Long-Term Debt



	As of November 30,
	2015			2014
	(In millions)
Senior debt	$	93.8		$	98.8
Senior secured notes	460.0			460.0
Convertible subordinated notes	84.8			133.8
Other debt	13.4			89.6
Total debt, carrying amount	652.0			782.2
Less: Amounts due within one year	(5.3		)	(5.3		)
Total long-term debt, carrying amount	$	646.7		$	776.9

As of November 30, 2015, the earlier of the Company’s contractual debt principal maturities or the next debt redemption date that could be exercised at the option of the debt holder, are summarized by fiscal year as follows:



	Total		2016		2017		2018		2019		2020		2021		2022
	(In millions)
Senior debt	$	93.8	$	5.0	$	5.0	$	5.0	$	78.8	$	—	$	—	$	—
Senior secured notes	460.0		—		—		—		—		—		460.0		—
Convertible subordinated notes (1)	84.8		—		—		—		0.2		84.6		—		—
Other debt	13.4		0.3		0.1		—		—		—		—		13.0
Total debt	$	652.0	$	5.3	$	5.1	$	5.0	$	79.0	$	84.6	$	460.0	$	13.0

_______


(1)	With respect to the 4¹/₁₆% Debentures holders option to require the Company to repurchase all of the outstanding 4¹/₁₆% Debentures, or any portion thereof that is a multiple of $1,000 principal amount, on December 31, 2019, the Company has the unilateral option to pay the 4¹/₁₆% Debentures holders in shares of its common stock.

a. Senior Debt:



	As of November 30,
	2015		2014
	(In millions)
Term loan, bearing interest at variable rates (rate of 2.33% as of November 30, 2015), payable in quarterly installments of $1.3 million plus interest, maturing in May 2019	$	93.8	$	98.8

Senior Credit Facility

In connection with the consummation of the Acquisition, the Company added Pratt & Whitney Rocketdyne, Inc. (“PWR”), Arde, Inc. (“Arde”) and Arde-Barinco, Inc. (“Arde-Barinco”) as subsidiary guarantors under its senior credit facility (the “Senior Credit Facility”) pursuant to that certain Joinder Agreement, dated as of June 14, 2013, by and among PWR, Arde, Arde-Barinco, the Company and Wells Fargo Bank, National Association, as administrative agent. In connection with the consummation of the Acquisition, the name of PWR was changed to Aerojet Rocketdyne of DE, Inc. and the name of Aerojet-General Corporation, an existing subsidiary guarantor at the time of the Acquisition, was changed to Aerojet Rocketdyne, Inc.

On May 30, 2014, the Company, with its wholly-owned subsidiaries Aerojet Rocketdyne, Aerojet Rocketdyne of DE, Inc., Arde, and Arde-Barinco as guarantors, executed an amendment to the Senior Credit Facility with the lenders identified therein and Wells Fargo Bank, National Association, as administrative agent. This amendment to the Senior Credit Facility replaces the Company’s prior credit facility and, among other things, (i) extends the maturity date to May 30, 2019 (which date may be accelerated in certain cases); and (ii) replaces the existing revolving credit facility and credit-linked facility with (x) a revolving credit facility in an aggregate principal amount of up to $200.0 million (with a $100.0 million subfacility for standby letters of credit and a $5.0 million subfacility for swingline loans) and (y) a term loan facility in an aggregate principal amount of up to $100.0 million. The term loan facility will amortize at a rate of 5.0% of the original principal amount per annum to be paid in equal quarterly installments with any remaining amounts due on the maturity date. Outstanding indebtedness under the Senior Credit Facility may be voluntarily prepaid at any time, in whole or in part, in general without premium or penalty.

The Company and the guarantors (collectively, the “Loan Parties”) guarantee the payment obligations of the Company under the Senior Credit Facility. Any borrowings are further secured by (i) certain equity interests owned or held by the Loan Parties and 65% of the voting stock (and 100% of the non-voting stock) of all present and future first-tier foreign subsidiaries of the Loan Parties; (ii) substantially all of the tangible and intangible personal property and assets of the Loan Parties; and (iii) certain real property owned by the Loan Parties located in Culpeper, Virginia, Redmond, Washington and Canoga Park, California. All of the Company’s other real property is excluded from collateralization under the Senior Credit Facility.

As of November 30, 2015, the Company had $44.1 million outstanding letters of credit under the $100.0 million subfacility for standby letters of credit and had $93.8 million outstanding under the term loan facility.

In general, borrowings under the Senior Credit Facility bear interest at a rate equal to LIBOR plus 250 basis points (subject to downward adjustment based on the Company's corporate credit ratings and its leverage ratio), or the base rate as it is defined in the credit agreement governing the Senior Credit Facility. In addition, the Company is charged a commitment fee of 50 basis points per annum on unused amounts of the revolving credit facility (subject to downward adjustment based on the Company's corporate credit ratings and its leverage ratio) and 250 basis points per annum (subject to downward adjustment based on the Company's corporate credit ratings and its leverage ratio), along with a fronting fee of 25 basis points per annum, on the undrawn amount of all outstanding letters of credit.

