Annual report pursuant to Section 13 and 15(d)

Financing Agreements

v2.4.0.6
Financing Agreements
12 Months Ended
Sep. 30, 2012
Financing Agreements  
Financing Agreements

4.              Financing Agreements

 

Borrowings under financing agreements included:

 

 

 

September 30,

 

 

 

2012

 

2011

 

$600 revolving credit facility (excludes outstanding letters of credit)

 

$

123.0

 

$

 

$400 revolving credit facility (excludes outstanding letters of credit)

 

 

283.0

 

$150 senior unsecured notes, due July 15, 2020, net of discount

 

148.6

 

148.5

 

Total long-term debt

 

$

271.6

 

$

431.5

 

 

On July 27, 2012, we entered into a $600 five-year senior unsecured revolving credit facility (the “Facility”) available in multiple currencies to replace the $400 five-year revolving credit facility entered into in March 2008.  Borrowings under the Facility bear interest at variable rates plus a margin amount based upon our leverage.  In addition, there is a facility fee based upon our leverage.  The Facility matures on July 27, 2017.  Deferred financing costs associated with the Facility are $2.7.  We are amortizing the discount to interest expense over the five-year term.  For fiscal years ended September 30, 2012 and 2011, the weighted-average interest rates were 0.8% and 0.7%.  The availability of borrowings under the Facility is subject to our ability at the time of borrowing to meet certain specified conditions.  These conditions include compliance with covenants, absence of default, and continued accuracy of certain representations and warranties.  Financial covenants include a maximum ratio of Consolidated Indebtedness to Consolidated EBITDA of 3.5 to 1.0 and a minimum ratio of Consolidated EBITDA to interest expense of 3.5 to 1.0.  We classified the Facility as long term based upon the contractual terms of the agreement.  In November 2012, we increased the capacity available under the Facility.  See Note 17 for further details.

 

As of September 30, 2012, we had $6.7 outstanding letters of credit under the Facility, were in compliance with all covenants, and had $470.3 of remaining borrowing capacity available.  As of September 30, 2011, we had $7.1 outstanding letters of credit under the $400 revolving credit facility, were in compliance with all covenants, and had $109.9 of remaining borrowing capacity available.

 

Our Swiss location maintains additional availability of $15.9 through local credit facilities secured by cash or real property.  As of September 30, 2012 and 2011, there were no borrowings under these facilities and availability was reduced by $6.6 and $5.3 for outstanding bank guarantees.  At September 30, 2012 and 2011, we had additional outstanding letters of credit and bank guarantees with other financial institutions totaling $7.8 and $9.7.  We had restricted cash of $1.6 and $0.3 at September 30, 2012 and 2011.

 

On July 9, 2010, we issued $150 of senior unsecured notes (“Notes”) due July 2020.  The Notes bear interest at a fixed rate of 5.5% per year, payable semi-annually in arrears beginning January 15, 2011.  The Notes were issued at a discount of $1.6, resulting in an initial carrying value of $148.4.  We are amortizing the discount to interest expense over the term of the Notes using the effective interest rate method, resulting in an annual interest rate of 5.65%.  Deferred financing costs associated with the Notes of $2.1 are being amortized to interest expense on a straight-line basis over the term of the Notes.  The Notes are unsubordinated obligations of Hillenbrand, Inc. and rank equally in right of payment with all of our other existing and future unsubordinated obligations.

 

The indenture governing the Notes does not limit our ability to incur additional indebtedness.  It does contain certain covenants that restrict our ability to incur secured debt and to engage in certain sale and leaseback transactions.  The indenture provides holders of debt securities with remedies if we fail to perform specific obligations.  In the event of a “Change of Control Triggering Event,” each holder of the Notes has the right to require us to purchase all or a portion of their Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest.  The Notes are redeemable with prior notice to Note holders.