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| 1 | ADOBE SYSTEMS INC |
NOTE 15. CREDIT AGREEMENT
In August 2007, we entered into an Amendment to our Credit Agreement dated February 2007 (the
“Amendment”), which increased the total senior unsecured revolving facility from $500.0 million to
$1.0 billion. The Amendment also permits us to request one-year extensions effective on each
anniversary of the closing date of the original agreement, subject to the majority consent of the
lenders. We also retain an option to request an additional $500.0 million in commitments, for a
maximum aggregate facility of $1.5 billion.
In February 2008, we entered into a Second Amendment to the Credit Agreement dated February
26, 2008, which extended the maturity date of the facility by one year to February 16, 2013. The
facility would terminate at this date if no additional extensions have been requested and granted.
All other terms and conditions remain the same.
The facility contains a financial covenant requiring us not to exceed a certain maximum
leverage ratio. At the Company’s option, borrowings under the facility accrue interest based on
either the London interbank offered rate (“LIBOR”) for one, two, three or six months, or longer
periods with bank consent, plus a margin according to a pricing grid tied to this financial
covenant, or a base rate. The margin is set at rates between 0.20% and 0.475%. Commitment fees are
payable on the facility at rates between 0.05% and 0.15% per year based on the same pricing grid.
The facility is available to provide loans to us and certain of our subsidiaries for general
corporate purposes. As of both August 28, 2009 and November 28, 2008, the amount outstanding under
the credit facility was $350.0 million, which is included in long-term liabilities on our Condensed
Consolidated Balance Sheets. As of August 28, 2009, we were in compliance with all of the
covenants. Subsequent to August 28, 2009, we borrowed an additional
$650.0 million under the credit facility.
See Note 18 for further discussion of this transaction. The carrying value of the outstanding liability approximates fair value.
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| 2 | ALTERA CORP |
Note 9 – Long-term Credit Facility Our total borrowings under our $750 million unsecured revolving credit facility (the “Facility”) as of September 25, 2009 and December 31, 2008 were $500 million. Borrowings under the Facility bear interest at either a Eurodollar rate (“LIBOR”) or a Prime rate, at our option, plus an applicable margin based upon certain financial ratios, determined and payable quarterly. The interest rate as of September 25, 2009 was LIBOR plus 0.425%. In addition, we pay a facility fee on the entire Facility. This facility fee varies with certain financial ratios and was 0.125% as of September 25, 2009. The principal amount of borrowings, together with accrued interest, is due on the maturity date in August 2012. As of September 25, 2009, $250 million is available under the Facility. The terms of the Facility require compliance with certain financial covenants that require us to maintain specified financial ratios related to interest coverage and financial leverage. As of September 25, 2009, we were in compliance with all such covenants. |
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| 3 | BED BATH & BEYOND INC. | 10) Lines of Credit
At August 29, 2009, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of September 3, 2009 and February 26, 2010, respectively. Subsequent to the end of the second fiscal quarter of 2009, the expiration date on the line of credit that expired on September 3, 2009 was extended to September 3, 2010. These uncommitted lines of credit are currently and are expected to be used for letters of credit in the ordinary course of business. As of August 29, 2009, the Company did not have any direct borrowings under the uncommitted lines of credit. Although no assurances can be provided, the Company intends to renew both uncommitted lines of credit before the respective expiration dates.
