Rayovac 2007 Annual Report Download - page 56

54 SPECTRUM BRANDS | 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
Approximately $38,781 of fees and expenses incurred in
association with the Senior Credit Facilities have been capital-
ized and will be amortized over the term of the facilities. In
addition, in connection with the March 30, 2007 refi nancing,
approximately $15,651 of debt issuance costs associated with
the previously outstanding senior credit facilities were written
off and are included in Interest expense in the Consolidated
Statements of Operations for the fi scal year ended September 30,
2007. Approximately $11,649 of prepayment premiums in connec-
tion with repayment of the previously outstanding senior credit
facilities were included in interest expense in the Consolidated
Statements of Operations for the fi scal year ended September 30,
2007. In addition, approximately $1,285 of fees and expenses were
incurred in connection with the fourth amendment to the Compa-
ny’s senior credit facilities outstanding prior to the refi nancing
undertaken in Fiscal 2007. As a result of the refi nancing in Fiscal
2007, these fees and expenses were included in interest expense in
the Consolidated Statements of Operations for the fi scal year ended
September 30, 2007.
The Term Loan Facilities are subject to repayment according
to a scheduled amortization, with the fi nal payment of all
amounts outstanding, plus accrued interest, due on March 30,
2013. Beginning with the fi scal year ended September 30, 2007,
the Senior Credit Agreement provides for annual mandatory
prepayments, over and above the normal amortization as a
result of excess cash fl ow, as defi ned in the Senior Credit Agree-
ment. The Senior Credit Agreement also provides for other
mandatory prepayments, subject to certain exceptions and rein-
vestment provisions, of net proceeds as a result of certain events,
including, the issuance of debt, sales of certain assets above a
specifi ed threshold, receipt of proceeds from certain casualty
events and the issuance of equity interests by the Company or
any of its subsidiaries.
The Senior Credit Agreement contains fi nancial covenants
with respect to debt which include a maximum senior secured
leverage ratio. In accordance with the agreement, the limits
imposed by such ratio become more restrictive over time. In
addition, the Senior Credit Agreement contains customary
restrictive covenants, including, but not limited to, restrictions
on the Company’s ability to incur additional indebtedness, cre-
ate liens, make investments or specifi ed payments, give guaran-
tees, pay dividends, make capital expenditures and merge or
acquire or sell assets.
The Senior Credit Agreement also contains customary events
of default and is secured by substantially all of the Company’s
domestic assets pursuant to a Guarantee and Collateral Agree-
ment entered into on March 30, 2007.
The ABL Credit Facility includes a $60,000 U.S. Dollar Letter
of Credit subfacility and a $30,000 U.S. Dollar swingline loan
subfacility within the $225,000 overall facility amount. The
ABL Facility is subject to repayment with the fi nal payment of
all amounts outstanding, plus accrued interest, due on Septem-
ber 28, 2011. The ABL Facility provides for mandatory prepay-
ments of net proceeds to the extent the borrowing base is reduced
or in connection with sales of business assets.
The ABL Credit Agreement is secured by certain of the Com-
pany’s liquid assets, including, among other things, deposit
accounts and substantially all of the Company’s domestic trade
receivables and inventory and contains customary restrictive
covenants, including, but not limited to, restrictions on the
Company’s ability to incur additional indebtedness, create liens,
make investments or specifi ed payments, give guarantees, pay
dividends, make capital expenditures and merge or acquire or
sell assets.
As of September 30, 2007, the Company was in compliance
with all covenants associated with the Senior Credit Facilities.
Senior Subordinated Notes
Beginning on March 16, 2007, the Company conducted an
offer to exchange the entire $350,000 of outstanding principal
amount of its 8½% Senior Subordinated Notes due 2013 (the
“Existing Notes”) for the same aggregate principal amount of
Variable Rate Toggle Senior Subordinated Notes due 2013 (the
“New Notes”) pursuant to the terms of an exchange offer (the
“Exchange Offer”). The terms of the Exchange Offer further
provided that holders of Existing Notes who tendered their
Existing Notes for exchange following the expiration of a con-
sent solicitation period, which ended on March 29, 2007, would
receive a reduced principal amount of New Notes in exchange
for tendered Existing Notes. As of the expiration of the Exchange
Offer on April 13, 2007, holders of Existing Notes had tendered
$347,127 of Existing Notes, which were accepted by the Com-
pany, and exchanged, pursuant to the terms of the Exchange
Offer, for $347,012 of New Notes. As a result of the terms of the
Exchange Offer, the Company recorded a gain from early extin-
guishment of debt of $75 net of tax expense of $40 for the fi scal
year ended September 30, 2007. At September 30, 2007, $2,873
principal amount of Existing Notes remain outstanding.
In connection with the Exchange Offer, on March 30, 2007, the
Company and certain of its domestic subsidiaries, as guarantors,
entered into an indenture (the “Indenture”) with Wells Fargo
Bank, N.A., as trustee (the “Trustee”), governing the New Notes.
Approximately $3,903 of fees and expenses incurred in asso-
ciation with the Exchange Offer have been capitalized and will be
amortized over the term of the New Notes. In addition, in con-
nection with the Exchange Offer approximately $8,925 of debt
issuance costs associated with the Existing Notes were written off
and included in Interest expense in the Consolidated Statements
of Operations for the fi scal year ended September 30, 2007.