Consolidated Balance Sheets. The Trust was funded with $450 million in cash and a promissory note, bearing no interest and
maturing on or before December 23, 2018 (the Bankruptcy Note). There is one remaining trust payment due. The net present value of the Bankruptcy Note, or $120.4 million, is classified as other long-term liabilities in our
consolidated financial statements at May 31, 2017. A portion of the payments due under the Bankruptcy Note is secured by a right to the equity of SPHC, Republic and Bondex. The Bankruptcy Plan, and Bankruptcy Note, provide for the following
additional contributions to the Trust:
Total current and future contributions to the Trust are deductible for U.S. income tax purposes.
Accounts Receivable Securitization Program
On May 9, 2017, we entered into a new, three-year, $200.0 million accounts receivable securitization facility (the AR Program). The maximum availability
under the AR Program is $200.0 million. Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at
certain times, we may not be able to fully access the $200.0 million of funding available under the AR Program.
As of May 31, 2017, there was no outstanding
balance under the AR Program, which compares with the maximum availability on that date of $200.0 million. The interest rate under the Purchase Agreement is based on the Alternate Base Rate, LIBOR Market Index Rate, one-month LIBOR or LIBOR for a
specified tranche period, as selected by us, plus in each case, a margin of 0.70%. In addition, we are obligated to pay a monthly unused commitment fee based on the daily amount of unused commitments under the Agreement, which fee ranges from 0.30%
to 0.50% based on usage. The AR Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions.
Our failure to comply with the covenants described above and other covenants contained in the Revolving Credit Facility
could result in an event of default under that agreement, entitling the lenders to, among other things, declare the entire amount outstanding under the Revolving Credit Facility to be due and payable. The instruments governing our other outstanding
indebtedness generally include cross-default provisions that provide that under certain circumstances, an event of default that results in acceleration of our indebtedness under the Revolving Credit Facility will entitle the holders of such other
indebtedness to declare amounts outstanding immediately due and payable.
2.25% Convertible Senior Notes due 2020
On December 9, 2013, we issued $205 million of 2.25% convertible senior notes due 2020 (the Convertible Notes). We pay interest on the Convertible Notes
semi-annually on June 15th and December 15th of each year.
The Convertible Notes will be convertible under certain circumstances and during certain
periods at an initial conversion rate of 18.8905 shares of RPM common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $52.94 per share of common stock), subject to adjustment in certain
circumstances. In April 2017, we declared a dividend in excess of $0.24 per share, and consequently, the adjusted conversion rate at May 31, 2017 was 19.049431. The initial conversion price represents a conversion premium of approximately 37%
over the last reported sale price of RPM common stock of $38.64 on December 3, 2013. Prior to June 15, 2020, the Convertible Notes may be converted only upon specified events, and, thereafter, at any time. Upon conversion, the Convertible
Notes may be settled, at RPMs election, in cash, shares of RPMs common stock, or a combination of cash and shares of RPMs common stock.
for the liability and equity components of the Convertible Notes separately, and in a manner that will reflect our nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The effective interest rate on the
liability component is 3.92%. Contractual interest was $4.6 million for both fiscal 2017 and 2016, and amortization of the debt discount was $2.9 million and $2.8 million for fiscal 2017 and 2016, respectively. At May 31, 2017, the remaining
period over which the debt discount will be amortized was 3.5 years, the unamortized debt discount was $11.2 million, and the carrying amount of the equity component was $20.7 million.
The following table summarizes our financial obligations and their expected maturities at May 31, 2017 and the effect such obligations are expected to have on our
liquidity and cash flow in the periods indicated.
Long-term debt obligations
Capital lease obligations
Operating lease obligations
Other long-term liabilities (1):
Interest payments on long-term debt obligations
Promissory note payments on 524(g) Trust
Contributions to pension and postretirement plans (2)
RPM International Inc. and Subsidiaries 29
RPM International Inc. (NYSE: RPM) owns subsidiaries that are world leaders in coatings, sealants, building materials and related services. From homes to precious landmarks worldwide, their brands are trusted by consumers and professionals alike to protect, improve and beautify. Among its leading consumer brands are Rust-Oleum, DAP and Zinsser. Learn more about RPM brands >>
RPM is a compelling long-term investment.
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