Rayovac 2011 Annual Report Download - page 80

The Term Loan was issued at par with a maturity date of June 17, 2016. Subject to certain mandatory
prepayment events, the Term Loan is subject to repayment according to a scheduled amortization, with the final
payment of all amounts outstanding, plus accrued and unpaid interest, due at maturity. Among other things, the
Term Loan provides for interest on the Term Loan at a rate per annum equal to, at our option, the LIBO rate
(adjusted for statutory reserves) subject to a 1.00% floor plus a margin equal to 4.00%, or an alternate base rate
plus a margin equal to 3.00%.
The Term Loan contains financial covenants with respect to debt, including, but not limited to, a maximum
leverage ratio and a minimum interest coverage ratio, which covenants, pursuant to their terms, become more
restrictive over time. In addition, the Term Loan contains customary restrictive covenants, including, but not
limited to, restrictions on our 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.
Pursuant to a guarantee and collateral agreement, we and our domestic subsidiaries have guaranteed our
respective obligations under the Term Loan and related loan documents and have pledged substantially all of our
respective assets to secure such obligations. The Term Loan also provides for customary events of default,
including payment defaults and cross-defaults on other material indebtedness.
We incurred approximately $11 million of fees during Fiscal 2011 in connection with the Term Loan. The
fees are classified as Debt issuance costs within the Consolidated Statements of Financial Position included in
this Annual Report on Form 10-K and are amortized as an adjustment to interest expense over the remaining life
of the Term Loan. In connection with the refinancing, included in Fiscal 2011 Interest expense are cash charges
of approximately $5 million and accelerated amortization of portions of the unamortized discount and
unamortized Debt issuance costs totaling approximately $24 million. In connection with voluntary prepayments
of $220 million of the Term Loan during Fiscal 2011, we recorded cash charges of approximately $1 million and
accelerated amortization of portions of the unamortized discount and unamortized Debt issuance costs totaling
approximately $8 million as an adjustment to increase interest expense.
At September 30, 2011, we were in compliance with all covenants under the Senior Credit Agreement.
9.5% Notes
At both September 30, 2011 and September 30, 2010, we had outstanding principal of $750 million under
the 9.5% Notes maturing June 15, 2018. Subsequent to September 30, 2011 we issued an additional $200 million
under the 9.5% Notes.
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 of the Company,
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.
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