Rayovac 2006 Annual Report Download - page 93

SPECTRUM BRANDS | 2006 ANNUAL REPORT 81
As previously disclosed, the Company has engaged advisors to
assist with a sale of various assets in order for the Company to
sharpen its focus on strategic growth businesses, reduce its out-
standing indebtedness and maximize long-term shareholder
value. In connection with this undertaking, the Company has
entered into discussions to dispose of certain of its assets. The
Company currently expects that any such sale would be consum-
mated during the second quarter of fi scal 2007. Proceeds from
the sale will be used to reduce the Company’s outstanding debt.
See Note 18, Subsequent Events, for additional information
regarding this divestiture.
The Company’s senior credit facilities (the “Senior Credit
Facilities”) include aggregate facilities of $1,444,351 consisting of a
$604,827 U.S. Dollar Term Loan, a €106,063 Term Loan (USD
$134,721 at September 30, 2006), a Tranche B €261,624 Term
Loan (USD $332,315 at September 30, 2006), a Canadian Dollar
$80,548 Term Loan (USD $72,488 at September 30, 2006) and a
revolving credit facility of $300,000 (the “Revolving Credit
Facility”). Approximately $26,200 was outstanding under the
Revolving Credit Facility at September 30, 2006. The Revolving
Credit Facility includes foreign currency sublimits equal to the U.S.
Dollar equivalent of €25,000 for borrowings in Euros, the U.S.
Dollar equivalent of £10,000 for borrowings in Pounds Sterling and
the equivalent of borrowings in Chinese Yuan of $35,000.
Approximately $221,224 remains available under the Revolving
Credit Facility as of September 30, 2006, net of approximately
$52,576 of outstanding letters of credit.
The interest and fees per annum are calculated on a 365-day
year basis for Base Rate loans and loans denominated in Pounds
Sterling. For all other denominations, interest and fees per annum
are calculated on the basis of a 360-day year. The interest rates per
annum applicable to the Senior Credit Facility are the Eurocurrency
Rate plus the Applicable Margin, or at the Company’s option in the
case of advances made in U.S. Dollars, the Base Rate plus the
Applicable Margin. The fees associated with these facilities were
capitalized and are being amortized over the term of the facilities.
In addition to principal payments, the Company is required to
pay a quarterly commitment fee of 0.50% on the unused portion
of the Revolving Credit Facility.
The aggregate scheduled maturities of debt as of September 30,
2006 are as follows:
2007 $ 42,713
2008 9,575
2009 8,939
2010 8,711
2011 242,172
Thereafter 1,965,061
$2,277,171
Aggregate capitalized lease obligations included in the
amounts above are payable in installments of $958 in 2007,
$891 in 2008, $665 in 2009, $437 in 2010, $380 in 2011, and
$10,591 thereafter.
The Senior Credit Facilities contain fi nancial covenants with
respect to borrowings, which include maintaining minimum
interest coverage and maximum leverage ratios. In accordance
with the Senior Credit Facilities, the limits imposed by such
ratios become more restrictive over time. In addition, the Senior
Credit Facilities restrict the Company’s ability to, among other
things, incur additional indebtedness, create liens, make invest-
ments or specifi ed payments, give guarantees, pay dividends,
make capital expenditures and enter into a merger or acquisition
or sell assets. Indebtedness under these facilities (i) is secured by
substantially all of the Company’s assets, and (ii) is guaranteed by
certain of the Company’s subsidiaries.
The terms of both the $350 million 81
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2% and $700 million
73
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8% Senior Subordinated Notes permit the holders to require
us to repurchase all or a portion of the notes in the event of a
change of control. In addition, the terms of the notes restrict or
limit the Company’s ability to, among other things: (i) pay divi-
dends or make other restricted payments; (ii) incur additional
indebtedness and issue preferred stock; (iii) create liens; (iv)
enter into mergers, consolidations, or sales of all or substantially
all of the Company assets; (v) make asset sales; (vi) enter into
transactions with affi liates; and (vii) issue or sell capital stock of
the Company’s wholly owned subsidiaries. Payment obligations
of the notes are fully and unconditionally guaranteed on a joint
and several basis by all of the Company’s domestic subsidiaries.
On December 12, 2005, the Company reached agreement
with its creditors to amend its leverage and interest charge cove-
nants associated with the Senior Credit Facilities for subsequent
periods. In connection with this amendment, interest costs on
the Company’s existing U.S. Dollar and Canadian Dollar term
loans increased by 25 basis points as the spread between the base
rate and the rate paid by the Company increased from 2.00% to
2.25%. In connection with the amendment, the Company
incurred approximately $2,100 of fees which are being amor-
tized over the remaining term of the Senior Credit Facilities.
On May 9, 2006, the Company reached agreement with its
senior lenders to amend the consolidated leverage ratio and con-
solidated interest coverage ratio covenants effective for the
period ended April 2, 2006 and subsequent periods. Under the
amendment, the limits imposed by such ratios become more
restrictive over time. As a result of this amendment, interest
costs on the Company’s existing Euro term loan increased by 25
basis points as the spread between the market rate and the
Company’s rate increased from 2.75% to 3.00%. Interest costs
on the Company’s existing U.S. Dollar, Canadian Dollar and
2006 Form 10-K Annual Report
Spectrum Brands, Inc.