Rayovac 2003 Annual Report Download - page 48

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 were capitalized and are
being amortized over the term of the facilities. Indebtedness under these 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 Third Restated Agreement required the Company to transform the German subsidiary, VARTA Geratebatterie, from a GmbH
legal structure to a KgaA legal structure (“Transformation”) on or before December 30, 2002. Effective January 29, 2003, the agree-
ment was amended (“First Amendment”) to extend the deadline for Transformation to on or before June 30, 2003. Effective June 27,
2003, the Third Restated Agreement was amended (“Second Amendment”) (i) to re-define and permit acceleration, recording,
and incurrence of certain Restructuring Charges, as defined in the Third Restated Agreement, (ii) to extend the deadline for
Transformation to on or before March 31, 2004 and (iii) to consent to certain organizational restructurings (“Restructurings”),
including releases and substitutions of collateral pledges, and disregarding application of certain basket amounts as necessary to
effect the Restructurings.
In connection with the acquisition of Remington, the Third Restated Agreement was amended (“Third Amendment”) effective
September 30, 2003 to (i) permit the Remington acquisition (“Acquisition”) including issuance of $350,000 of senior subordinated
debt, increase the Dollar-denominated revolver by $20,000, decrease the Euro-denominated revolver by €10,000 and increase the
Dollar-denominated seven-year term facility by $50,000, (ii) permit incurrence of certain Restructuring Charges related to the
Acquisition, (iii) amend certain covenant ratios to allow for the effect of financing of the Acquisition, (iv) allow for organizational
restructurings related to the Acquisition including necessary releases and substitutions of collateral pledges, and (v) increase certain
covenant basket amounts to allow for operation of the resulting larger business entity.
The term facilities, as amended in the Third Amendment, provide for quarterly amortization over their remaining terms (using the
September 30, 2003 exchange rate of the Dollar to the Euro of 1.16618 to 1) totaling approximately $6,818 in 2004, $16,276 in 2005,
2006 and 2007, $66,441 in 2008 and $383,543 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, plus non-cash Restructuring
Charges, less certain operating expenditures including scheduled principal payments of long-term debt). The quarterly amortization
is reduced pro-rata 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 (N/A at September 30, 2003) or Dollar-denominated LIBOR plus a margin (2.25% to 3.50%) per annum (N/A at September
30, 2003). 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 (5.62% at September 30, 2003). 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 (N/A at September 30, 2003) or Dollar-
denominated LIBOR plus a fixed 3.75% margin per annum (4.87% at September 30, 2003). Interest on the Euro-denominated seven-
year term loan is Euro-denominated LIBOR plus a fixed 3.75% margin per annum (5.87% at September 30, 2003). The Company is
required to pay a commitment fee of 0.50% per annum on the average daily-unused portion of the revolving facilities. A fee (2.25%
to 3.50%) per annum (3.50% at September 30, 2003) is payable on the outstanding letters of credit, of which $6,005 were outstanding
at September 30, 2003. The Company also incurs a fee of 0.25% per annum of the average daily maximum amount available to be
drawn on each letter of credit issued. The margin on the revolving facilities, six-year amortizing term loan, and fees on outstanding
letters of credit may be adjusted if the Company’s leverage ratio, as defined, increases or decreases.
The Third Restated Agreement contains financial covenants with respect to borrowings, which include maintaining minimum
interest and fixed charge and maximum leverage ratios. In accordance with the Agreement, the limits imposed by such ratios
became more restrictive over time. In addition, the Third Restated Agreement restricts 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.
Notes to Consolidated Financial Statements
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)
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