This excerpt taken from the CVH 8-K filed Jul 1, 2005.
ITEM 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
As discussed above, on June 30, 2005 the Company entered into new credit facilities providing for a revolving credit facility in the maximum principal amount of $350 million and a term loan in the principal amount of $100 million.
The term loan facility has a maturity of five years and requires regularly scheduled annual payments of principal in the amount of $10 million per year. Unless terminated earlier, the revolving credit facility will mature five years after closing and is payable in full upon its maturity on the termination date.
Loans under the new credit facilities bear interest at a margin or spread in excess of either (1) the one-, two-, three-, six-, nine-, or twelve- month rate for Eurodollar deposits (the Eurodollar Rate) or (2) the greater of the federal funds rate plus 0.5% or the base rate of the Administrative Agent (Base Rate), as selected by the Company. The margin or spread depends on the Companys non-credit-enhanced long-term senior unsecured debt ratings and varies from 0.450% to 1.750% for Eurodollar Rate advances and from 0.000% to 0.500% for Base Rate advances. Commitment fees will accrue and be payable quarterly in arrears at a rate ranging from 0.100% to 0.375% depending on the Companys non-credit-enhanced long-term senior unsecured debt ratings, multiplied by the daily average unused portion of the revolving credit facility.
The revolving credit facility provides for a $60 million subfacility for letters of credit. Letter of credit fees are payable in respect of outstanding letters of credit at a rate per annum equal to the applicable margin for Eurodollar Rate advances.
The Credit Agreement contains various affirmative and negative covenants, including, among others, covenants that restrict the ability of the Company and its subsidiaries to: create or permit liens on assets; engage in mergers or consolidations; make accounting changes; dispose of assets; pay dividends or other distributions, purchase or redeem the Companys equity securities or those of its subsidiaries and make other restricted payments; enter into new lines of business; agree with others to limit the ability of the Companys subsidiaries to pay dividends or other restricted payments or to make loans or transfer assets to the Company or another of its subsidiaries; agree with
others to limit their ability to grant liens on assets. The Credit Agreement also includes covenants that restrict the ability of the Companys subsidiaries to incur indebtedness and guarantee obligations. The Credit Agreement also requires compliance with specified financial ratios and tests, including a maximum leverage ratio and a minimum fixed charge coverage ratio.
If an event of default under the new credit facilities shall occur and be continuing, the commitments under the new credit facilities may be terminated and the principal amount outstanding under the new credit facilities, together with all accrued unpaid interest and other amounts owing under the Credit Agreement and related loan documents, may be declared immediately due and payable.
The Company will use the net proceeds of the borrowings under the new credit facilities to refinance its existing term loan and revolving credit facility.
The description set forth above in Item 1.01 and this Item 2.03 is qualified by the Credit Agreement, which is filed as an exhibit herewith.
SECTION 9 FINANCIAL STATEMENT AND EXHIBITS