Debt, Short Term Line Of Credit And Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2014 |
Debt, Short Term Line Of Credit And Capital Lease Obligations [Abstract] | ' |
Debt, Short Term Line Of Credit And Capital Lease Obligations | ' |
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CAI INTERNATIONAL, INC. |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
(6) Debt, Short Term Line of Credit and Capital Lease Obligations |
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Debt |
Details of the Company’s debt as of September 30, 2014 and December 31, 2013 were as follows (dollars in thousands): |
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| | 30-Sep-14 | | 31-Dec-13 | | |
| | Outstanding | | Average | | Outstanding | | Average | | Agreement |
Reference | | Current | | Long-term | | Interest | | Current | | Long-term | | Interest | | Terminates |
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(a)(i) | Revolving credit facility | $ | - | | $ | 287,000 | | 1.90% | | $ | - | | $ | 235,000 | | 1.90% | | Mar-18 |
(a)(ii) | Revolving credit facility - Rail | | - | | | 61,769 | | 1.90% | | | - | | | 54,469 | | 2.40% | | Jul-19 |
(b)(i) | Term loan | | 1,800 | | | 25,950 | | 2.20% | | | 8,400 | | | 27,300 | | 2.30% | | Apr-18 |
(b)(ii) | Term loan | | 7,500 | | | 106,250 | | 2.50% | | | 7,500 | | | 111,875 | | 2.50% | | Dec-16 |
(b)(iii) | Term loan | | 9,940 | | | 111,865 | | 1.90% | | | 9,940 | | | 119,320 | | 2.20% | | Apr-17 |
(c) | Senior secured notes | | 8,240 | | | 78,280 | | 4.90% | | | 8,240 | | | 86,520 | | 4.90% | | Sep-22 |
(d) | Asset backed notes | | 40,000 | | | 292,875 | | 3.40% | | | 40,000 | | | 322,875 | | 3.40% | | Mar-28 |
(e) | Collateralized financing obligations | | 38,907 | | | 82,872 | | 1.00% | | | - | | | 101,269 | | 1.00% | | Jun-19 |
(f) | Term loans held by VIE | | 1,829 | | | 8,474 | | 2.60% | | | - | | | - | | - | | Jun-19 |
(g) | Short term line of credit | | 75,000 | | | - | | 1.50% | | | - | | | - | | - | | May-15 |
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| Total Debt | $ | 183,216 | | $ | 1,055,335 | | | | $ | 74,080 | | $ | 1,058,628 | | | | |
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(a)Revolving Credit Facilities |
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Revolving credit facilities consist of the following: |
(i) On March 15, 2013, the Company entered into a Third Amended and Restated Revolving Credit Agreement with a syndicate of banks to finance the acquisition of container rental equipment and for general working capital purposes. As of September 30, 2014, the maximum commitment under the revolving credit facility was $760.0 million. The revolving credit facility may be increased up to a maximum of $960.0 million, in accordance with the terms of the agreement, so long as no default or event of default exists either before or immediately after giving effect to the increase. There is a commitment fee on the unused amount of the total commitment, payable quarterly in arrears. The revolving credit facility provides that swing line loans (short-term borrowings of up to $10.0 million in the aggregate that are payable within 10 business days or at maturity date, whichever comes earlier) and standby letters of credit (up to $15.0 million in the aggregate) will be available to the Company. These credit commitments are part of, and not in addition to, the total commitment provided under the revolving credit facility. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the revolving credit agreement. In addition to various financial and other covenants, the Company’s revolving credit facility also includes certain restrictions on the Company’s ability to incur other indebtedness or pay dividends to stockholders. As of September 30, 2014, the Company was in compliance with the terms of the revolving credit facility. |
As of September 30, 2014, the Company had $472.9 million in availability under the revolving credit facility (net of $0.1 million in letters of credit) subject to its ability to meet the collateral requirements under the agreement governing borrowing under the facility. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default. |
The revolving credit facility, including any amounts drawn on the facility, is secured by substantially all of the assets of the Company (not otherwise used as security for its other credit facilities) including the equipment owned by the Company, the underlying leases thereon and the Company’s interest in any money received under such contracts. |
(ii) On July 25, 2014, the Company and CAI Rail Inc. (CAI Rail), a wholly-owned subsidiary of the Company, entered into an Amended and Restated Revolving Credit Agreement with a consortium of banks to finance the acquisition of railcars. As of September 30, 2014, the maximum credit commitment under the revolving credit facility was $250.0 million. CAI Rail’s revolving credit facility may be increased up to a maximum of $325.0 million, in accordance with the terms of the agreement, subject to certain conditions. |
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CAI INTERNATIONAL, INC. |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
