Supercuts 2011 Annual Report Download - page 70

Table of Contents
from 1.5x to 1.3x, amending certain definitions, including EBITDA and Fixed Charges, and limiting the Company's Restricted Payments to
$20 million if the Company's Leverage Ratio is greater than 2.0x. In addition, the amendments to the Fourth Amended and Restated Credit
Agreement reduced the borrowing capacity of the revolving credit facility from $350.0 to $300.0 million and the amendments to the Restated
Private Shelf Agreement incorporated a risk based capital fee calculated on the daily average outstanding principal amount equal to an annual
rate of 1.0 percent which commences one year after the effective date of the amendment.
Fiscal Year 2009
During fiscal year 2009, we completed a $85 million term loan that matures in July 2012. The monthly interest payments are based on a
one-month LIBOR plus a 1.75 percent spread. The term loan includes customary financial covenants including a leverage ratio, fixed charge
ratio and minimum net equity test. We used the proceeds from the term loan to pay down our revolving line of credit facility.
Other Financing Arrangements
Private Shelf Agreement
At June 30, 2011 and 2010, we had $133.6 and $174.1 million, respectively, in unsecured, fixed rate, senior term notes outstanding under a
Private Shelf Agreement. The notes require quarterly payments, and final maturity dates range from June 2013 through December 2017. The
interest rates on the notes range from 6.69 to 8.50 percent as of June 30, 2011, and range from 5.65 to 8.39 percent as of June 30, 2010.
The Private Shelf Agreement includes financial covenants including debt to earnings before interest, taxes, depreciation and amortization
(EBITDA) ratios, fixed charge coverage ratios and minimum net equity tests (as defined within the Private Shelf Agreement), as well as other
customary terms and conditions. The maturity date for the debt may be accelerated upon the occurrence of various Events of Default, including
breaches of the agreement, certain cross-default situations, certain bankruptcy related situations, and other customary events of default.
In July 2009, the Company amended the Restated Private Shelf Agreement. The amendments included increasing the Company's minimum
net worth covenant from $675 to $800 million, lowering the fixed charge coverage ratio requirement from 1.5x to 1.3x, amending certain
definitions, including EBITDA and Fixed Charges, limiting the Company's Restricted Payments to $20 million if the Company's Leverage Ratio
is greater than 2.0x and the addition of a risk based capital fee calculated on the daily average outstanding principal amount equal to an annual
rate of 1.0 percent that commences one year after the amendment date. During fiscal year 2010, the net proceeds from the convertible senior
notes and common stock issuances in July 2009 were utilized in part to repay $30.0 million of senior term notes under the Private Shelf
Agreement.
Private Placement Senior Term Notes
On June 29, 2009, the Company entered into a prepayment amendment on the private placement senior term notes whereby the Company
negotiated to prepay the notes with a premium over the principal amount that was less than the make-whole premium that would otherwise be
payable upon redemption. During fiscal year 2010, the net proceeds from the convertible senior notes and common stock issuances in July 2009
were utilized to repay the remaining outstanding private placement senior term notes totaling $267.0 million.
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