Senior Secured Revolving Credit Facility

9 Months Ended

Sep. 30, 2011

Senior Secured Revolving Credit Facility

Senior Secured Revolving Credit Facility

Note 2. Senior Secured Revolving Credit Facility

On September 29, 2011, the company amended, restated and expanded its existing senior secured revolving credit facility from the prior $924.0 million level to a renewed 5-year $1.1 billion facility. Subject to certain conditions, the company has the opportunity to increase the facility size by an additional $400.0 million. The facility is guaranteed by certain of the company’s subsidiaries and is secured by substantially all of its accounts receivable and inventories. The proceeds of the revolver will be available to fund working capital, capital expenditures, and other general corporate purposes.

The amended credit agreement contains financial covenants and other covenants that limit or restrict our ability to make capital expenditures; incur indebtedness; permit liens on property; enter into transactions with affiliates; make restricted payments or investments; enter into mergers, acquisitions or consolidations; conduct asset sales; pay dividends or distributions and enter into other specified transactions and activities. Our ability to borrow funds within the terms of the revolver is dependent upon our continued compliance with the financial and other covenants contained in the senior secured credit agreement.  At September 30, 2011, there were no outstanding borrowings under our senior secured revolver, which is subject to a quarterly borrowing base.

The senior secured revolving credit facility pricing grid is adjusted quarterly and is based on the company’s leverage of total debt to last-twelve-month’s (LTM) adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transactions, as defined in the credit agreement).  The minimum pricing is LIBOR plus 1.00% or Prime, and the maximum pricing is LIBOR plus 2.00% or Prime plus 1.00%.  In addition the company is subject to an unused commitment fee of between 0.25% and 0.45% (based on leverage of total debt to LTM adjusted EBITDA) which is applied to the unused portion of the $1.1 billion revolver each quarter.