Filing said, the $50 Million Unsecured Term Loan together with available cash and borrowings on its secured revolving credit facility were used to redeem, satisfy and discharge in full the Company's 7.875% senior subordinated notes due 2013 (the "7.875% Notes"), and to pay certain fees and expenses incurred in connection with the Unsecured Credit Agreement and the redemption, satisfaction and discharge of the 7.875% Notes.
Their Unsecured Term Loan will bear interest at a rate of 15% per annum! They had to borrow money at 15% to pay off a 7.875% Note. Can you say, delaying the inevitable?
Best management team in the business? F-off you greedy pigs!
Best part is by my calculations they wont pay down principal fast enough to avoid paying the 10% clause. By calcing out the payment schedule, CVO never gets to the threshold. CVO will be paying the 25% effective rate until the 1st payment in 2015. Only reason it goes away is that after the Nov 2014 stepdown the threshold is -0-. Great deal boys. What should have been a payment of $4,030,639.84 is now $4,858,415.62 for 8 payments. Macquarie has some smart folks over there. They get their extra 10% either way for 2 years. They effectively get a 9th payment. Then, as the second half of the loan starts, they still get to push for excess cash flow payments. Genius. Absolutely genius. Best Management Team in the business found a way to actually increase the effective rate on $50mil of borrowing 4x from 7.875 to 25%. Sure, its only for 8 quarters, but really does it matter?
Atta boy! Rip some more stock off the old TP role. Cant wait for the instiutional investors to get their first year MBAs to analyze this mess. What a sham of financial management. I guess its good to get it behind the company, but christ at what cost? Oh yeah, who cares. With Debt Sales hovering around 1:1, the debt will never be paid off.
See how long it takes S&P et al to revise the outlook back down on these deal terms. B Schools take note: Case Study in what not to do in progress.
Indeed web m! but just remember........they could charge whatever interest rate they want but that dosent mean they will ever collect! They probly borrowed an extra ten or twenty million to pay the trio package bonus for 2013! guess whos laughing all the way tgo the bank? What a shame