Borrowings under the credit facility bear interest at a variable rate. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the revolving credit agreement. For domestic base rate loans, the interest rate is equal to the highest of (i) the daily federal funds open rate as published by the Federal Reserve Bank of New York and (ii) the administrative agent’s published “Reference Rate”, in each case plus a margin based on certain conditions. |
As of September 30, 2014, CAI Rail had $188.2 million in availability under the revolving credit facility, subject to its ability to meet the collateral requirements under the agreement governing the facility. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default. |
The agreement governing CAI Rail’s revolving credit facility contains various financial and other covenants. As of September 30, 2014, CAI Rail was in compliance with the terms of the revolving credit facility. CAI Rail’s revolving credit facility, including any amounts drawn on the facility, is secured by all of the assets of CAI Rail and is guaranteed by the Company. |
(b)Term Loans |
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Term loans consist of the following: |
(i) On March 22, 2013, the Company entered into a $30.0 million five-year loan agreement with Development Bank of Japan (DBJ). The loan is payable in 19 quarterly installments of $0.5 million starting July 31, 2013 and a final payment of $21.5 million on April 30, 2018. The loan bears interest at a variable rate based on LIBOR. As of September 30, 2014, the loan had a balance of $27.8 million. |
(ii) On December 20, 2010, the Company entered into a term loan agreement with a consortium of banks. Under this loan agreement, the Company was eligible to borrow up to $300.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of the Company’s wholly-owned foreign subsidiaries. The loan agreement is an amortizing facility with a term of six years. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the term loan agreement. The loan bears a variable interest rate based on LIBOR for Eurodollar loans, and Base Rate for base rate loans. The Base Rate is defined as the highest of (i) the federal funds rate plus 1/2 of 1.0%, (ii) the prime rate (as published in The Wall Street Journal), and (iii) the Eurodollar rate (for three-month loans) plus 1.0%. |
On March 28, 2013, the term loan agreement was amended to: (a) reduce the principal balance of the loan from $249.4 million to $125.0 million through payment of $124.4 million from the proceeds of the $229.0 million fixed-rate asset-backed notes issued by the Company’s indirect wholly-owned subsidiary, CAL Funding II Limited (see Note 6(d) below); (b) reduce the interest rate on the remaining loan balance; and (c) revise certain covenants under the term loan agreement to provide increased flexibility to the Company. Quarterly payments of principal have been reduced to $1.9 million with the balance of the unpaid principal due on December 20, 2016. As of September 30, 2014, the term loan had a balance of $113.8 million. |
On October 1, 2014, the Company entered into an Amended and Restated Term Loan Agreement with a consortium of banks, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) reduce the borrowing rates from LIBOR plus 2.25% to LIBOR plus 1.6% (per annum) for Eurodollar loans, (b) increase the outstanding loan commitment from $115.0 million to $150.0 million, (c) extend the maturity date to October 1, 2019, and (d) revise certain of the covenants and restrictions under the prior loan agreement to provide the Company with additional flexibility. |
(iii) On April 11, 2012, the Company entered into a term loan agreement with a consortium of banks. The agreement, which was amended on August 31, 2012, May 30, 2013, and July 25, 2014, provides for a five year term loan of up to $142.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of the Company. The commitment under the loan may be increased to a maximum of $200.0 million under certain conditions described in the agreement. The outstanding principal amounts under the term loan bear interest based on LIBOR, amortized quarterly, and require quarterly payments equal to 1.75% multiplied by the outstanding principal amount at such time. The facility contains various financial and other covenants. The full $142.0 million has been drawn and was primarily used to repay outstanding amounts under the Company’s senior revolving credit facility. All unpaid amounts then outstanding are due and payable on April 11, 2017. As of September 30, 2014, the loan had a balance of $121.8 million. |
(c)Senior Secured Notes |
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On September 13, 2012, Container Applications Limited (CAL), a wholly-owned subsidiary of the Company, entered into a Note Purchase Agreement with certain institutional investors, pursuant to which CAL issued $103.0 million of its 4.90% Senior Secured Notes due September 13, 2022 (the Notes) to the investors. The Notes are guaranteed by the Company and secured by certain assets of CAL and the Company. |
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CAI INTERNATIONAL, INC. |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