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| 4 | BioScrip, Inc. | NOTE 6 – LINE OF CREDIT At September 30, 2009, there was $39.6 million in outstanding borrowings under the Company’s revolving credit facility (the “Facility”) with an affiliate of Healthcare Finance Group, Inc. (“HFG”), as compared to $50.4 million at December 31, 2008. The Facility provides for borrowings of up to $85.0 million, at the London Inter-Bank Offered Rate (“LIBOR”) or a pre-determined minimum rate plus the applicable margin and other associated fees, provided that a sufficient level of receivable assets are available as collateral. The term of the Facility runs through November 1, 2010. Under the terms of the Facility, the Company may request to increase the amount available for borrowing up to $100.0 million and convert a portion of any outstanding borrowings from a Revolving Loan into a Term Loan. The borrowing base utilizes receivable balances and proceeds thereof as security under the Facility. At September 30, 2009, the Company had $45.4 million of credit available under the Facility on a borrowing basis of $85.0 million. The weighted average interest rate on the Facility during the quarter ended September 30, 2009 was 4.4% compared to 5.4% for the quarter ended December 31, 2008. The Facility contains various covenants that, among other things, require the Company to maintain certain financial ratios as defined in the agreements governing the Facility. The Company was in compliance with all the covenants contained in the agreements as of September 30, 2009. |
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| 5 | CNX Gas Corp | Note 6—Credit Facility: CNX Gas has a five-year $200,000 unsecured credit agreement which extends through October 2010. The agreement gives CNX Gas the ability to request an increase in the aggregate outstanding principal amount up to $300,000, including borrowings and letters of credit. The $200,000 credit agreement for CNX Gas is unsecured; however, it does contain a negative pledge provision providing CNX Gas assets cannot be used to secure any other obligations. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Covenants in the facility limit our ability to dispose of assets, make investments, purchase or redeem CNX Gas stock and merge with another corporation. The facility includes a maximum leverage ratio covenant of not more than 3.0 to 1.0, measured quarterly. The leverage ratio was 0.4 to 1.0 at September 30, 2009. The facility also includes a minimum interest coverage ratio of no less than 3.0 to 1.0 measured quarterly. The interest coverage ratio was 66.8 to 1.0 at September 30, 2009. At September 30, 2009, the CNX Gas credit agreement had outstanding borrowings of $73,050 and outstanding letters of credit of $14,933, leaving $112,017 of capacity available for borrowings and the issuance of letters of credit. The facility bore a weighted average interest rate of 1.47% for the nine months ended September 30, 2009.
CNX Gas and subsidiaries have executed a Supplemental Indenture and are guarantors of CONSOL Energy’s 7.875% notes due March 1, 2012 in the principal amount of $250,000. In addition, if CNX Gas were to grant liens to a lender as part of a future borrowing, the indenture governing CONSOL Energy’s 7.875% notes would require CNX Gas to ratably secure the notes. |
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| 6 | EQUITY RESIDENTIAL |
The Operating Partnership has a $1.5 billion unsecured revolving credit facility maturing on February 28, 2012, with the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread (currently 0.5%) dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group. EQR has guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility. During the year ended December 31, 2008, one of the providers of the Operating Partnership’s unsecured revolving credit facility declared bankruptcy. Under the existing terms of the credit facility, the provider’s share is up to $75.0 million of potential borrowings. As a result, the Operating Partnership’s borrowing capacity under the unsecured revolving credit facility has, in essence, been permanently reduced to $1.425 billion of potential borrowings. The obligation to fund by all of the other providers has not changed.
As of September 30, 2009, the amount available on the credit facility was $1.36 billion (net of $68.5 million which was restricted/dedicated to support letters of credit and net of the $75.0 million discussed above). The Company did not draw on its revolving credit facility at any time during the nine months ended September 30, 2009.
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| 7 | ERP OPERATING LTD PARTNERSHIP |
The Operating Partnership has a $1.5 billion unsecured revolving credit facility maturing on February 28, 2012, with the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread (currently 0.5%) dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group. EQR has guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility. During the year ended December 31, 2008, one of the providers of the Operating Partnership’s unsecured revolving credit facility declared bankruptcy. Under the existing terms of the credit facility, the provider’s share is up to $75.0 million of potential borrowings. As a result, the Operating Partnership’s borrowing capacity under the unsecured revolving credit facility has, in essence, been permanently reduced to $1.425 billion of potential borrowings. The obligation to fund by all of the other providers has not changed. As of September 30, 2009, the amount available on the credit facility was $1.36 billion (net of $68.5 million which was restricted/dedicated to support letters of credit and net of the $75.0 million discussed above). The Operating Partnership did not draw on its revolving credit facility at any time during the nine months ended September 30, 2009.
