| Senior and Other Debt | Note 5. Senior and Other Debt
Asia-Pacific Leasing Senior Credit Facility
Royal Wolf has a $133,627,000 (AUS$175,000,000) secured
senior credit facility, as amended, under a common terms deed
arrangement with the Australia and New Zealand Banking Group
Limited (“ANZ”) and Commonwealth Bank of Australia
(“CBA”) (the “ANZ/CBA Credit Facility”).
Under the common deed arrangement of the ANZ/CBA Credit Facility,
ANZ’s proportionate share of the borrowing capacity is
$80,176,000 (AUS$105,000,000) and CBA’s proportionate share
is $53,451,000 (AUS$70,000,000). The ANZ/CBA Credit Facility has
$95,448,000 (AUS$125,000,000) maturing on July 31, 2017 (Facility
A), and $38,179,000 (AUS$50,000,000) maturing on July 31, 2019
(Facility B).
Borrowings under the ANZ/CBA Credit Facility bear interest at
the bank bill swap interest rate in Australia (“BBSY”)
or New Zealand (“BKBM”), plus a margin of 1.10% - 2.10%
per annum on Facility A and 1.35% - 2.40% on Facility B, depending
on the net debt leverage ratio (“NDLR”), as defined.
The CBA proportionate share has a minimum margin that is 0.10%
higher than the ANZ proportionate share. At September 30, 2016, the
30-day and 90-day BBSY and BKBM were 1.665% and 1.79% and 2.215%
and 2.25%, respectively. The ANZ/CBA Credit Facility also includes
a $2,291,000 (AUS$3,000,000) sub-facility to, among other things,
facilitate direct and global payments using electronic banking
services. The ANZ/CBA Credit Facility, as amended, is subject to
certain financial and other customary covenants, including, among
other things, compliance with specified interest coverage and net
debt ratios based on earnings before interest, income taxes,
impairment, depreciation and amortization and other non-operating
costs and income (“EBITDA”) on a semi-annual basis and
that borrowings may not exceed a multiple of 3.5 times EBITDA, as
defined, through June 30, 2016, and 3.25 times EBITDA
thereafter.
At September 30, 2016, total borrowings and availability
under the ANZ/CBA Credit Facility totaled $82,487,000
(AUS$108,027,000) and $15,711,000 (AUS$20,576,000),
respectively. Of the total borrowings, $80,452,000
(AUS$105,362,000) is drawn under Facility A and $2,035,000
(AUS$2,665,000) is drawn under Facility B.
The above amounts were translated based upon the exchange
rate of one Australian dollar to $0.76358 U.S. dollar at
September 30, 2016.
North America Senior Credit Facility
The North America leasing (Pac-Van and Lone Star) and
manufacturing operations (Southern Frac) have a combined
$232,000,000 senior secured revolving credit facility, as amended,
with a syndicate led by Wells Fargo Bank, National Association
(“Wells Fargo”) that also includes HSBC Bank USA, NA,
the Private Bank and Trust Company, Capital One Business Credit
Corp. and OneWest Bank N.A. (the “Wells Fargo Credit
Facility”). The Wells Fargo Credit Facility, which matures on
September 7, 2017, effectively not only finances the
Company’s North American operations, but also the funding
requirements for the Series C Preferred Stock (see Note 3), the
term loan with Credit Suisse and the publicly-traded unsecured
senior notes (see below).
The Wells Fargo Credit Facility includes a $20,000,000 real
estate sub-facility to allow the borrowers (including GFNRC) to
acquire real estate as collateral. In addition, subject to certain
conditions, the amount that may be borrowed under the Wells Fargo
Credit Facility may increase by $20,000,000 to a maximum of
$252,000,000. The maximum amount of intercompany dividends that
Pac-Van and Lone Star are allowed to pay in each fiscal year to GFN
for the funding requirements of GFN’s senior and other debt
and the Series C Preferred Stock are (a) the lesser of $5,000,000
for the Series C Preferred Stock or the amount equal to the
dividend rate of the Series C Preferred Stock and its aggregate
liquidation preference and the actual amount of dividends required
to be paid to the Series C Preferred Stock; (b) the lesser of
$3,125,000 for the term loan with Credit Suisse or the actual
annual interest to be paid; and (c) $6,120,000 for the public
offering of unsecured senior notes or the actual amount of annual
interest required to be paid; provided that (i) the payment of such
dividends does not cause a default or event of default; (ii) each
of Pac-Van and Lone Star is solvent; (iii) excess
availability, as defined, is $5,000,000 or more under the Wells
Fargo Credit Facility; (iv) the fixed charge coverage ratio, as
defined, will be greater than 1.25 to 1.00; and (v) the dividends
are paid no earlier than ten business days prior to the date they
are due.
Borrowings under the Wells Fargo Credit Facility accrue
interest, at the Company’s option, either at the base rate,
plus 0.5% and a range of 1.00% to 1.50%, or the LIBOR rate, plus
1.0% and a range of 2.50% to 3.00%. Borrowings under the
$20,000,000 real estate sub-facility accrue interest, at the
Company’s option, either at the base rate, plus a range of
1.50% to 2.00%, or the LIBOR rate, plus a range of 3.0% to 3.50%.
