Most of their debt is their revolver to finance ongoing operations. The big question would be, how big a revenue drop could CAP withstand and not default on the revolver?
(a) Revolving Credit Facility
The Company has a senior secured line of credit agreement with a consortium of banks to finance the acquisition of assets and for general working capital purposes. This agreement was amended on May 27, 2008 to increase the maximum credit availability. As of September 30, 2008, the maximum credit commitment under the senior secured line of credit was $290.0 million.
The Company’s senior secured credit facility, including any amounts drawn on the facility, is secured by substantially all of the assets of the Company (excluding CEAB assets) including the containers owned by the Company, the underlying leases thereon and the Company’s interest in any money received under such contracts. The facility may be increased under certain conditions described in the agreement governing the facility. In addition, there is a commitment fee on the unused amount of the total commitment, payable quarterly in arrears. The agreement provides that swing line loans (short-term borrowings of up to $10.0 million in the aggregate that are payable within 10 business days or at maturity date, whichever comes earlier) and standby letters of credit (up to $15.0 million in the aggregate) will be available to the Company. These credit commitments are part of, and not in addition to, the total commitment provided under the agreement. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the senior secured credit facility. As of September 30, 2008, the interest rate under the amended agreement was approximately 3.7%. The agreement governing the Company’s senior secured credit facility also contains various financial and other covenants. It also includes certain restrictions on the Company’s ability to incur other indebtedness or pay dividends to stockholders. As of September 30, 2008, the Company was in compliance with the terms of the senior secured credit facility.
As of September 30, 2008, the outstanding balance under the Company’s senior secured revolving credit facility was $219.4 million, out of which $104.3 million was allocated to CAI Barbados and $115.1 million to CAI U.S., compared to an outstanding balance of $147.6 million that was all allocated to CAI U.S. at December 31, 2007. The portion of this credit facility that was allocated to Barbados is guaranteed by our international subsidiaries. As of September 30, 2008, the Company had $70.3 million in availability under the senior secured credit facility (net of $328,000 in letters of credit) subject to our ability to meet the collateral requirements under the agreement governing the facility. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default. |