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| 8 | FLIR SYSTEMS INC | Note 12. Credit Agreements At September 30, 2009, the Company had no borrowings outstanding under its Credit Agreement, dated October 6, 2006, with Bank of America, N.A., Union Bank of California, N.A., U.S. Bank National Association and other Lenders, and $11.7 million of letters of credit outstanding, which reduces the total available credit.
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| 9 | GENZYME CORPORATION |
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| 10 | GILEAD SCIENCES INC | 10. CREDIT FACILITY Under our amended and restated credit agreement, we, along with our wholly-owned subsidiary, Gilead Biopharmaceutics Ireland Corporation, may borrow up to an aggregate of $1.25 billion in revolving credit loans. The credit agreement also includes a sub-facility for swing-line loans and letters of credit. Loans under the credit agreement bear interest at an interest rate of either LIBOR plus a margin ranging from 0.20 percent to 0.32 percent or the base rate, as defined in the credit agreement. In April 2009, in connection with the acquisition of CV Therapeutics, we borrowed $400.0 million under the credit agreement to partially fund the acquisition. As of September 30, 2009, we have repaid $200.0 million under this credit agreement and expect to repay the remaining $200.0 million in the fourth quarter of 2009 using cash flow generated from operations. The credit agreement will terminate and all amounts owing thereunder shall be due and payable on December 17, 2012. We may reduce the commitments and may prepay loans under the credit agreement in whole or in part at any time without penalty, subject to certain conditions. As of September 30, 2009, we had letters of credit outstanding under this credit facility of $3.8 million, and the amount available under the credit facility was approximately $1.05 billion. We are required to comply with certain covenants under this credit facility and as of September 30, 2009, we were in compliance with all such covenants. |
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| 11 | INTERCONTINENTALEXCHANGE INC |
As of December 31, 2008, the Company had a senior unsecured credit agreement under which a term loan facility in the aggregate principal amount of $184.4 million was outstanding and a revolving credit facility with a total borrowing capacity of $250.0 million (collectively, the “Credit Facilities”). As of December 31, 2008, $195.0 million was outstanding under the revolving credit facility, which was due to be repaid by January 12, 2010. The Company also had a separate senior credit agreement (the “Credit Agreement”) outstanding that provided for an additional 364-day revolving credit facility with a total borrowing capacity of $150.0 million for use by ICE Clear Europe, of which no amounts had been borrowed. On April 9, 2009, the Credit Facilities and the Credit Agreement were cancelled, amended and/or replaced with new unsecured senior credit facilities (the “New Credit Facilities”) with aggregate principal amount and borrowing capacity of $775.0 million with Wachovia Bank, National Association (“Wachovia”), as Administrative Agent, Bank of America, N.A., as Syndication Agent, and the lenders named therein. The New Credit Facilities provide for a 364-day senior unsecured revolving credit facility with a total borrowing capacity of $300.0 million, a three-year senior unsecured revolving credit facility with a total borrowing capacity of $100.0 million, a three-year senior unsecured term loan facility in the aggregate principal amount of $200.0 million and an amended senior unsecured term loan facility in the aggregate principal amount of $175.0 million. The full $200.0 million available under the new term loan facility was borrowed on April 9, 2009 and was used to pay off the $195.0 million in principal that was outstanding under the previous revolving credit facility. The original term loan facility was amended and the $175.0 million that was outstanding at that time remained outstanding under the New Credit Facilities. As of September 30, 2009, no amounts have been borrowed under the new $400.0 million combined revolving credit facilities. Loans under the New Credit Facilities bear interest on the principal amount outstanding, at the option of the Company, at either (i) LIBOR plus an applicable margin rate or (ii) a “base rate” plus an applicable margin rate. The “base rate” will be equal to the higher of (i) Wachovia’s prime rate, (ii) the federal funds rate plus 0.5%, or (iii) the LIBOR rate for an interest period of one month plus 1.5%. The applicable margin rate ranges from 2.50% to 4.50% on the LIBOR loans and from 1.50% to 3.50% for the base rate loans, in each case based on the Company’s total leverage ratio calculated on a trailing twelve month period. Interest on each outstanding borrowing is payable on at least a quarterly basis. Aggregate principal maturities