Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit
facilities, stood at $1.15 billion at May 31, 2017. Our debt-to-capital ratio was 59.3% at May 31, 2017, compared with 54.4% at May 31, 2016.
5.250% Notes due 2045 and 3.750% Notes due 2027
On March 2, 2017, we issued $50.0 million aggregate principal amount of 5.250% Notes due 2045 (the 2045 Notes) and $400.0 million aggregate
principal amount of 3.750% Notes due 2027 (the 2027 Notes). The 2045 Notes are a further issuance of the $250 million aggregate principal amount of 5.250% Notes due 2045 initially issued by us on May 29, 2015. Interest on the
2045 Notes accrues from December 1, 2016 and is payable semiannually in arrears on June 1st and December 1st of each year, beginning June 1, 2017, at a rate of 5.250% per year. The 2045 Notes mature on June 1, 2045. Interest on the
2027 Notes accrues from March 2, 2017 and is payable semiannually in arrears on March 15th and September 15th of each year, beginning September 15, 2017, at a rate of 3.750% per year. The 2027 Notes mature on March 15, 2027. The
indenture governing this indebtedness includes cross-acceleration provisions. Under certain circumstances, where an event of default under our other instruments results in acceleration of the indebtedness under such instruments, holders of the
indebtedness under the indenture are entitled to declare amounts outstanding immediately due and payable.
Revolving Credit Agreement
During fiscal 2015, we entered into an $800.0 million unsecured syndicated revolving credit facility (the New Revolving Credit Facility),
which expires on December 5, 2019. The New Revolving Credit Facility replaced our prior $600.0 million revolving credit facility.
The New Revolving Credit
Facility includes sublimits for the issuance of swingline loans, which are comparatively short-term loans used for working capital purposes and letters of credit. The aggregate maximum principal amount of the commitments under the New Revolving
Credit Facility may be expanded upon our request, subject to certain conditions, up to $1.0 billion. The New Revolving Credit Facility is available to refinance existing indebtedness, to finance working capital and capital expenditures, to
satisfy all or a portion of our obligations relating to the plan of reorganization for our SPHC subsidiary, and for general corporate purposes.
The New Revolving
Credit Facility requires us to comply with various customary affirmative and negative covenants, including a leverage covenant and interest coverage ratio, which are calculated in accordance with the terms as defined by the credit agreement. Under
the terms of the leverage covenant, we may not permit our consolidated indebtedness as of any fiscal quarter end to exceed 65% of the sum of such indebtedness and our consolidated shareholders equity on such date. The minimum required
consolidated interest coverage ratio for EBITDA to interest expense is 3.50 to 1. The interest coverage ratio is calculated at the end of each fiscal quarter for the four fiscal quarters then ended using an EBITDA as defined in the credit agreement.
As of May 31, 2017, we were in compliance with all financial covenants contained in our New Revolving Credit Facility, including the leverage and interest
coverage ratio covenants. At that date, our leverage ratio was 58.1%, while our interest coverage ratio was 9.2 to 1. Our available liquidity under our New Revolving Credit Facility stood at $599.1 million at May 31, 2017.
Our access to funds under our New Revolving Credit Facility is dependent on the ability of the financial institutions that are parties to the New Revolving Credit
Facility to meet their funding commitments. Those financial institutions may not be able to
meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive
volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our New Revolving Credit Facility are several and not joint and, as a result, a funding default by one or more institutions
does not need to be made up by the others.
s previously reported, during fiscal 2015, a plan of reorganization was confirmed (the Bankruptcy Plan) and,
effective as of December 23, 2014, Bondex, SPHC, Republic and NMBFiL emerged from bankruptcy. Accordingly, trusts were established under Section 524(g) of the United States Bankruptcy Code (together, the Trust) and were funded
with first installments. Borrowings under our New Revolving Credit Facility were used to fund the initial trust payment of $450 million, which is classified as long-term debt in our 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
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.
RPM International Inc. and Subsidiaries 47
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 >>
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