| Debt | NOTE 14 – DEBT
Long-term debt consisted of the following:
July 25, 2015 April 25, 2015 July 26, 2014
New ABL Facility, maturing in 2018 $ 69,400 $ 24,200 $ 71,900
New Term Loan, maturing in 2019 142,100 142,462 142,681
New Term Loan Original Issue Discount (2,045 ) (2,153 ) (2,352 )
Deferred Cash Payment Obligations, maturing in 2019 18,024 17,684 16,577
Total debt 227,479 182,193 228,806
Less: Current maturities (70,844 ) (25,644 ) (72,475 )
Total long-term debt $ 156,635 $ 156,549 $ 156,331
ABL Facility
On June 11, 2013, the Company entered into a Loan Agreement
(the “Asset-Based Credit Agreement”) by and among the
Company, Bank of America, N.A, as Agent, SunTrust Bank, as
Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and SunTrust Robinson Humphrey, Inc., as Joint Lead
Arrangers and Bookrunners, and the Lenders that are party to the
Asset-Based Credit Agreement (the “Asset-Based
Lenders”). In the third quarter of fiscal 2015, the Company
amended the Asset-Based Credit Agreement facility. The main purpose
for the amendment was to provide the Company additional flexibility
in its execution of certain restructuring actions by increasing the
cap on the amount that may be added back under the definition of
earnings before interest, taxes, depreciation, and amortization
(“EBITDA”) for non-recurring, unusual or extraordinary
charges, business optimization expenses or other restructuring
charges or reserves and cash expenses relating to earn outs or
similar obligations.
Under the Asset-Based Credit Agreement, the Asset-Based Lenders
agreed to provide a revolving senior secured asset-based credit
facility (the “New ABL Facility”) in an aggregate
principal amount of $175,000. As of August 7, 2015, the
aggregate commitments were permanently reduced, at the election of
the Company, by $50,000, from $175,000 to $125,000 (see Note 19-
Subsequent Events). Outstanding amounts under the New ABL Facility
will bear interest at a rate per annum equal to, at the
Company’s election: (1) a base rate (equal to the
greatest of ( a b c
The effective interest rate under the New ABL Facility for the
three months ended July 25, 2015 was 6.14%, which includes
amortization of loan origination fees of $295 and commitment fees
on unborrowed funds of $153. As of July 25, 2015, the
outstanding balance on the New ABL Facility was $69,400, which was
reflected as currently maturing, long-term debt in the accompanying
condensed consolidated balance sheets.
The New ABL Facility will mature on June 11, 2018. The Company
may prepay advances under the New ABL Facility in whole or in part
at any time without penalty or premium. The Company will be
required to make specified prepayments upon the occurrence of
certain events, including: (1) the amount outstanding on the
New ABL Facility exceeding the Borrowing Base (as determined in
accordance with the terms of the New ABL Facility), and
(2) the Company’s receipt of net cash proceeds of any
sale or disposition of assets that are first priority collateral
for the New ABL Facility.
Pursuant to a Guaranty and Collateral Agreement dated as of
June 11, 2013 (the “New ABL Security Agreement”),
the New ABL Facility is secured by a first priority security
interest in substantially all assets of the Company and the
guarantor subsidiaries. Under an intercreditor agreement between
the Asset-Based Lenders and the Term Loan Lenders, as defined and
described below, the Asset-Based Lenders have a first priority
security interest in substantially all working capital assets of
the Company and the guarantor subsidiaries, and a second priority
security interest in all other assets, subordinate only to the
first priority security interest of the New Term Loan Lenders in
such other assets.
The Asset-Based Credit Agreement contains customary events of
default and financial, affirmative and negative covenants,
including but not limited to a springing financial covenant
relating to the Company’s fixed charge coverage ratio and
restrictions on indebtedness, liens, investments, asset
dispositions and dividends and other restricted payments.
Term Loan
Also on June 11, 2013, the Company entered into a Credit
Agreement (the “New Term Loan Credit Agreement”) among
the Company, Credit Suisse AG, as Administrative Agent and
Collateral Agent, and the Lenders defined in the New Term Loan
Credit Agreement (the “Term Loan Lenders”). In the
third quarter of fiscal 2015, the Company amended the New Term Loan
Credit Agreement. The main purpose for the amendment was to provide
the Company additional flexibility in its execution of certain
restructuring actions by increasing the cap on the amount that may
be added back under the definition of consolidated EBITDA for
non-recurring, unusual or extraordinary charges, business
optimization expenses or other restructuring charges or reserves
and cash expenses relating to earn outs or similar obligations.
Under the New Term Loan Credit Agreement, the Term Loan Lenders
agreed to make a term loan (the “New Term Loan”) to the
Company in aggregate principal amount of $145,000, including an
original issue discount of $2,900. The outstanding principal amount
of the New Term Loan will bear interest at a rate per annum equal
to the applicable LIBOR rate (with a 1% floor) plus 8.50%, or the
base rate plus a margin of 7.50%. Interest on loans under the New
Term Loan Credit Agreement bearing interest based upon the base
rate will be due quarterly in arrears, and interest on loans
bearing interest based upon the LIBOR Rate will be due on the last
day of each relevant interest period or, if sooner, on the
respective dates that fall every three months after the beginning
of such interest period.
