| Long-Term Debt and Short-Term Debt | Note 6. Long-Term Debt and Short-Term Debt
Long-term debt and short-term debt at March 31, 2016 and
December 31, 2015 consisted of the following:
Restated
March 31,
December 31,
2016 2015
Borrowings under our $575.0 million Senior Secured Term Loan B
bearing interest the greater of 1% or 3 month LIBOR (0.63% at March
31, 2016, 0.61% at December 31, 2015) plus an applicable margin of
4.75% at March 31, 2016, expiring October 19, 2022, net
of debt issuance costs of $20.1 million at March 31, 2016 and $20.6
million at December 31, 2015. 552,038 552,957
Borrowings under our $100.0 million Senior Secured Revolver bearing
interest at LIBOR (0.43% at March 31, 2016, 0.42% at December
31, 2015) plus an applicable margin of 3.50% at March 31,
2016, expiring October 19, 2020, net of debt issuance costs of
$2.8 million at March 31, 2016 and $2.9 million at December 31,
2015. 15,211 3,547
Borrowings under our $250.0 million Senior Notes bearing interest
at 10.25%, maturing on November 1, 2020, net of debt issuance
costs of $5.7 million at March 31, 2016 and $5.9 million at
December 31, 2015. 244,330 244,088
French Safeguard Obligations (Autocam) 507 2,000
Brazilian lines of credit and equipment notes (Autocam) 812 826
Chinese line of credit (Autocam) 3,721 3,696
Total debt 816,619 807,114
Less current maturities of long-term debt 11,947 11,714
Long-term debt, excluding current maturities of long-term debt $ 804,672 $ 795,400
On October 19, 2015, concurrent with the PEP Acquisition, we:
(i) entered into a new senior secured term loan facility in
the amount of up to $525 million with a seven year maturity (the
“New Term Loan Credit Facility”); (ii) entered
into a new senior secured revolving credit facility in the amount
of up to $100 million with a five year maturity (together with the
New Term Loan Credit Facility, the “New Senior Credit
Facilities”); and (iii) issued of $300 million of 10.25%
senior notes due 2020 (the “Senior Notes”). The New
Senior Credit Facilities replaced our existing credit facilities.
On November 9, 2015, an incremental term loan of $50 million
was drawn on the New Term Loan Credit Facility and the proceeds
were used to repurchase approximately $50 million of the Senior
Notes.
The interest applicable to borrowings under the New Senior Credit
Facilities are based upon a fluctuating rate of interest measured
by reference to either, at our option, (i) a base rate, plus
an applicable margin, or (ii) the greater of the London
Interbank Offered Rate (“LIBOR”) or 1.0%, plus an
applicable margin. The initial applicable margin for all borrowings
under the New Term Loan Credit Facility is 3.75% per annum
with respect to base rate borrowings and 4.75% per annum with
respect to LIBOR borrowings. The initial applicable margin for New
Senior Secured Revolving Credit Facility borrowings is
2.5% per annum with respect to base rate borrowings and
3.5% per annum with respect to LIBOR borrowings, which shall
be in effect until we provide a compliance certificate, as required
by the credit agreement. Thereafter, the applicable margin shall be
determined by reference to a ratio of our consolidated leverage
ratio. Our obligations under the New Senior Credit Facilities are
guaranteed by certain of our direct and indirect, existing and
future domestic subsidiaries, subject to customary exceptions and
limitations. The New Senior Credit Facilities are secured by a
first priority lien over substantially all of NN’s and each
guarantor’s assets, subject to certain customary exceptions.
The New Senior Credit Facilities are subject to negative covenants
that, among other things subject to certain exceptions, limit our
ability and the ability of its restricted subsidiaries to:
(i) incur liens; (ii) incur indebtedness; (iii) make
investments and acquisitions, (iv) merge, liquidate or
dissolve, (v) sell assets, including capital stock of
subsidiaries; (vi) pay dividends on capital stock or redeem,
repurchase or retire capital stock; (viii) alter our business;
(viii) engage in transactions with our affiliates; and
(ix) enter into agreements limiting subsidiary dividends and
distributions. In the event borrowings under the New Senior Secured
Revolving Credit Facility exceed 30.0% of the aggregate commitments
under the revolver, we will become subject to a financial covenant
that requires us to maintain a specified consolidated net leverage
ratio. The credit agreement provides that we have the right to
request one or more increases in the revolving loan commitments or
term loan commitment up to $100.0 million in the aggregate. In
total, we have paid debt issuance costs of $21.1 million related to
the New Term Loan Credit Facility and $2.3 million related to the
New Senior Secured Revolving Credit Facility, which are being
amortized into interest expense over the life of the New Senior
Credit Facilities.
