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Debt and Capital Lease Obligations
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Jun. 26, 2011
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| Debt and Capital Lease Obligations |
10. Debt and Capital Lease Obligations The following table summarizes the Company's debt and capital lease obligations at June 26, 2011 and December 26, 2010:
Senior Secured Term Loan (the Term Loan) On May 12, 2011, Spansion LLC amended its Term Loan to reduce the applicable margin on base rate loans from 3.75 percent per annum to 2.50 percent per annum and on Eurodollar rate loans from 4.75 percent per annum to 3.50 percent per annum, and reduce the LIBOR floor on Eurodollar rate loans from 1.75 percent to 1.25 percent, effective as of May 16, 2011.The Company incurred a $2.5 million prepayment penalty associated with the amendment of the Term Loan which was capitalized as a discount to the Term Loan in accordance with the guidance under ASC Topic No. 470, Debt. At any time prior to May 12, 2012, if the Company makes any prepayment of the Term Loan in connection with certain repricing transactions or effects any amendment of the Term Loan resulting in certain repricing transactions, a prepayment premium of one percent of the amount of the Term Loan being prepaid will be due from the Company. The amendment also provides for increased allowable limits for capitalized leases, loans to employees, threshold for requiring control agreements on deposit accounts, investments, dispositions, general restricted payments and acquisition of certain bankruptcy claims. Additionally, the amendment permits the sale of the Company's headquarters building and consignment of equipment and inventory in connection with the provision of services or products. As of June 26, 2011, the Company was in compliance with all the Term Loan's covenants, including the minimum Consolidated Interest Coverage Ratio test, Consolidated Leverage Ratio and Capital Expenditures. The following shows the required ratios under these financial covenants and the current ratios as of June 26, 2011:
Revolving Credit Facility On May 12, 2011, the Company also amended the Revolving Credit Facility in a fashion similar to those changes made to the Term Loan. Availability on the Revolving Credit Facility was $16.6 million as of June 26, 2011 with no amounts drawn down. The Company was in compliance with all of the Revolving Credit Facility's covenants as of June 26, 2011. |
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