on the borrowings outstanding under the New Credit Facilities are $22.5 million for the remaining three months in 2009 and $99.0 million, $132.8 million and $75.7 million in 2010, 2011 and 2012, respectively. The Company had a three-month LIBOR-rate loan with a stated interest rate of 2.78% per annum, including the applicable margin rate of 2.50% on the LIBOR loan, related to the $175.0 million term loan facility, of which $150.0 million remained outstanding as of September 30, 2009. The Company had a three-month LIBOR-rate loan with a stated interest rate of 2.78% per annum, including the applicable margin rate of 2.50% on the LIBOR loan, related to the $200.0 million term loan facility, of which $180.0 million remained outstanding as of September 30, 2009. The closing of the New Credit Facilities increased the deferred debt issuance costs to $8.3 million as of September 30, 2009. The debt issuance costs are being amortized over the remaining life of the loans, including $3.3 million and $1.5 million that was amortized during the nine months and three months ended September 30, 2009, respectively, and the Company will amortize $1.5 million over the remaining three months in 2009 and $3.8 million, $2.5 million and $541,000 in 2010, 2011 and 2012, respectively. The New Credit Facilities include an unutilized revolving credit commitment fee that is equal to the unused maximum revolver amount multiplied by an applicable margin rate and is payable in arrears on a quarterly basis. The applicable margin rate ranges from 0.50% to 0.90% based on the Company’s total leverage ratio calculated on a trailing twelve month period. Based on this calculation, the applicable margin rate was 0.50% as of September 30, 2009. Of the $300.0 million available under the 364-day senior unsecured revolving credit facility, (i) up to $150.0 million of such amount has been reserved to provide liquidity for the clearing operations of ICE Clear Europe, (ii) up to $100.0 million of such amount has been reserved to provide liquidity for the clearing operations of ICE Trust, and (iii) up to $50.0 million of such amount has been reserved to provide liquidity for the clearing operations of ICE Clear U.S. The Company has reserved $3.0 million of the $100.0 million available under the three-year senior unsecured revolving credit facility to be used to provide liquidity for certain of the clearing operations of ICE Clear Canada and the remaining balance can be used by the Company for working capital and general corporate purposes. With limited exceptions, the Company may prepay the outstanding loans under the New Credit Facilities, in whole or in part, without premium or penalty. The New Credit Facilities contain affirmative and negative covenants, including, but not limited to, leverage and interest coverage ratios, as well as limitations or required notices or approvals for acquisitions, dispositions of assets and certain investments, the incurrence of additional debt or the creation of liens and other fundamental changes to the Company’s business. The Company has been and is currently in compliance with all applicable covenants under the New Credit Facilities. In April 2009, the Company entered into interest rate swaps to reduce its exposure to interest rate volatility on the term loan facilities. The interest rate swaps are forward-starting swaps and are effective from December 31, 2009 through the maturity dates of the term loan facilities. The interest rate swaps require the Company to pay a fixed interest rate of 4.26% per annum on the $175.0 million term loan facility, of which $137.5 million will be outstanding as of December 31, 2009, and 4.36% per annum on the $200.0 million term loan facility, of which $170.0 million will be outstanding as of December 31, 2009. In return, the Company will receive the one-month LIBOR-rate plus 250 basis points. These swaps are designated as cash flow hedges. The effective portion of unrealized gains or losses on derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income. The unrealized gain or loss is recognized in earnings when the designated interest expense under the term loans is recognized in earnings. Any portion of the hedge that is ineffective is recognized in earnings immediately. The amounts received under the variable component of the swaps will fully offset the variable interest payments under the term loan facilities. With the two variable components offsetting, the net interest expense will equal the fixed interest component. The fair value of the interest rate swaps as of September 30, 2009 is ($1.9 million), or ($1.2 million) net of taxes, and is included in the accompanying balance sheet in non-current liabilities with the unrealized loss included under the shareholders’ equity section as accumulated other comprehensive loss from cash flow hedges. The portion of the unrealized loss expected to be reclassified into earnings within the next twelve months is not expected to be significant.
