borrower. Borrowings under the European portion of the Credit Facility are limited to the lesser
of (a) $50 million and (b) the “European borrowing base.” The European borrowing base calculation is fundamentally the same as
the U.S. borrowing base, subject to certain differences to account for European law and other similar issues.
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