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These excerpts taken from the WEN 10-K filed Mar 14, 2008. Trust Preferred
Securities
On September
29, 2005, August 2, 2006 and October 27, 2006, Trust I, Trust II and Trust III
issued preferred securities to unaffiliated investors for gross proceeds of
$50.0 million, $25.0 million and $45.0 million, respectively, and common
securities to the Company for $1.6 million, $0.8 million and $1.4 million,
respectively. The combined proceeds were invested by Trust I, Trust II and Trust
III in $51.6 million, $25.8 million and $46.3 million, respectively, of
unsecured junior subordinated debt securities issued by DC LLC. The junior
subordinated debt securities are the sole assets of the Trusts. The Trust I
securities mature on October 30, 2035 but are callable by DC LLC on or after
October 30, 2010. The Trust II and Trust III securities both mature on October
30, 2036 but are callable by DC LLC on or after October 30, 2011. Interest is
payable quarterly at a floating rate equal to three-month LIBOR plus 3.50% per
annum for Trust I and plus 2.25% per annum for Trust II and Trust III. The rate
as of December 31, 2007 was 8.48% and 7.23%, for Trust I and both Trust II and
Trust III, respectively. The rate as of December 31, 2006 was 8.88% and 7.63%,
for Trust I and both Trust II and Trust III, respectively.
The holders
of the preferred securities of the Trusts are entitled to receive distributions
payable quarterly at a variable rate equal to the respective spread over
three-month LIBOR. The preferred and common securities of the Trusts do not have
a stated maturity date; however, they are subject to mandatory redemption upon
the maturity or call of the junior subordinated debt securities.
Unamortized
deferred issuance costs associated with the junior subordinated debt securities
totaled $2.4 million and $3.1 million as of December 31, 2007 and 2006,
respectively. The debt issuance costs are classified as part of prepaid and
other assets on the consolidated balance sheet. These costs are amortized into
interest expense using a method that approximates the effective yield method
from issuance date to the respective junior subordinated debt securities’ call
date.
DFR has
issued a parent guarantee for the payment of any amounts to be paid by DC LLC
under the terms of the junior subordinated debt securities debenture. The
obligations under the parent guarantee agreement constitute unsecured
obligations of DFR and rank subordinate and junior to all other senior debt. The
parent guarantee will terminate upon the full payment of the redemption price
for the trust preferred securities or full payment of the junior subordinated
debt securities upon liquidation of the Trusts. The junior subordinated debt
securities are subject to several non-financial covenants, including those which
relate to compliance with laws, maintenance of service agreements, protection of
collateral and various notification requirements. Trust I’s junior subordinated
debt securities also have a $200.0 million Consolidated Net Worth covenant,
which by definition excludes intangible assets, including goodwill. Failure to
meet these requirements may cause an event of default resulting in an
acceleration of the outstanding indebtedness. See “Minimum Net Worth Covenant”
below for further discussion.
Trust Preferred Securities On September 29, 2005, August 2, 2006 and October 27, 2006, Trust I, Trust II and Trust III issued preferred securities to unaffiliated investors for gross proceeds of $50.0 million, $25.0 million and $45.0 million, respectively, and common securities to the Company for $1.6 million, $0.8 million and $1.4 million, respectively. The combined proceeds were invested by Trust I, Trust II and Trust III in $51.6 million, $25.8 million and $46.3 million, respectively, of unsecured junior subordinated debt securities issued by DC LLC. The junior subordinated debt securities are the sole assets of the Trusts. The Trust I securities mature on October 30, 2035 but are callable by DC LLC on or after October 30, 2010. The Trust II and Trust III securities both mature on October 30, 2036 but are callable by DC LLC on or after October 30, 2011. Interest is payable quarterly at a floating rate equal to three-month LIBOR plus 3.50% per annum for Trust I and plus 2.25% per annum for Trust II and Trust III. The rate as of December 31, 2007 was 8.48% and 7.23%, for Trust I and both Trust II and Trust III, respectively. The rate as of December 31, 2006 was 8.88% and 7.63%, for Trust I and both Trust II and Trust III, respectively. The holders of the preferred securities of the Trusts are entitled to receive distributions payable quarterly at a variable rate equal to the respective spread over three-month LIBOR. The preferred and common securities of the Trusts do not have a stated maturity date; however, they are subject to mandatory redemption upon the maturity or call of the junior subordinated debt securities. Unamortized deferred issuance costs associated with the junior subordinated debt securities totaled $2.4 million and $3.1 million as of December 31, 2007 and 2006, respectively. The debt issuance costs are classified as part of prepaid and other assets on the consolidated balance sheet. These costs are amortized into interest expense using a method that approximates the effective yield method from issuance date to the respective junior subordinated debt securities’ call date. DFR has issued a parent guarantee for the payment of any amounts to be paid by DC LLC under the terms of the junior subordinated debt securities debenture. The obligations under the parent guarantee agreement constitute unsecured obligations of DFR and rank subordinate and junior to all other senior debt. The parent guarantee will terminate upon the full payment of the redemption price for the trust preferred securities or full payment of the junior subordinated debt securities upon liquidation of the Trusts. The junior subordinated debt securities are subject to several non-financial covenants, including those which relate to compliance with laws, maintenance of service agreements, protection of collateral and various notification requirements. Trust I’s junior subordinated debt securities also have a $200.0 million Consolidated Net Worth covenant, which by definition excludes intangible assets, including goodwill. Failure to meet these requirements may cause an event of default resulting in an acceleration of the outstanding indebtedness. See “Minimum Net Worth Covenant” below for further discussion. | EXCERPTS ON THIS PAGE:
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