The Notes bear interest at 4.9% per annum, due and payable semiannually on March 13 and September 13 of each year, commencing on March 13, 2013. In addition, CAL is required to make certain principal payments on March 13 and September 13 of each year, commencing on March 13, 2013. Any unpaid principal and interest is due and payable on September 13, 2022. The Note Purchase Agreement provides that CAL may prepay at any time all or any part of the Notes in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding. As of September 30, 2014, the Notes had a balance of $86.5 million. |
(d)Asset-Backed Notes |
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On October 18, 2012, CAL Funding II Limited (CAL II), a wholly-owned indirect subsidiary of CAI, issued $171.0 million of 3.47% fixed rate asset-backed notes (Series 2012-1 Asset-Backed Notes). Principal and interest on the Series 2012-1 Asset-Backed Notes is payable monthly commencing on November 26, 2012, and the Series 2012-1 Asset-Backed Notes mature in October 2027. The proceeds from the Series 2012-1 Asset-Backed Notes were used to repay part of the Company’s borrowings under its senior revolving credit facility. As of September 30, 2014, the Series 2012-1 Asset-Backed Notes had a balance of $138.2 million. |
On March 28, 2013, CAL II issued $229.0 million of 3.35% fixed rate asset-backed notes (Series 2013-1 Asset-Backed Notes). Principal and interest on the Series 2013-1 Asset-Backed Notes is payable monthly commencing on April 25, 2013, and the Series 2013-1 Asset-Backed Notes mature in March 2028. The proceeds from the Series 2013-1 Asset-Backed Notes were used partly to reduce the balance of the Company’s term loan as described in Note 6 (b)(ii) above, and to partially pay down the Company’s senior revolving credit facility. The Series 2013-1 Asset-Backed Notes had a balance of $194.7 million as of September 30, 2014. |
The agreements under each of the asset-backed notes described above require the Company to maintain a restricted cash account to cover payment of the obligations. As of September 30, 2014, the restricted cash account had a balance of $8.5 million. |
(e)Collateralized Financing Obligations |
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As of September 30, 2014, the Company had collateralized financing obligations of $121.8 million (see Note 3). The obligations had an average interest rate of 1.0% as of September 30, 2014 with maturity dates between June 2015 and June 2019. The debt is secured by a pool of containers covered under the financing arrangements. |
(f)Term Loans Held by VIE |
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On June 25, 2014, one of the Japanese investor funds that is consolidated by the Company as a VIE (see Note 3) entered into a term loan agreement with a bank. Under the terms of the agreement, the Japanese investor fund entered into two loans; a five year, amortizing loan of $9.2 million at a fixed interest rate of 2.7%, and a five year, non-amortizing loan of $1.6 million at a variable interest rate based on LIBOR. The debt is secured by assets of the Japanese investor fund, and is subject to certain borrowing conditions set out in the loan agreement. As of September 30, 2014, the term loans held by the Japanese investor fund totaled $10.3 million and had an average interest rate of 2.6%. |
The Company's term loans, senior secured notes, asset-backed notes, collateralized financing obligations and term loans held by VIEs are each secured by specific pools of rental equipment and other assets owned by the Company, the underlying leases thereon and the Company’s interest in any money received under such contracts. The agreements relating to all of the Company’s debt contain various financial and other covenants. As of September 30, 2014, the Company was in compliance with all of its debt covenants. |
(g)Short Term Line of Credit |
On May 8, 2014, CAL entered into a short term uncommitted line of credit agreement. Under this credit agreement, CAL is eligible to borrow up to $75.0 million, subject to certain borrowing conditions. Loans made under the line of credit are repayable on the earlier of (a) 3 months after the loan is made, and (b) the facility termination date of May 8, 2015. Outstanding loans bear a variable interest rate based on LIBOR. The full $75.0 million has been drawn and was primarily used to repay outstanding amounts under the Company’s senior revolving credit facility. As of September 30, 2014, the loan had a balance of $75.0 million, which is due and payable on December 24, 2014. The Company intends to renew the loan upon its maturity dates. Interest is charged on the outstanding loan at an annual rate of 1.5%. |
Capital Lease Obligations |
As of September 30, 2014, the Company had capital lease obligations of $3.0 million. The underlying obligations are denominated in U.S. Dollars and Euros at floating interest rates averaging 2.4% as of September 30, 2014 with maturity dates between December 2014 and June 2019. The loans are secured by containers covered by the lease obligations. |
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