Sunbeam 2007 Annual Report Download - page 58

In connection with the aforementioned Pure Fishing acquisition completed on April 6, 2007, the Company
issued a $100 million five-year subordinated note (the “Note”) with a 2% coupon and a warrant exercisable into
approximately 2.2 million shares of Jarden common stock with an initial exercise price of $45.32 per share
(subject to certain adjustments contained therein). The Note is not prepayable at the Company’s option. The
holder of the Note has the option to require redemption of the Note if after one year from issuance the closing
price of Jarden’s common stock exceeds $45.32 per share for a period of three consecutive trading days.
On August 28, 2006, the Company completed a $250 million receivables purchase agreement, which is
subject to annual renewal, bears interest at a margin over the commercial paper rate and is accounted for as a
borrowing. Under this agreement, substantially all of the Company’s Outdoor Solutions and Consumer Solutions
accounts receivable are sold to a special purpose entity, Jarden Receivables, LLC (“JRLLC”), which is a wholly-
owned consolidated subsidiary of the Company. JRLLC funds these purchases with borrowings under a loan
agreement, secured by the accounts receivable. There is no recourse to the Company for the unpaid portion of
any loans under this loan agreement. The securitization facility is reflected as a short-term borrowing on the
Company’s balance sheet because the term of the loan agreement, subject to annual renewals, runs until August,
2008. The facility will be drawn upon and repaid as needed to fund general corporate purposes. In contemplation
of this securitization transaction, the Company executed an amendment to its senior credit facility, dated
August 23, 2006, which permitted the securitization facility, among other things.
In connection with the Acquisition, additional subsidiaries of the Company under the Branded Consumables
segment as well as K2 began to sell their respective receivables to JRLLC. As of December 31, 2007 the
Company’s securitization facility was fully utilized with outstanding borrowings totaling $250 million, including
the $185 million described above in connection with the Acquisition. The Company is required to pay
commitment fees of 0.25% per annum on any unused balance of the $250 million securitization facility. The
securitization facility is subject to annual renewal by both parties. The Company currently intends to renew this
securitization facility as it did in 2007; however, should it not be renewed, the Company will seek alternative
financing.
Certain foreign subsidiaries of the Company maintain working capital lines of credits with their respective
local financial institutions for use in operating activities. At December 31, 2007, the aggregate amount available
under these lines of credit totaled approximately $59 million.
The Company was not in default of any of its debt covenants as of December 31, 2007.
The Company maintains cash balances which at times may be significant, at various international
subsidiaries. At December 31, 2007, approximately $71 million of this may be subject to certain availability
restrictions. The Company does not believe that such restrictions will materially affect the Company’s liquidity,
nor does the Company rely on these cash balances to fund operations outside of the country where the cash was
generated.
In November 2007, the Company’s Board of Directors authorized a new stock repurchase program that
would allow the Company to repurchase up to $100 million of its common stock. In 2007, the Company
repurchased approximately 1.1 million shares of its common stock under this plan at an average price of $26.58
per share.
In November 2006, the Company completed an equity offering which included four million newly issued
shares of common stock that resulted in net proceeds to the Company of approximately $139 million. The
proceeds were used to pay down outstanding loans under its senior credit facility and securitization borrowings.
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