SEC Document

 

As of November 30, 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 October 2017, we declared a dividend in excess of $0.24 per share, and consequently, the adjusted conversion rate at November 30, 2017 was 19.099650.  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 RPM’s election, in cash, shares of RPM’s common stock, or a combination of cash and shares of RPM’s common stock.  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.

We account 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 $1.2 million and amortization of the debt discount was $0.7 million for the second quarter of fiscal 2018 and 2017. Contractual interest was $2.3 million for the first half of fiscal 2018 and 2017, while amortization of the debt discount was $1.5 million and $1.4 million for the first half of fiscal 2018 and 2017, respectively.  At November 30, 2017, the remaining period over which the debt discount will be amortized was 3.0 years, the unamortized debt discount was $9.7 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 November 30, 2017 and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.  

 

 

 

Total Contractual

 

 

Payments Due In

 

 

 

Payment Stream

 

 

2018

 

 

2019-20

 

 

2021-22

 

 

After 2022

 

 

 

(In thousands)

 

Long-term debt obligations

 

$

2,136,960

 

 

$

253,688

 

 

$

695,832

 

 

$

493,089

 

 

$

694,351

 

Capital lease obligations

 

 

1,007

 

 

 

219

 

 

 

345

 

 

 

170

 

 

 

273

 

Operating lease obligations

 

 

213,874

 

 

 

54,066

 

 

 

69,363

 

 

 

36,264

 

 

 

54,181

 

Other long-term liabilities (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest payments on long-term debt obligations

 

 

713,495

 

 

 

81,400

 

 

 

117,839

 

 

 

84,506

 

 

 

429,750

 

Promissory note payments on 524(g) Trust

 

 

125,000

 

 

 

 

 

 

 

125,000

 

 

 

 

 

 

 

 

 

Contributions to pension and postretirement plans (2)

 

 

369,800

 

 

 

8,900

 

 

 

65,800

 

 

 

134,100

 

 

 

161,000

 

Total

 

$

3,560,136

 

 

$

398,273

 

 

$

1,074,179

 

 

$

748,129

 

 

$

1,339,555

 

 

(1)

Excluded from other long-term liabilities are our gross long-term liabilities for unrecognized tax benefits, which totaled $18.1 million at November 30, 2017. Currently, we cannot predict with reasonable reliability the timing of cash settlements to the respective taxing authorities related to these liabilities.

(2)

These amounts represent our estimated cash contributions to be made in the periods indicated for our pension and postretirement plans, assuming no actuarial gains or losses, assumption changes or plan changes occur in any period.  The projection results assume the required minimum contribution will be contributed.  

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