Sunbeam 2008 Annual Report Download - page 49

During February 2007, the Company completed a registered public offering for $650 aggregate principal amount of 7 1/2% Senior
Subordinated Notes due 2017 (the “Senior Notes”) and received approximately $637 of net proceeds. Of these proceeds, approximately $195
was used to purchase the entire principal amount outstanding of the Company’s 9 3/4% Senior Subordinated Notes due 2012 (the “Senior
Subordinated Notes”) plus the tender premium and accrued interest. As a result of the purchase of Senior Subordinated Notes, during 2007
the Company recorded a $15.3 loss on the extinguishment of the Senior Subordinated Notes. This loss is primarily comprised of a $10.1
tender premium; a loss of $4.5 related to the termination of $105 notional amount of interest rate swaps that were designated as fair value
hedges against the Senior Subordinated Notes; the write off of $3.7 of deferred debt issuance costs; and the recognition of $3.7 of deferred
gains that resulted from previously terminated interest rate swaps. At December 31, 2008 the fair value of the Senior Notes was
approximately $429.
The Note issued in connection with the Pure Fishing acquisition (see Note 3) bears annual interest at 2.0% and is payable monthly.
The fair value of the Note at December 31, 2008 is approximately $70. 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.
In connection with the Acquisition, the Company assumed K2’s 5% Convertible Debentures due June 2010 (the “Debentures”).
The Debentures can be called by the Company at a stipulated premium that began in June 2008. Upon conversion, the holders of the
Debentures are entitled to receive the same merger consideration as received by the K2 shareholders as a result of the Acquisition
(see Note3).
Senior Credit Facility
At December 31, 2008, the Facility consists of Term Loans, with payments due through 2012 and bear interest based on three-month
LIBOR plus an applicable margin; and a revolving credit facility which matures in 2010 and bears interest at LIBOR or Prime Rate, plus an
applicable margin. At December 31, 2008, the annual commitment fee on unused balances was 0.375%. The weighted average interest rate
on the Facility was 3.5% at December 31, 2008.
Subsequent to December 31, 2008, the Company entered into an amendment to the Facility whereby a successor administrative
agent was appointed and a certain revolving lender’s commitment in the revolving credit facility was released and availability under the
Facility was reduced accordingly. Additionally, the Company voluntarily decreased the commitments under the revolving credit facility by
$20 bringing the total amount available to $185. This reduction was applied on a pro rata basis among the existing revolving lenders.
Securitization Facility
The Company has maintained a $250 receivables purchase agreement since 2006, which is subject to annual renewal by both
parties, bears interest at a margin over the commercial paper rate and is accounted for as a borrowing. Under the Securitization Facility,
substantially all of the Company’s Outdoor Solutions, Consumer Solutions and Branded Consumables domestic 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 drawn upon and repaid as needed to fund general
corporate purposes. At December 31, 2008, the Company’s Securitization Facility was fully utilized with outstanding borrowings totaling
$250. In July 2008, the Company entered into an amendment to the Securitization Facility that extended it for another year until July 2009.
Following the renewal, the borrowing rate margin is 150 basis points and the unused line fee is 0.50% per annum. The Securitization Facility
is reflected as a short-term borrowing on the Company’s balance sheet because of its annual term.
Non-U.S. Borrowings
Asof December 31, 2008 and 2007, non-U.S. borrowings consisted of the Foreign Senior Debt of $26.9 and $33.9, respectively; and
amounts borrowed under various foreign credit lines and facilities totaling $32.1 and $34.1, respectively. Certain of these foreign credit lines
are secured by certain non-U.S. subsidiaries’ inventory and/or accounts receivable.
Debt Covenants
The Facility and the Foreign Senior Debt contain certain restrictions on the conduct of the Company’s business, including, among
other restrictions: incurring debt; disposing of certain assets; making investments; exceeding certain agreed upon capital expenditures; cre-
ating or suffering liens; completing certain mergers; consolidations and sales of assets and with permitted exceptions; acquisitions; declaring
dividends; redeeming or prepaying other debt; and certain transactions with affiliates. The Facility and the Foreign Senior Debt also include
financial covenants that require the Company to maintain certain leverage and interest coverage ratios.
The Facilityand the Foreign Senior Debt also contain a covenant that restricts the Company and its subsidiaries from making certain
“restricted payments” (any dividend or other distribution, whether in cash, securities or other property, with respect to any stock or stock
equivalents of the Company or any subsidiary), except that:
• the Company may declare and make dividend payments or other distributions payable in common stock;
• the Company may repurchase shares of its own stock (provided certain financial and other conditions are met); and
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated)
47