The Senior Notes will mature on November 1, 2020. Interest
will be payable semi-annually in arrears on May 1 and
November 1 of each year, commencing May 2016. Under the Senior
Notes, we received proceeds of $293.3 million net of a discount of
$6.8 million, which is being amortized into interest expense over
the life of the Senior Notes. We have paid a total of $7.3 million
in debt issuance costs, which includes the $6.8 million of debt
discount, all of which is being amortized into interest expense
over the life of the Senior Notes. The Senior Notes will be
guaranteed by each existing direct and indirect domestic restricted
subsidiaries (excluding immaterial subsidiaries). The Senior Notes
and guarantees will be senior unsecured obligations of the issuer
and the guarantors, respectively, and will rank pari passu in right
of payments with all existing and future senior debt and senior to
all existing and future subordinated debt of the issuer and
guarantors. The Senior Notes and guarantees will be effectively
subordinated to all existing and future secured debt of the issuer
and guarantors to the extent of the assets securing such debt. In
addition, the Senior Notes and the guarantees will be structurally
subordinated to all indebtedness and other liabilities and
preferred stock of our subsidiaries that do not guarantee the
Senior Notes. The Senior Notes have not been registered under the
Securities Act of 1933, as amended, or any state securities law and
may not be offered or sold within the United States or to, or for
the benefit of, a U.S. person (as defined by Regulation S under the
Securities Act) except in transactions exempt from, or not subject
to, the registration requirements of the Securities Act. The Senior
Notes were offered and sold only to persons reasonably believed to
be “qualified institutional buyers” (as defined in Rule
144A under the Securities Act) and to persons outside the United
States under Regulations S. We will use our commercially reasonable
efforts to register notes having substantially identical terms
(other than restrictions on transfer and additional interest) as
the Senior Notes with the SEC as part of an offer to exchange
registered exchange notes for the Senior Notes. We will use our
commercially reasonable effort to file a registration statement for
the exchange notes with the SEC and cause that registration
statement to be declared effective 300 days of the issue date of
the Senior Notes. If we fail to register the Senior Notes, than
annual interest rate on the Senior Notes will increase by 0.25%.
The annual interest rate on the Senior Notes will increase by an
additional 0.25% for each subsequent 90-day period during which a
registration default continues, up to a maximum additional interest
rate of 1.0% per year.
As part of the merger with Autocam, we assumed certain foreign
credit facilities. These facilities relate to local borrowings in
France, Brazil and China. These facilities are with financial
institutions in the countries in which foreign plants operate and
are meant to fund working capital and equipment purchases in those
countries. Below is a description of the credit facilities.
Our French operation (acquired with Autocam) has liabilities with
certain creditors subject to Safeguard protection. The liabilities
are being paid annually over a 10-year period until 2019 and carry
a zero percent interest rate. Amounts due as of March 31,
2016, to those creditors opting to be paid over a 10-year period
totaled $0.5 million and are included in current maturities of
long-term debt of $0.4 million and long-term debt, net of current
portion of $0.1 million.
The Brazilian equipment notes represent borrowings from certain
Brazilian banks to fund equipment purchases for Autocam’s
Brazilian plants. These credit facilities have annual interest
rates ranging from 2.5% to 9.1%.
The Chinese line of credit is a working capital line of credit with
a Chinese bank bearing an annual interest rate of 4.95%.
As discussed in Note 1, we have adopted ASU 2015-03, which provides
guidance on simplifying the presentation of debt issuance costs on
the balance sheet. To simplify presentation of debt issuance costs,
the amendments in ASU No. 2015-03 require that debt issuance
costs related to a recognized debt liability be presented in the
balance sheet as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. The table
below displays the audited debt footnote amounts for the year ended
December 31, 2015 restated for the adoption of ASU 2015-03.
The debt issuance costs were reclassified from other non-current
assets and directly applied to the associated liability.
Audited ASU 2015-13 Restated
Borrowings under our $575.0 million Senior Secured Term Loan
B $ 562,580 $ (9,623 ) $ 552,957
Borrowings under our $100.0 million Senior Secured
Revolver 6,462 (2,915 ) 3,547
Borrowings under our $250.0 million Senior Notes 244,509 (421 ) 244,088
French Safeguard Obligations (Autocam) 2,000 2,000
Brazilian lines of credit and equipment notes (Autocam) 826 826
Chinese line of credit (Autocam) 3,696 3,696
Total debt 820,073 807,114
Less current maturities of long-term debt 11,714 11,714
Long-term debt, excluding current maturities of long-term debt 808,359 795,400 |
