Rayovac 2009 Annual Report Download - page 76

Table of Contents
Index to Financial Statements
As of September 30, 2009, we had outstanding principal of approximately $218 million under the 12% Notes.
The indenture governing the 12% Notes, or the 2019 Indenture, contains customary covenants that limit, among other things, the incurrence of
additional indebtedness, payment of dividends on or redemption or repurchase of equity interests, the making of certain investments, expansion into
unrelated businesses, creation of liens on assets, merger or consolidation with another company, transfer or sale of all or substantially all assets, and
transactions with affiliates.
In addition, the 2019 Indenture provides for customary events of default, including failure to make required payments, failure to comply with certain
agreements or covenants, failure to make payments on or acceleration of certain other indebtedness, and certain events of bankruptcy and insolvency.
Events of default under the indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the amounts due
under the 12% Notes. If any other event of default under the 2019 Indenture occurs and is continuing, the trustee for the indenture or the registered holders
of at least 25% in the then aggregate outstanding principal amount of the 12% Notes, may declare the acceleration of the amounts due under those notes.
As of September 30, 2009, we were in compliance with all covenants under the 12% Notes and the 2019 Indenture. However, we are subject to
certain limitations as a result of our Fixed Charge Coverage Ratio under the 2019 indentures being below 2:1. Until the test is satisfied, we and certain of
our subsidiaries are limited in their ability to make significant acquisitions or incur significant additional senior credit facility debt beyond the Senior Credit
Facilities. We do not expect the inability to satisfy the Fixed Charge Coverage Ratio test to impair our ability to provide adequate liquidity to meet the
short−term and long−term liquidity requirements of our existing business, although no assurance can be given in this regard.
We currently believe that cash on hand, funds from our operations and availability under the ABL Revolving Credit Facility and other foreign credit
facilities will provide us with sufficient liquidity to fund our operations, capital expenditures and debt service obligations although no assurance can be
given in this regard.
Interest Payments and Fees
In addition to principal payments on our Senior Credit Facilities, we have annual PIK interest payment obligations of approximately $26 million in
the aggregate under our 12% Notes. We also incur interest on our borrowings under the Senior Credit Facilities, and such interest would increase
borrowings under the ABL Revolving Credit Facility if cash were not otherwise available for such payments. Interest on the 12% Notes is payable
semi−annually in arrears and interest under the Senior Credit Facilities is payable on various interest payment dates as provided in the Senior Credit
Agreement and the ABL Credit Agreement. Interest is payable in cash, except that interest under the 12% Notes is required to be paid for the first three
semi−annual payments dates by increasing the aggregate principal amount due under the subject notes. Thereafter, we may make the semi−annual
payments, by increasing the aggregate principal amount due under the notes subject to certain conditions. Based on amounts currently outstanding under the
Senior Credit Facilities, and using market interest rates and foreign exchange rates in effect as of September 30, 2009, we estimate annual interest payments
of approximately $121 million in the aggregate under our Senior Credit Facilities would be required assuming no further principal payments were to occur
and excluding any payments associated with outstanding interest rate swaps. We are required to pay certain fees in connection with the Senior Credit
Facilities and the L/C Facility. Such fees include a quarterly commitment fee of up to 1.00% on the unused portion of the ABL Revolving Credit Facility,
certain additional fees with respect to the letter of credit subfacility under the ABL Revolving Credit Facility and a quarterly commitment fee of 4.15% on
the L/C Facility.
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