Rayovac 2002 Annual Report Download - page 50

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)
The Second Restated Agreement was subsequently amended over time primarily to permit increased levels of: letters of credit, capital spending, loans to
employees and investments by a domestic subsidiary in a foreign subsidiary; and amend the definition of EBITDA to exclude certain non-recurring
charges including a bad debt reserve for the Kmart bankruptcy.
Interest on these borrowings was at the Base Rate plus a margin (0.00% to 0.75%) per annum (5.00% at September 30, 2002) or IBOR plus a margin
(0.75% to 1.75%) per annum. The Company was required to pay a commitment fee (0.25% to 0.50%) per annum (0.375% at September 30, 2002)
on the average daily-unused portion of the revolving facility. The Company had outstanding letters of credit of approximately $5,750 at September 30,
2002. A fee (0.75% to 1.75%) per annum (1.25% at September 30, 2002) was payable on the outstanding letters of credit. The Company also incurred
a fixed fee of 0.25% per annum of the average daily maximum amount available to be drawn on each letter of credit issued. The facilities’ margin,
revolving commitment fee and fees on outstanding letters of credit could be adjusted if the Company’s leverage ratio, as defined, increased or decreased.
The Second Restated Agreement contained financial covenants with respect to borrowings which included maintaining minimum interest coverage and
maximum leverage ratios. In accordance with the Agreement, the limits imposed by such ratios became more restrictive over time. In addition, the
Second Restated Agreement restricted the Company’s ability to incur additional indebtedness, create liens, make investments or specified payments, give
guarantees, pay dividends, make capital expenditures, and merge or acquire or sell assets.
The Series B Senior Subordinated Notes (“Notes”), initially scheduled to mature on November 1, 2006, were redeemed in connection with the
Company’s initial public offering of common stock, and a subsequent primary offering, with the final residual amount redeemed in November 2001.
The Company entered into no new capital leases in 2002. Aggregate capitalized lease obligations are payable in installments of $340 in 2003 and $160
in 2004.
In connection with the acquisition of the consumer battery business of VARTA AG on October 1, 2002, the Company entered into an Amended and
Restated Credit Agreement (“Third Restated Agreement”) which replaced the Second Restated Agreement discussed above. The Third Restated
Agreement provides for senior bank facilities, including term and revolving credit facilities in an initial aggregate amount (assuming an exchange rate of
the Euro to the Dollar of 1 to 1) of approximately $625,000. The Third Restated Agreement includes a $100,000 seven-year revolving credit facility,
a EUR 50,000 seven-year revolving facility, a $300,000 seven-year amortizing term loan, a EUR 125,000 seven-year amortizing term loan and a
EUR 50,000 six-year amortizing term loan. The U.S. Dollar revolving credit facility may be increased, at the Company’s option, by up to $50,000.
The interest on Dollar-denominated borrowings is computed, at the Company’s option, based on the base rate, as defined (“Base Rate”), or the London
Interbank Offered Rate (“LIBOR”) for Dollar-denominated deposits. The interest on Euro-denominated borrowings is computed on LIBOR for Euro-
denominated deposits. The fees associated with these facilities will be capitalized and amortized over the term of the facilities. Unamortized fees associ-
ated with the replaced facilities above will be written off as a charge to earnings in the quarter ending December 29, 2002. Indebtedness under these
amended facilities is secured by substantially all of the assets of the Company, is guaranteed by certain of our subsidiaries and the Euro-denominated
revolving facility is subject to a borrowing base (“Borrowing Base”) of certain European assets.
The term facilities provide for quarterly amortization totaling (assuming an exchange rate of the Euro to the Dollar of 1 to 1) of approximately $9,250
in 2003 and 2004, $14,250 in 2005, 2006, and 2007, $61,250 in 2008 and $352,500 in 2009. The term facility also provides for annual prepayments,
over and above the normal amortization. Such payments would be a portion of “Excess Cash Flow” (EBITDA, as defined, less certain operating expen-
ditures including scheduled principal payments of long-term debt). The quarterly amortization is reduced prorata for the effect of prepayments made as
a result of Excess Cash Flow.
Interest on Dollar-denominated revolving borrowings is, at the Company’s option, at the Base Rate plus a margin (1.25% to 2.50%) per annum or
Dollar-denominated LIBOR plus a margin (2.25% to 3.50%) per annum. Interest on Euro-denominated revolving borrowings and the Euro-denominated
six-year term loan is Euro-denominated LIBOR plus a margin (2.25% to 3.50%) per annum (6.58% at October 1, 2002). Interest on the Dollar-
denominated seven-year term loan is, at the Company’s option, at the Base Rate plus a fixed 2.75% margin per annum or Dollar-denominated LIBOR
plus a fixed 3.75% margin per annum (5.57% at October 1, 2002). Interest on the Euro-denominated seven-year term loan is Euro-denominated
LIBOR plus a fixed 3.75% margin per annum (7.08% at October 1, 2002). The Company is required to pay a commitment fee of 0.50% per annum