Annual report pursuant to Section 13 and 15(d)

Debt

v2.4.0.6
Debt
12 Months Ended
Dec. 31, 2011
Debt [Abstract]  
Debt
Note 14 – Debt

Short-term debt at December 31, 2011 and 2010 consisted of the following:

(in millions)
 
2011
   
2010
           
Current maturities of long-term debt
  $ 1.5     $ 1.7
Other short-term debt
    0.9       0.5
               
Total short-term debt
  $ 2.4     $ 2.2

In March 2011, the Company entered into a five-year $300.0 million secured, asset-based borrowing facility (Facility).  Borrowings under this Facility are subject to the value of the borrowing base, consisting of certain accounts receivable and inventory of the Company's domestic subsidiaries.  As of December 31, 2011, the borrowing base totaled $254.4 million and available borrowing capacity totaled $231.5 million, net of $22.9 million of letters of credit outstanding under the Facility.  The Company has the ability to issue up to $125.0 million in letters of credit under the Facility.  The Company pays a facility fee of 25.0 to 62.5 basis points per annum, which is adjusted based on a leverage ratio.  The facility fee was 37.5 basis points per annum as of December 31, 2011.  Under the terms of the Facility, the Company has multiple borrowing options, including borrowing at a rate tied to adjusted LIBOR plus a spread of 225 to 300 basis points, which is adjusted based on a leverage ratio.  The borrowing spread was 250 basis points as of December 31, 2011.  The Company may also borrow at the highest of the following, plus a spread of 125 to 200 basis points, which is adjusted based on a leverage ratio (150 basis points as of December 31, 2011); the Federal Funds rate plus 0.50 percent; the Prime Rate established by JPMorgan Chase Bank, N.A., or the one month adjusted LIBOR rate plus 1.00 percent.

The Company's borrowing capacity may also be affected by the fixed charge covenant included in the Facility.  The covenant requires that the Company maintain a fixed charge coverage ratio, as defined in the agreement, of greater than 1.0, whenever unused borrowing capacity plus certain cash balances (together representing Availability), falls below $37.5 million.  At the end of 2011, the Company had a fixed charge coverage ratio in excess of 1.0, and therefore had full access to borrowing capacity available under the Facility.  When the fixed charge covenant ratio is below 1.0, the Company is required to maintain at least $37.5 million of Availability in order to be in compliance with the covenant.  Consequently, the borrowing capacity is effectively reduced by $37.5 million whenever the fixed charge covenant ratio falls below 1.0.  Upon entering into the Facility in March 2011, the Company terminated its existing Mercury Receivables ABL Facility, as described in Note 8 – Financial Services, and its $400.0 million secured, asset-based facility, which was set to expire in May 2012.  As a result of terminating these agreements, the Company wrote off $1.1 million of deferred debt issuance costs during the first quarter of 2011.

Long-Term Debt at December 31, 2011 and 2010 consisted of the following:

(in millions)
 
2011
 
2010
 
             
Senior notes, currently 11.25%, due 2016, net of discount of $5.9 and $8.4
  $ 287.9     $ 341.6  
Notes, 7.125% due 2027, net of discount of $0.6 and $0.8
    167.2       199.2  
Debentures, 7.375% due 2023, net of discount of $0.3 and $0.4
    114.4       124.6  
Senior notes, currently 11.75%, due 2013
    73.0       117.2  
Loan with Fond du Lac County Economic Development Corporation, 2.0% due 2021, net of discount of $7.3 and $8.0
    42.7       42.0  
Notes, various up to 5.892% payable through 2022
    6.7       5.5  
      691.9       830.1  
Current maturities of long-term debt
    (1.5 )     (1.7 )
                 
Long-term debt
  $ 690.4     $ 828.4  
                 
Scheduled maturities, net of discounts
               
2012
  $ 1.5          
2013
    84.6          
2014
    6.2          
2015
    5.6          
2016
    293.5          
Thereafter
    300.5          
                 
Total long-term debt including current maturities
  $ 691.9          

Under the terms of the loan with the Fond du Lac County Economic Development Corporation, up to approximately 43 percent of the principal due is forgivable if the Company achieves certain employment target levels as outlined in the agreement. The amount of loan forgiveness is based on average employment levels at the end of the previous four quarters.

The Company's debt-repurchase activity during the years ended December 31, 2011 and 2010 was as follows:

(in millions)
 
2011
   
2010
           
Senior notes, currently 11.75%, due 2013
  $ 44.2     $ 36.2
Senior notes, currently 11.25%, due 2016
    56.2       -
Notes, 7.125%, due 2027
    32.1       -
Debentures, 7.375%, due 2023
    10.3       -
               
Total debt repurchases
  $ 142.8     $ 36.2
               
Loss on early extinguishment of debt
  $ 19.8     $ 5.7