Note 10 - Credit Facilities and Indebtedness

6 Months Ended

Mar. 31, 2013

Debt Disclosure [Text Block]

10.          CREDIT FACILITIES AND INDEBTEDNESS

Total Outstanding debt

	March 31, 2013			September 30, 2012
Credit facilities	$	120.0		$	140.0
3.25% Convertible Notes		850.0			850.0
7.5% Bonds		500.0			500.0
5.5% Bonds		300.0			300.0
Total principal debt obligations		1,770.0			1,790.0
Discounts:
3.25% Convertible Notes		(42.0	)		(60.0	)
7.5% Bonds		(1.9	)		(2.1	)
5.5% Bonds		(1.0	)		(1.0	)
Swap fair value adjustments:
7.5% Bonds		67.7			77.0
5.5% Bonds		36.5			42.5
Total outstanding debt, net	$	1,829.3		$	1,846.4

IGT was compliant with all covenants and embedded features required no bifurcation at March 31, 2013.

At March 31, 2013, $120.0 million was outstanding under our $750.0 million revolving credit facility, $606.8 million was available, and $23.2 million was reserved for letters of credit and performance bonds.

On April 23, 2013, we entered into an amended and restated credit agreement, increasing the available revolving line of our credit facility from $750.0 million to $1.0 billion, of which up to $50.0 million is available for letters of credit and up to $50.0 million is available for swing line borrowing. The former facility was terminated in conjunction with the issuance of the new credit facility. Subject to lenders’ consent, the facility may be increased by $250.0 million at any time up to 60 days prior to maturity. At maturity on April 23, 2018, all amounts outstanding will be immediately due and payable. The maturity may be extended upon our request for one year on each of the first and second closing date anniversaries, presuming no default exists.

The new facility interest rates and facility fees are based on our public debt ratings or our net funded debt to EBITDA ratio, whichever is more favorable to IGT. Net funded debt is defined as debt minus any unrestricted cash and investments in excess of $150.0 million. At the initial pricing level of Baa2/BBB, the interest rate was LIBOR plus 100 bps and the facility fee was 17.5 bps.  Additional debt issuance costs of approximately $3.3 million were capitalized and together with $8.2 million of previously deferred offering costs remaining from the former facility will be amortized to interest expense over the new facility term.

Substantially the same as the former credit facility, the new credit facility carries no limitations on share repurchases or dividend payments provided no default exists and includes the following covenants (all terms as defined in the facility document):

· a minimum ratio of 3.0 adjusted EBITDA to interest expense (interest coverage ratio)

· a maximum ratio of 3.5 for net funded debt to adjusted EBITDA (net funded debt leverage ratio)

· certain restrictions on our ability to:

§ pledge the securities of our subsidiaries

§ permit our subsidiaries to incur or guaranty additional debt, or enter into swap agreements

§ incur liens

§ merge with or acquire other companies, liquidate or dissolve

§ sell, transfer, lease or dispose of all or substantially all assets

§ change the nature of our business

The facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including failure to make timely principal and interest payments or satisfy the covenants. An event of default, if not cured, could cause the entire outstanding borrowings under the credit facility to become immediately due and payable, lenders may cease making loans and/or terminate commitments, and cross-default provisions may be triggered in other debt issuances.

3.25% Convertible Notes

	Periods Ended March 31,
	Quarters				Six Months
	2013		2012		2013		2012
Contractual interest expense	$	6.9	$	6.9	$	13.8	$	13.8
Discount amortization		9.1		8.3		18.0		16.4
Remaining discount amortization period (years)		1.1

Bonds

Interest rate swaps executed in conjunction with our bonds are described in Note 9.