Memorex 2014 Annual Report Download - page 42

37
December 31, 2014. As of December 31, 2014, our total remaining borrowing capacity under the Amended Credit
Agreement was $26.0 million, consisting of $16.7 million in the United States and $9.3 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. 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) $140 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) $30 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.
The Amended Credit Agreement contains covenants which are customary for similar credit agreements,
including covenants related to financial reporting and notification, payment of indebtedness, taxes and other
obligations; compliance with applicable laws; and limitations regarding additional liens, indebtedness, certain
acquisitions, investments and dispositions of assets. The Amended Credit Agreement contains a conditional
financial covenant that requires Imation Corp. to have a Consolidated Fixed Charge Coverage Ratio (as defined in
the Amended Credit Agreement) of not less than 1.00 or a liquidity requirement of $30.0 million of domestic
borrowing availability. We were in compliance with the liquidity requirement as of December 31, 2014 and our U.S.
availability of $16.7 million discussed above is net of this $30 million liquidity requirement. As of December 31, 2014
and 2013, we had outstanding standby letters of credit of $1.0 million and $0.7 million, respectively. The outstanding
standby letters of credit reduce our allowed borrowing capacity under the Amended Credit Agreement.
On July 16, 2013, we entered into an additional credit agreement for a revolving credit facility with a lender in
Japan with Imation Corporation Japan as the borrower and Imation Corp. as the guarantor. We intend to use the
credit facility for general operating purposes. The credit agreement is a three year asset-based revolving credit
facility with a borrowing base consistent with our existing Amended Credit Agreement that allows for the borrowing
of amounts up to 3.0 billion Japanese Yen, or approximately $25.0 million. Borrowings under the credit facility will
bear interest at an interest rate equal to the base rate based on LIBOR or TIBOR plus the applicable margins
provided for in the credit agreement. The credit agreement contains financial covenants applicable to Imation
Corporation Japan including a fixed charge coverage ratio requirement. As of December 31, 2014, we had $7.9
million of borrowings outstanding under the agreement which had an interest rate of 2.7 percent. As of
December 31, 2014, our remaining borrowing capacity under this arrangement was $7.9 million. Imation
Corporation Japan is in compliance with all covenant requirements as of December 31, 2014.
As of December 31, 2014 we had a 600 million Japanese Yen, or approximately $5.0 million, overdraft line of
credit available in Japan. As of December 31, 2014, we had outstanding borrowings under this overdraft line of 300
million Japanese Yen or approximately $2.5 million. We had no borrowings outstanding on December 31, 2013.
Other outstanding borrowings on lines of credit lines were $0.5 million and $0.1 million for December 31, 2014
and 2013, respectively.