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Debt

3 Months Ended

Dec. 31, 2011

12. DEBT ARRANGEMENTS

The Company’s liquidity requirements are affected by crop seasonality, foreign currency and interest rates, green tobacco prices, crop size and quality, as well as other factors. The Company monitors and adjusts funding sources that include cash from operations and various types of financings based on a number of industry, business, and financial market dynamics. Movement and changes between these various funding sources provides flexibility to help maximize various business opportunities, while minimizing associated costs where possible. The Company’s sales patterns and timing of shipments are shifting from larger volumes shipping in the first part of the fiscal year to the second half of the fiscal year. Factors such as later crop purchasing this year in a number of regions, transportation challenges in Africa, shifts in customer timing and mix, and the impact of Hurricane Irene in North Carolina have collectively created further timing shifts to its business this year. As such, fourth quarter shipping is important to meeting full year expectations.

The Company continues monitoring turbulence in the capital markets as a result of the European debt crisis, and believes that it is well positioned with no major long-term debt maturities in the next twelve months, good availability to crop lines globally, and appropriate levels of cash on hand. As of December 31, 2011, available credit lines and cash were $775,816, comprised of $150,647 in cash and $625,169 of credit lines, of which $10,810 million was exclusively for letters of credit.

Senior Secured Credit Facility

Fourth Amendment. On November 3, 2011, the Company closed the Fourth Amendment to the Credit Agreement that expires March 31, 2013. The amendment permits the exclusion of specified levels of restructuring and impairment charges from the financial covenants impacted by the Company’s EBIT for fiscal quarters ending on or prior to March 31, 2012 and permits the exclusion of specified levels of costs and expenses associated with the commercialization, sale or dissolution of the Company’s Alert business from the financial covenants impacted by the Company’s EBIT for fiscal quarters ending on or prior to December 31, 2011. The amendment also extends to April 30, 2012 the period in which the Company is permitted to form one or more subsidiaries for a specified business purpose to be funded by up to $1,000 in equity and $30,000 in subordinated note investments by the Company, provided the subsidiary or subsidiaries receive revolving credit financing of up to $200,000 from third parties and issue subordinated notes for an aggregate of up to $100,000.

The senior secured credit facility under which the Company had borrowings of $85,000 at December 31, 2011 contains various financial covenants. The Company did not meet the hurdle rate for the consolidated leverage ratio covenant on December 31, 2011; however, the Company was provided a waiver of this covenant for the period October 1, 2011 through December 31, 2011. The Company believes that it will be able to maintain compliance with each of the financial covenants over the next year and, accordingly, has classified the $85,000 of borrowings as long-term debt at December 31, 2011. Significant changes in market conditions could adversely affect the Company’s business. As a result, there can be no assurance that the Company will be able to maintain compliance with its financial covenants in the future.

Senior Notes

At December 31, 2011, the Company did not achieve the ratio of consolidated EBITDA to fixed charges of at least 2.0 to 1.0 under the indenture governing the 10% Senior Notes due 2016 necessary to access the restricted payments basket for the purchase of common stock, payment of dividends and other actions under that basket. The Company from time to time may not satisfy this ratio.

Foreign Seasonal Lines of Credit

The Company has typically financed its non-U.S. operations with uncommitted unsecured short-term seasonal lines of credit at the local level. These operating lines are seasonal in nature, normally extending for a term of 180 to 270 days corresponding to the tobacco crop cycle in that location. These facilities are typically uncommitted in that the lenders have the right to cease making loans and demand repayment of loans at any time. These loans are typically renewed at the outset of each tobacco season. As of December 31, 2011, the Company had approximately $429,120 drawn and outstanding on foreign seasonal lines with maximum capacity totaling $853,535 subject to limitations as provided for in the Credit Agreement. Additionally against these lines there was $10,810 available in unused letter of credit capacity with $4,316 issued but unfunded.

The following table summarizes the debt financing as of December 31, 2011 and 2010, and March 31, 2011.

				December 31, 2011
	Outstanding			Lines and
	March 31,	December 31,	December 31,	Letters	Interest
	2011	2010	2011	Available	Rate
Senior secured credit facility:
Revolver ⁽¹⁾	$ 148,000	$ 28,000	$ 85,000	$ 205,000	6.0%	⁽²⁾
Senior notes:
10% senior notes due 2016	611,756	610,954	614,295	-	10.0%
8 ½% senior notes due 2012	6,000	6,000	6,000	-	8.5%
	617,756	616,954	620,295	-
5 ½% convertible senior subordinated notes due 2014	115,000	115,000	115,000	-	5.5%
Other long-term debt	4,399	3,098	54,308	70	9.7%	⁽²⁾
Notes payable to banks ⁽³⁾	231,407	239,786	429,120	409,289	2.9%	⁽²⁾
Total debt	$ 1,116,562	$ 1,002,838	$ 1,303,723	614,359
Short term	$ 231,407	$ 239,786	$ 429,120
Long term:
Long term debt current	$ 784	$ 435	$ 1,271
Long term debt	884,371	762,617	873,332
	$ 885,155	$ 763,052	$ 874,593
Letters of credit	$ 4,859	$ 3,699	$ 4,316	10,810
Total credit available				$ 625,169
(1) As of December 31, 2011 pursuant to Section 2.1 (A) (iv) of the Credit Agreement, the full Revolving Committed Amount was available based on the calculation of the lesser of the Revolving Committed Amount and the Working Capital Amount.

(2) Weighted average rate for the nine months ended December 31, 2011.

(3) Primarily foreign seasonal lines of credit.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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