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HBI » Topics » Our indebtedness subjects us to various restrictions and could decrease our profitability and otherwise adversely affect our business.These excerpts taken from the HBI 10-K filed Feb 19, 2008. Our
indebtedness subjects us to various restrictions and could
decrease our profitability and otherwise adversely affect our
business.
As described in “Management’s Discussion and Analysis
of Financial Condition and Results of Operations —
Liquidity and Capital Resources,” our indebtedness includes
the $2.1 billion senior secured credit facility that we
entered into on September 5, 2006 (the “Senior Secured
Credit Facility”), the $450 million senior secured
second lien credit facility that we entered into on
September 5, 2006 (the “Second Lien Credit
Facility” and, together with the Senior Secured Credit
Facility, the “Credit Facilities”), our
$500 million Floating Rate Senior Notes due 2014 (the
“Floating Rate Senior Notes”) and the
$250 million accounts receivable securitization facility
that we entered into on November 27, 2007 (the
“Receivables Facility”). The Senior Secured Credit
Facility, Second Lien Credit Facility and the indenture
governing the Floating Rate Senior Notes contain restrictions
that affect, and in some cases significantly limit or prohibit,
among other things, our ability to borrow funds, pay dividends
or make other distributions, make investments, engage in
transactions with affiliates, or create liens on our assets. In
addition, the Credit Facilities and the Receivables Facility
require us to maintain financial ratios. If we fail to comply
with the covenant restrictions contained in these agreements,
that failure could result in a default that accelerates the
maturity of the indebtedness under such facilities.
Our leverage also could put us at a competitive disadvantage
compared to our competitors that are less leveraged. These
competitors could have greater financial flexibility to pursue
strategic acquisitions, secure additional financing for their
operations by incurring additional debt, expend capital to
expand their manufacturing and production operations to
lower-cost areas and apply pricing pressure on us. In addition,
because many of our customers rely on us to fulfill a
substantial portion of their apparel essentials demand, any
concern these customers may have regarding our financial
condition may cause them to reduce the amount of products they
purchase from us. Our leverage could also impede our ability to
withstand downturns in our industry or the economy in general.
Our indebtedness subjects us to various restrictions and could decrease our profitability and otherwise adversely affect our business. As described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources,” our indebtedness includes the $2.1 billion senior secured credit facility that we entered into on September 5, 2006 (the “Senior Secured Credit Facility”), the $450 million senior secured second lien credit facility that we entered into on September 5, 2006 (the “Second Lien Credit Facility” and, together with the Senior Secured Credit Facility, the “Credit Facilities”), our $500 million Floating Rate Senior Notes due 2014 (the “Floating Rate Senior Notes”) and the $250 million accounts receivable securitization facility that we entered into on November 27, 2007 (the “Receivables Facility”). The Senior Secured Credit Facility, Second Lien Credit Facility and the indenture governing the Floating Rate Senior Notes contain restrictions that affect, and in some cases significantly limit or prohibit, among other things, our ability to borrow funds, pay dividends or make other distributions, make investments, engage in transactions with affiliates, or create liens on our assets. In addition, the Credit Facilities and the Receivables Facility require us to maintain financial ratios. If we fail to comply with the covenant restrictions contained in these agreements, that failure could result in a default that accelerates the maturity of the indebtedness under such facilities. Our leverage also could put us at a competitive disadvantage compared to our competitors that are less leveraged. These competitors could have greater financial flexibility to pursue strategic acquisitions, secure additional financing for their operations by incurring additional debt, expend capital to expand their manufacturing and production operations to lower-cost areas and apply pricing pressure on us. In addition, because many of our customers rely on us to fulfill a substantial portion of their apparel essentials demand, any concern these customers may have regarding our financial condition may cause them to reduce the amount of products they purchase from us. Our leverage could also impede our ability to withstand downturns in our industry or the economy in general. | EXCERPTS ON THIS PAGE:
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