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| 12 | JONES APPAREL GROUP INC | CREDIT FACILITIES Prior to May 2009, we had a revolving credit agreement with several lending institutions to borrow an aggregate principal amount of up to $600 million (which was reduced from $750 million on January 5, 2009). This agreement could be used for letters of credit or cash borrowings. In May 2009, we replaced this revolving credit facility and our C$10.0 million unsecured line of credit in Canada with a new three-year $650 million secured revolving credit agreement (the “New Credit Facility”). Under the New Credit Facility, up to the entire amount of the facility is available for cash borrowings, with up to $400 million available for trade letters of credit and up to $50 million for standby letters of credit, and a subfacility available to our Canadian subsidiaries of up to $25 million for letters of credit and borrowings. Borrowings under the New Credit Facility may be used to refinance existing indebtedness, to repay our 4.250% Senior Notes due 2009 (the “2009 Notes”), and for general corporate purposes in the ordinary course of business. Such borrowings bear interest either based on the alternate base rate, as defined in the New Credit Facility, or based on Eurocurrency rates, each with a margin that depends on the availability remaining under the New Credit Facility. The New Credit Facility contains customary events of default. Upon the termination of our prior credit agreement, we wrote off the remaining $7.9 million of deferred financing costs related to that agreement, which is reported as interest expense and financing costs in the fiscal nine months ended October 3, 2009. Availability under the New Credit Facility is determined in reference to a borrowing base consisting of a percentage of eligible inventory, accounts receivable, credit card receivables and licensee receivables, minus reserves determined by the joint collateral agents. At October 3, 2009, we had no cash borrowings and $37.3 million of letters of credit outstanding, and our remaining availability was $461.0 million. If availability under the New Credit Facility falls below a stated level, we will be required to comply with a minimum fixed charge coverage ratio. The New Credit Facility also contains affirmative and negative covenants that, among other things, will limit or restrict our ability to (1) incur indebtedness, (2) create liens, (3) merge, consolidate, liquidate or dissolve, (4) make investments (including acquisitions), loans or advances, (5) sell assets, (6) enter into sale and leaseback transactions, (7) enter into swap agreements, (8) make certain restricted payments (including dividends and other payments in respect of capital stock), (9) enter into transactions with affiliates, (10) enter into restrictive agreements, and (11) amend material documents. The New Credit Facility is secured by a first priority lien on substantially all of our personal property. |
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| 13 | MATTEL INC /DE/ |
Mattel maintains and periodically amends or replaces its domestic unsecured committed revolving credit facility with a commercial bank group that is used as the primary source of financing for the seasonal working capital requirements of its domestic subsidiaries. The agreement in effect was amended and restated on March 23, 2009 to, among other things, (i) extend the maturity date of the credit facility to March 23, 2012, (ii) reduce aggregate commitments under the credit facility from $1.3 billion to $880.0 million, with an “accordion feature,” which would allow Mattel to increase the availability under the credit facility to $1.08 billion under certain circumstances, (iii) add an interest rate floor equal to 30-day US Dollar London Interbank Offered Rate (“LIBOR”) plus 1.00% for base rate loans under the credit facility, (iv) increase the applicable interest rate margins to a range of 2.00% to 3.00% above the applicable base rate for base rate loans, and 2.5% to 3.5% above the applicable LIBOR rate for Eurodollar rate loans, depending on Mattel’s senior unsecured long-term debt rating, (v) increase commitment fees to a range of 0.25% to 0.75% of the