The Wells Fargo Credit Facility contains, among other things,
certain financial covenants, including fixed charge coverage
ratios, and other covenants, representations, warranties,
indemnification provisions, and events of default that are
customary for senior secured credit facilities; including a
covenant that would require repayment upon a change in control, as
defined. At September 30, 2016, borrowings and availability under
the Wells Fargo Credit Facility totaled $193,104,000 and
$23,255,000, respectively.
Credit Suisse Term Loan
On March 31, 2014, the Company entered into a $25,000,000
facility agreement, as amended, with Credit Suisse (“Credit
Suisse Term Loan”) as part of the financing for the
acquisition of Lone Star and, on April 3, 2014, the Company
borrowed the $25,000,000 available to it. The Credit Suisse Term
Loan provides that the amount borrowed will bear interest at LIBOR
plus 7.50% per year, will be payable quarterly and that all
principal and interest will mature on July 1, 2017. In addition,
the Credit Suisse Term Loan is secured by a first ranking pledge
over substantially all shares of RWH owned by GFN U.S., requires a
certain coverage maintenance ratio in U.S. dollars based on the
value of the RWH shares and, among other things, that an amount
equal to six-months interest be deposited in an interest reserve
account pledged to secure repayment of all amounts borrowed. The
Company has repaid, prior to maturity, $15,000,000 of the
outstanding borrowings of the Credit Suisse Term Loan and, as of
September 30, 2016, $9,898,000 remained outstanding, net of
unamortized debt issuance costs of $102,000.
Senior Notes
The Company has outstanding publicly-traded senior notes (the
“Senior Notes”) in an aggregate principal amount of
$72,000,000 ($70,000,000, net of unamortized debt issuance costs of
$2,000,000 at September 30, 2016). The Senior Notes were issued in
minimum denominations of $25 and integral multiples of $25 in
excess thereof and pursuant to the First Supplemental Indenture
(the “First Supplemental Indenture”) dated as of June
18, 2014 by and between the Company and Wells Fargo, as trustee
(the “Trustee”). The First Supplemental Indenture
supplements the Indenture entered into by and between the Company
and the Trustee dated as of June 18, 2014 (the “Base
Indenture” and, together with the First Supplemental
Indenture, the “Indenture”). The Senior Notes bear
interest at the rate of 8.125% per annum, mature on July 31, 2021
and are not subject to any sinking fund. Interest on the Senior
Notes is payable quarterly in arrears on January 31, April 30,
July 31 and October 31, commencing on July 31, 2014.
The Senior Notes rank equally in right of payment with all of
the Company’s existing and future unsecured senior debt and
senior in right of payment to all of its existing and future
subordinated debt. The Senior Notes are effectively subordinated to
any of the Company’s existing and future secured debt, to the
extent of the value of the assets securing such debt. The Senior
Notes are structurally subordinated to all existing and future
liabilities of the Company’s subsidiaries and are not
guaranteed by any of the Company’s subsidiaries. The Company
may, at its option, prior to July 31, 2017, redeem the Senior Notes
in whole or in part upon the payment of 100% of the principal
amount of the Senior Notes being redeemed plus any additional
amount required by the Indenture. In addition, the Company may from
time to time redeem up to 35% of the aggregate outstanding
principal amount of the Senior Notes before July 31, 2017 with
the net cash proceeds from certain equity offerings at a redemption
price of 108.125% of the principal amount plus accrued and unpaid
interest. If the Company sells certain of its assets or experiences
specific kinds of changes in control, as defined, it must offer to
redeem the Senior Notes. The Company may, at its option, at any
time and from time to time, on or after July 31, 2017, redeem the
Senior Notes in whole or in part. The Senior Notes will be
redeemable at a redemption price initially equal to 106.094% of the
principal amount of the Senior Notes (and which declines each year
on July 31) plus accrued and unpaid interest to the date of
redemption. On and after any redemption date, interest will cease
to accrue on the redeemed Senior Notes.
The Indenture contains covenants which, among other things,
limit the Company’s ability to make certain payments, to pay
dividends and to incur additional indebtedness if the incurrence of
such indebtedness would cause the company’s consolidated
fixed charge coverage ratio, as defined in the Indenture, to be
below 2.0 to 1.0. The Senior Notes are listed on NASDAQ under the
symbol “GFNSL.”
Other
At September 30, 2016, other debt totaled $10,240,000.
The Company was in compliance with the financial covenants
under all its credit facilities as of September 30, 2016.
The weighted-average interest rate in the Asia-Pacific area
was 5.5% and 5.0% in FY 2016 and FY 2017, respectively; which does
not include the effect of translation, interest rate swap contracts
and options and the amortization of deferred financing
costs. The weighted-average interest rate in North America was
4.9% in both FY 2016 and FY 2017, respectively, which does not
include the effect of the amortization of deferred financing costs
and accretion of interest. |
