Pallet-Management-Services - AFM

| ANNUAL REPORT 2006 | IFCO SYSTEMS N.V. |
amount of the Senior Secured Notes plus accrued and unpaid
interest. A change of control, as defined, does not include a
change in ownership if the sale of voting stock to an acquirer is
made by holders who received this stock in connection with the
conversion of the former Senior Subordinated Notes.
The indenture governing the Senior Secured Notes contains
a number of covenants that, among other things, limit the
Company and its subsidiaries’ ability to incur additional debt,
make certain restricted payments, create certain liens, dispose
of assets and subsidiary capital stock, merge or consolidate,
issue guarantees, pay dividends, and otherwise restrict certain
corporate activities. The Senior Secured Notes also limit the
Company’s obligations under finance leases to €25.0 million.
The Senior Secured Notes also contain customary events of
default, including non-payment of principal, interest or fees,
material inaccuracy of certain representations and warranties,
violation of covenants, cross-default to certain other debt,
certain events of bankruptcy and insolvency, material judgments,
and a change of control in certain circumstances.
The Senior Secured Notes are not listed on a public market. The
fair value of the Senior Secured Notes has been determined
by using the fair values of comparable notes of comparable
companies. These comparisons support Company’s assessment
that fair value is nearly equal to nominal value.
Working Capital Facility
During 2004, one of the Company’s indirect European
subsidiaries entered into a €20.0 million working capital
facility (the Facility). The purpose of the Facility was to provide
a mechanism to secure certain letters of credit which the
Company had issued and to provide for liquidity as necessary
for capital or working capital requirements. During 2005, the
Facility was increased to €35.0 million. During 2006, the Facility
was increased to €40.0 million and then to €44.0 million,
respectively.
Outstanding cash borrowings, which are limited to €24.0 million
(US $31.7 million based on exchange rates as of December 31,
2006), accrue interest at a variable rate of interest based on the
Euro Over Night Index Average (Eonia), with interest payable
quarterly. Due to the variability of this interest rate basis, the
Company is exposed to interest rate fluctuations in that respect.
No principal payments are due under the Facility, which is
secured by certain assets of our European operations, until its
86
maturity in July 2007. The carrying amount of assets pledged
is US $82.6 million.
The working capital facility agreement contains financial
covenants as EBITDA leverage, interest coverage and
magnitude of EBIT and refundable deposit.
As of December 31, 2006, there were US $3.5 million
outstanding cash borrowings and approximately US $13.7
million in outstanding letters of credit under the Facility.
Maturities of debt
Long-term debt consists of the following:
US $ in thousands As of December 31,
2006 2005
Senior secured notes 145,167 130,262
Other 3,908 602
149,075 130,864
Less: current maturities (3,545) (226)
145,530 130,638
Less: deferred financing costs (5,360) (6,308)
The maturities of long-term debt are as follows as of
December 31, 2006:
140,170 124,330
US $ in thousands Amount
2007 3,545
2008 47
2009 32
2010 145,451
2011 –
149,075