The effective interest rate under the term loan credit facility for
the three months ended July 25, 2015 was 10.64%, which
includes amortization of loan origination fees of $302 and original
issue discount amortization of $108. As of July 25, 2015, the
outstanding balance on the New Term Loan Credit Agreement was
$140,055, net of the unamortized original issue discount. Of this
amount, $1,444 was reflected as currently maturing, long-term debt
in the accompanying condensed consolidated balance sheets. The
original issue discount is being amortized as additional interest
expense on a straight-line basis over the life of the New Term
Loan.
The New Term Loan matures on June 11, 2019. The New Term Loan
Credit Agreement requires prepayments at specified levels upon the
Company’s receipt of net proceeds from certain events,
including: (1) certain dispositions of property, divisions,
business units or business lines; and (2) other issuances of
debt other than Permitted Debt (as defined in the New Term Loan
Credit Agreement). The New Term Loan Credit Agreement also requires
prepayments at specified levels from the Company’s excess
cash flow. The Company is also permitted to voluntarily prepay the
New Term Loan in whole or in part. Any prepayments are to be made
at par, plus an early payment fee calculated in accordance with the
terms of the New Term Loan Credit Agreement, as amended, if prepaid
prior to October 31, 2016.
Pursuant to a Guarantee and Collateral Agreement dated as of
June 11, 2013 (the “New Term Loan Security
Agreement”), the Term Loan is secured by a first priority
security interest in substantially all assets of the Company and
the guarantor subsidiaries. Under an intercreditor agreement
between the Asset-Based Lenders and the Term Loan Lenders, the Term
Loan Lenders have a second priority security interest in
substantially all working capital assets of the Company and the
subsidiary guarantors, subordinate only to the first priority
security interest of the Asset-Based Lenders in such assets, and a
first priority security interest in all other assets.
The New Term Loan Credit Agreement contains customary events of
default and financial, affirmative and negative covenants,
including but not limited to quarterly financial covenants,
relating to the Company’s (1) minimum interest coverage
ratio and (2) maximum net total leverage ratio and
restrictions on indebtedness, liens, investments, asset
dispositions and dividends and other restricted payments.
The New Term Loan required the Company to enter into an interest
rate hedge, within 90 days of the Effective Date, in an amount
equal to at least 50% of the aggregate principal amount outstanding
under the New Term Loan. The purpose of the interest rate hedge is
to effectively subject a portion of the New Term Loan to a fixed or
maximum interest rate. As such, the Company entered into an
interest rate swap agreement on August 27, 2013 that
effectively fixes the interest payments on a portion of the
Company’s variable-rate debt. The swap, which has a
termination date of September 11, 2016, effectively fixes the
LIBOR-based interest rate on the debt in the amount of the notional
amount of the swap at 9.985%. The notional amount of the swap at
July 25, 2015 was $72,500. The fair value of the
derivative increased as of the end of first quarter short year 2015
compared to the end of fiscal 2015 by $58 and a gain of $58 was
recognized for the quarter. The gain for the first quarter of short
year 2015 was recorded in “Change in fair value of interest
rate swap” on the condensed consolidated statement of
operations.
Under this swap agreement, the Company will pay the counterparty
interest on the notional amount at a fixed rate per annum of 1.485%
and the counterparty will pay the Company interest on the notional
amount at a variable rate per annum equal to the greater of 1-month
LIBOR or 1.0%. The 1-month LIBOR rate applicable to this agreement
was 0.189% at July 25, 2015. The notional amounts do not
represent amounts exchanged by the parties, and thus are not a
measure of exposure of the Company. The amounts exchanged are
normally based on the notional amounts and other terms of the
swaps. The variable rates are subject to change over time
as 1-month
The company has estimated the fair value of its Term Loan (valued
under Level 3) as of July 25, 2015 approximated the carrying
value of $142,100.
Deferred Cash Payment Obligations
In connection with the Reorganization Plan, general unsecured
creditors are entitled to receive a deferred cash payment
obligation of 20% of the allowed claim in full settlement of the
allowed unsecured claims. Such payment accrues quarterly
paid-in-kind interest of 5% per annum beginning on the
Effective Date. Trade unsecured creditors had the ability to make a
trade election to provide agreed upon customary trade terms. If the
election was made, those unsecured trade creditors received a
deferred cash payment obligation of 45% of the allowed claim in
full settlement of those claims. As of the Effective Date, the
deferred payment obligations under the trade elections began to
accrue quarterly paid-in-kind interest of 10% per annum. All
deferred cash payment obligations, along with interest
paid-in-kind, are payable in December 2019.
The Company’s reconciliation of general unsecured claims was
completed in fiscal 2015. As of July 25, 2015, the
Company’s deferred payment obligations were $18,024, of which
$3,045 represents a 20% recovery for the creditors and $12,070
represents a 45% recovery for the creditors with the remaining
$2,909 related to accrued paid-in-kind interest. |