unused commitments under the credit facility, and (vi) replace the consolidated debt-to-capital ratio with a consolidated debt-to-earnings before interest, taxes, depreciation, and amortization (“EBITDA”) ratio. In April and July 2009, Mattel utilized the accordion feature of the credit facility to increase the aggregate commitments under the credit facility by $60.0 million and $95.0 million, respectively. On October 9, 2009, Mattel further increased the aggregate commitments under the credit facility by $45.0 million, from $1.035 billion to $1.08 billion, which is the maximum aggregate commitment available under the credit facility. Mattel has a $300.0 million domestic receivables sales facility that is a sub-facility of Mattel’s domestic unsecured committed revolving credit facility, which was also amended in connection with the amendment of the credit facility. The amendment to the receivables sales facility, among other things, (i) extended the maturity date of the receivables sales facility to March 23, 2012, and (ii) incorporated the credit facility’s increased applicable interest rate margins described above.
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| 14 | MURPHY OIL CORP /DE | Note D – Financing Arrangements In September 2009, the Company filed a Form S-3 registration statement with the U.S. Securities and Exchange Commission which permits the offer and sale of debt and/or equity securities. The Company may use this shelf registration, if needed, in future years to raise debt or equity capital to fund operational requirements. The shelf registration expires in September 2012.
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| 15 | ONEOK INC /NEW/ | F. CREDIT FACILITIES AND SHORT-TERM NOTES PAYABLE ONEOK’s $1.2 billion amended and restated credit agreement dated July 14, 2006 (ONEOK Credit Agreement), which expires in July 2011, and ONEOK Partners’ $1.0 billion amended and restated revolving credit agreement dated March 30, 2007 (ONEOK Partners Credit Agreement), which expires in March 2012, contain certain financial and other typical covenants as discussed in Note H of the Notes to Consolidated Financial Statements in our Annual Report. Among other things, the ONEOK Credit Agreement’s covenants include a limitation on ONEOK’s stand-alone debt-to-capital ratio, which may not exceed 67.5 percent at the end of any calendar quarter. At September 30, 2009, ONEOK’s stand-alone debt-to-capital ratio, as calculated under the terms of the ONEOK Credit Agreement, was 45.4 percent, and ONEOK was in compliance with all covenants under the ONEOK Credit Agreement. ONEOK’s $400 million 364-day revolving credit facility dated August 6, 2008, expired on August 5, 2009. The ONEOK Partners Credit Agreement’s covenants include, among other things, maintaining a ratio of indebtedness to adjusted EBITDA (EBITDA as adjusted for all non-cash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5 to 1. At September 30, 2009, ONEOK Partners’ ratio of indebtedness to adjusted EBITDA was 4.7 to 1, and ONEOK Partners was in compliance with all covenants under the ONEOK Partners Credit Agreement at September 30, 2009. At September 30, 2009, ONEOK had $309 million in commercial paper outstanding and $42 million in letters of credit issued under the ONEOK Credit Agreement. At September 30, 2009, ONEOK had approximately $849 million of credit available under the ONEOK Credit Agreement. At September 30, 2009, ONEOK Partners had $515 million in borrowings outstanding under the ONEOK Partners Credit Agreement, and under the most restrictive provisions of the ONEOK Partners Credit Agreement had $219.7 million of credit available. ONEOK Partners had a total of $49.2 million issued in letters of credit outside of the ONEOK Partners Credit Agreement. Borrowings under the ONEOK Credit Agreement and the ONEOK Partners Credit Agreement are short term in nature, ranging from one day to six months. Accordingly, these borrowings are classified as short-term notes payable. |
