Rayovac 2010 Annual Report Download - page 86

We may redeem all or a part of the 9.5% Notes, upon not less than 30 or more than 60 days notice at
specified redemption prices. Further, the indenture governing the 9.5% Notes (the “2018 Indenture”) requires us
to make an offer, in cash, to repurchase all or a portion of the applicable outstanding notes for a specified
redemption price, including a redemption premium, upon the occurrence of a change of control, as defined in
such indenture.
The 2018 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 2018 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 2018
Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the
amounts due under the 9.5% Notes. If any other event of default under the 2018 Indenture occurs and is
continuing, the trustee for the 2018 Indenture or the registered holders of at least 25% in the then aggregate
outstanding principal amount of the 9.5% Notes may declare the acceleration of the amounts due under those
notes.
At September 30, 2010, we were in compliance with all covenants under the 2018 Indenture.
The 9.5% Notes were issued at a 1.37% discount and were recorded net of the $10 million amount incurred.
The discount will be amortized as an adjustment to the carrying value of principal with a corresponding charge to
interest expense over the remaining life of the 9.5% Notes. During Fiscal 2010, we recorded $21 million of fees
in connection with the issuance of the 9.5% Notes. The fees are classified as Debt issuance costs and will be
amortized as an adjustment to interest expense over the remaining life of the 9.5% Notes.
12% Notes
On August 28, 2009, in connection with emergence from the voluntary reorganization under Chapter 11 and
pursuant to the Plan, we issued $218 million in aggregate principal amount of 12% Notes maturing August 28,
2019. Semiannually, at our option, we may elect to pay interest on the 12% Notes in cash or as payment in kind,
or “PIK”. PIK interest would be added to principal upon the relevant semi-annual interest payment date. Under
the Prior Term Facility, we agreed to make interest payments on the 12% Notes through PIK for the first three
semi-annual interest payment periods. As a result of the refinancing of the Prior Term Facility we are no longer
required to make interest payments as payment in kind after the semi-annual interest payment date of August 28,
2010. Effective with the payment date of August 28, 2010 we gave notice to the trustee that the interest payment
due February 28, 2011 would be made in cash. During Fiscal 2010, we reclassified $27 million of accrued
interest from Other long term liabilities to principal in connection with the PIK provision of the 12% Notes.
We may redeem all or a part of the 12% Notes, upon not less than 30 or more than 60 days notice, beginning
August 28, 2012 at specified redemption prices. Further, the indenture governing the 12% Notes requires us to
make an offer, in cash, to repurchase all or a portion of the applicable outstanding notes for a specified
redemption price, including a redemption premium, upon the occurrence of a change of control, as defined in
such indenture.
At September 30, 2010 and September 30, 2009, we had outstanding principal of $245 million and $218
million, respectively, under the 12% Notes.
The indenture governing the 12% Notes (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
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