SEC Filings
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| 10-Q | |
| HRG GROUP, INC. filed this Form 10-Q on 08/09/2016 | |
| Entire Document | |
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Spectrum Brands Interest terms Certain of Spectrum Brands’ debt instruments are subject to variable interest rates. At June 30, 2016, Spectrum Brands’ variable interest rate terms were as follows: (i) for the U.S. dollar denominated term loan facility (the “USD Term Loan”), either adjusted LIBOR, subject to a 0.75% floor, plus 2.75% per annum, or base rate plus 1.75% per annum; (ii) for the CAD denominated term loan facility (the “CAD Term Loan”), either Canadian Dollar Offered Rate, subject to a 0.75% floor plus 3.5% per annum, or base rate plus 2.5% per annum; (iii) for the Euro denominated term loan facility (the “Euro Term Loan”), Euro Interbank Offered Rate, subject to a 0.75% floor, plus 2.75% per annum, with no base rate option available; and (iv) for the revolving credit facility (the “Revolver Facility”), either adjusted LIBOR plus 2.75% per annum or base rate plus 1.75% per annum. As a result of borrowings and payments under the Revolver Facility, at June 30, 2016, the Company had borrowing availability of $276.9, net outstanding letters of credit of $24.6. Compass As of June 30, 2016, Compass had $125.0 of outstanding indebtedness under the Compass Credit Agreement. The borrowing base is redetermined semi-annually, with Compass and the lenders having the right to request interim unscheduled redeterminations in certain circumstances. The interest rate grid ranges from LIBOR plus 294 bps to 375 bps (or Alternate Base Rate (“ABR”) plus 475 bps to 575 bps), depending on the percentages of drawn balances to the borrowing base as defined in the agreement. On June 30, 2016, the one month LIBOR was 0.5% which resulted in an interest rate of approximately 3.8%. On November 13, 2015, Compass entered into an amendment to the terms of the Compass Credit Agreement that included a modification of the Consolidated Leverage Ratio (as defined in the Compass Credit Agreement) whereby the maximum permitted ratio at the end of each quarter was increased to 6.00 to 1.00 through September 30, 2016. The maximum permitted Consolidated Coverage Ratio (as defined in the Compass Credit Agreement) for each quarter ending after October 1, 2016 will be 4.50 to 1.00. The amendment also provided for the reduction of the borrowing base to $320.0 on November 13, 2015. Following the completion of the Compass Asset Sale and paydown of Compass’ indebtedness, the borrowing base under the Compass Credit Agreement was further reduced to $175.0. Concurrently with such amendment, HRG’s wholly-owned subsidiary, HGI Funding, LLC (“HGI Funding”), determined to amend its guarantee in order to continue to provide a guarantee (the “Guarantee”) of a limited portion, up to $30.0, of the debt under the Compass Credit Agreement until the date of Compass’ May 2016 borrowing base redetermination and committed to make a debt or equity contribution to Compass on the date of such redetermination in an amount to be determined based on the amount of the borrowing base at such time. The guarantee was also amended to provide that HGI Funding may elect to guaranty an additional portion of the debt under the Compass Credit Agreement (the “Optional Guarantee”) in order to cure defaults under the Consolidated Leverage Ratio on any test date through September 30, 2016. This provision was removed in a further amendment (as detailed below). The secured amount is secured by a pledge of assets chosen by the Company that may consist of a combination of cash and marketable securities with a determined value equal to the maximum secured amount then applicable. In measuring the determined value of the pledged assets, cash is valued at 100.0% and marketable securities are valued at 33.3% of fair market value thereafter (measured as the 20 day average close price of such marketable securities). On December 23, 2015, Compass received the consent of the lenders under the Compass Credit Agreement to delay the delivery of Compass’ unqualified audited financial statements for the fiscal year ended September 30, 2015 until March 31, 2016. Such financial statements had previously been required to be delivered within 90 days following the end of such fiscal year. On March 29, 2016, Compass entered into a further amendment to the terms of the Compass Credit Agreement that included a modification of the Applicable Spread (as defined in the Compass Credit Agreement) whereby (i) the ABR Spread (as defined in the Compass Credit Agreement) was increased from a range of 0.75%-1.75%, based on the Borrowing Base Usage (as defined in the Compass Credit Agreement), to a spread of 1.25%-2.25% and (ii) the Eurodollar spread was increased from a range of 1.75%-2.75% to a range of 2.25%-3.25%. Additionally, the commitment fee was raised to 0.50% at all Borrowing Base Usage levels, up from 0.375% when the Borrowing Base Usage was less than 50.0%. The amendment further provided for a redetermination of Compass’ borrowing base on or about May 16, 2016 with scheduled redeterminations to begin December 1, 2016 and proceed every June 1 and December 1 thereafter. Finally, the amendment included a limited waiver of the event of default that would have occurred due to the existence of a going concern qualification in the audited consolidated financial statements of Compass for the fiscal year ended September 30, 2015. On May 20, 2016, Compass entered into a further amendment to the terms of the Compass Credit Agreement that, among other things, reintroduced a covenant to maintain a consolidated cash interest coverage ratio of no more than 1.10 to 1.00, determined as of the end of each fiscal quarter ending on or after June 30, 2016 through and including the fiscal quarter ending June 30, 2017. The amendment also provided that the consolidated leverage ratio will not be tested for any quarter ending prior to September 30, 2017 and reduced the borrowing base to $135.0. In connection with the reduction in the borrowing base, Compass was required to prepay $35.0 towards the outstanding amounts under the Compass Credit Agreement prior to June 3, 2016, which funds were 29 | |
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