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| 16 | ONEOK Partners LP | F. CREDIT FACILITIES Our Partnership Credit Agreement, which expires in March 2012, contains certain financial and other typical covenants as discussed in Note H of the Notes to Consolidated Financial Statements in our Annual Report. Among other things, these covenants include maintaining a ratio of indebtedness to adjusted EBITDA (EBITDA, as adjusted for all non-cash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5 to 1. At September 30, 2009, our ratio of indebtedness to adjusted EBITDA was 4.7 to 1, and we were in compliance with all covenants under our Partnership Credit Agreement. At September 30, 2009, we had $515 million of borrowings outstanding under our Partnership Credit Agreement, and under the most restrictive provisions of our Partnership Credit Agreement had $219.7 million of credit available. At September 30, 2009, we had a total of $49.2 million issued in letters of credit outside of the Partnership Credit Agreement. Borrowings under our Partnership Credit Agreement are short term in nature, ranging from one day to six months. Accordingly, these borrowings are classified as short-term notes payable. |
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| 17 | PATTERSON UTI ENERGY INC |
8. Borrowings Under Line of Credit
The Company has an unsecured revolving line of credit (“LOC”) with a maximum borrowing
capacity of $240 million, including a letter of credit sublimit of $150 million and a swing line
sublimit of $40 million. In addition, the aggregate borrowing and letter of credit capacity under
the LOC may, subject to the terms and conditions set forth therein including the receipt of
additional commitments from lenders, be increased up to a maximum amount not to exceed $450
million.
Interest is paid on the outstanding principal amount of LOC borrowings at a floating rate
based on, at the Company’s election, LIBOR or a base rate. The margin on LIBOR loans ranges from
3.00% to 4.00% and the margin on base rate loans ranges from 2.00% to 3.00%, based on the Company’s
debt to capitalization ratio. At September 30, 2009, the margin on LIBOR loans would have been
3.00% and the margin on base rate loans would have been 2.00%. Any outstanding borrowings must be
repaid at maturity on January 31, 2012 and letters of credit may remain in effect up to six months
after such maturity date. This LOC facility includes various fees, including a commitment fee on
the actual daily unused commitment (the commitment fee rate was 1.00% at September 30, 2009).
The Company incurred line of credit issuance costs of approximately $6.2 million during the
nine months ended September 30, 2009 in connection with the LOC. These costs are being amortized
to interest expense over the contractual term of the LOC.
There are customary representations, warranties, restrictions and covenants associated with
the LOC. Financial covenants provide for a maximum debt to capitalization ratio and a minimum
interest coverage ratio. The Company does not expect that the restrictions and covenants will
impact its ability to operate or react to opportunities that might arise. As of September 30,
2009, the Company had no borrowings outstanding under the LOC. The Company had $46.3 million in
letters of credit outstanding at September 30, 2009 and, as a result, had available borrowing
capacity of approximately $194 million at that date. Each domestic subsidiary of the Company has
unconditionally guaranteed the existing and future obligations of the Company and each other
guarantor under the LOC and related loan documents, as well as obligations of the Company and its
subsidiaries under any interest rate swap contracts that may be entered into with lenders party to
the LOC.
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| 18 | REYNOLDS AMERICAN INC |
Note 9 — Borrowing Arrangements
On June 28, 2007, RAI entered into a Fifth Amended and Restated Credit Agreement, which, as
subsequently amended, provides for a five-year, $498 million revolving credit facility, which may
be increased up to $848 million at the discretion of the lenders upon the request of RAI.
Effective July 3, 2009, RAI entered into a Second Amendment to Credit Agreement, referred to
as the Second Amendment, amending RAI’s credit facility. The Second Amendment amends the credit
facility by, among other things:
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