The Company is subject to certain limitations including the ability to incur additional debt, make certain investments and acquisitions, and make certain restricted payments, including stock repurchases and dividends. The Senior Credit Facility includes events of default usual and customary for facilities of this nature, the occurrence of which could lead to an acceleration of the Company’s obligations thereunder. Additionally, the Senior Credit Facility includes certain financial covenants, including that the Company maintain (i) a maximum total leverage ratio, calculated net of cash up to a maximum of $150.0 million, of 4.50 to 1.00 through the fiscal period ended November 30, 2015, 4.25 to 1.00 through fiscal periods ending November 30, 2017, and 4.00 to 1.00 thereafter; and (ii) a minimum interest coverage ratio of 2.40 to 1.00.



Financial Covenant	Actual Ratios as of November 30, 2015	Required Ratios
Interest coverage ratio, as defined under the Senior Credit Facility	4.77 to 1.00	Not less than: 2.40 to 1.00
Leverage ratio, as defined under the Senior Credit Facility	2.21 to 1.00	Not greater than: 4.50 to 1.00

The Company was in compliance with its financial and non-financial covenants as of November 30, 2015.

b. Senior Secured Notes:



	As of November 30,
	2015		2014
	(In millions)
Senior secured notes, bearing interest at 7.125% per annum, interest payments due in March and September, maturing in March 2021	$	460.0	$	460.0

7.125% Second-Priority Senior Secured Notes

On January 28, 2013, the Company issued $460.0 million in aggregate principal amount of its 7¹/₈% Notes. The 7¹/₈% Notes were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act and outside the U.S. in accordance with Regulation S under the Securities Act. The 7¹/₈% Notes mature on March 15, 2021, subject to early redemption described below. The 7¹/₈% Notes pay interest semi-annually in cash in arrears on March 15, and September 15, of each year, beginning on March 15, 2013. In November 2013, the 7¹/₈% Notes were registered under the Securities Act.

The gross proceeds from the sale of the 7¹/₈% Notes (after deducting underwriting discounts), plus an amount sufficient to fund a Special Mandatory Redemption (as defined in the 7¹/₈% Notes indenture), including accrued interest on the 7¹/₈% Notes, were deposited into escrow pending the consummation of the Acquisition pursuant to an escrow agreement (the “Escrow Agreement”) by and among the Company and U.S. Bank National Association, as trustee for the 7¹/₈% Notes, as escrow agent and as bank and securities intermediary. Pursuant to the Escrow Agreement, the Company continued to deposit accrued interest on the 7¹/₈% Notes on a monthly basis until the satisfaction of the conditions to release the proceeds from escrow. On June 14, 2013, the conditions to release the proceeds from escrow were satisfied and escrow funds were released in connection with the consummation of the Acquisition.

The 7¹/₈% Notes are redeemable at the Company’s option, in whole or in part, at any time prior to March 15, 2016 at a price equal to 100% of the principal amount, plus any accrued and unpaid interest to the date of redemption, plus an applicable premium (as defined in the 7¹/₈% Notes indenture). Thereafter, the Company may redeem the 7¹/₈% Notes, at any time on or after March 15, 2016, at redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and additional interest, if any, thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning March 15 of the years indicated below:



Year	Redemption Price
2016	105.344	%
2017	103.563	%
2018	101.781	%
2019 and thereafter	100.000	%

In addition, before March 15, 2016, the Company may redeem up to 35% of the original aggregate principal amount of the 7¹/₈% Notes at a redemption price equal to 107.125% of the aggregate principal amount of the 7¹/₈% Notes, plus accrued interest, with the proceeds from certain types of public equity offerings.

The 7¹/₈% Notes are fully and unconditionally and jointly and severally guaranteed on a second-priority senior secured basis by each of the Company’s existing and future subsidiaries that guarantee its obligations under the Company’s existing Senior Credit Facility. These 100% owned subsidiary guarantors are Aerojet Rocketdyne, Aerojet Rocketdyne of DE, Inc. (formerly PWR), Arde and Arde-Barinco. The 7¹/₈% Notes are also secured on a second-priority basis by the assets (other than real property) that secure the Company’s and its guarantors’ obligations under the Senior Credit Facility, subject to certain exceptions and permitted liens.

Upon the occurrence of a change of control (as defined in the 7¹/₈% Notes indenture), if the Company has not previously exercised its right to redeem all of the outstanding 7¹/₈% Notes pursuant to the Special Mandatory Redemption or an optional redemption as described in the indenture, the Company must offer to repurchase the 7¹/₈% Notes at 101% of the principal amount of the 7¹/₈% Notes, plus accrued and unpaid interest to the date of repurchase.

The 7¹/₈% Notes indenture contains certain covenants limiting the Company’s ability and the ability of its restricted subsidiaries (as defined in the 7¹/₈% Notes indenture) to, subject to certain exceptions and qualifications: (i) incur additional indebtedness; (ii) pay dividends or make other distributions on, redeem or repurchase, capital stock; (iii) make investments or other restricted payments; (iv) create or incur certain liens; (v) incur restrictions on the payment of dividends or other distributions from its restricted subsidiaries; (vi) enter into transactions with affiliates; (vii) sell assets; or (viii) effect a consolidation or merger.

The 7¹/₈% Notes indenture also contains customary events of default, including, among other things, failure to pay interest, failure to comply with certain repurchase provisions, breach of certain covenants, failure to pay at maturity or acceleration of other indebtedness, failure to pay certain judgments, and certain events of insolvency or bankruptcy. Generally, if any event of default occurs, the 7¹/₈% Notes trustee or the holders of at least 25% in principal amount of the 7¹/₈% Notes may declare the 7¹/₈% Notes due and payable by providing notice to the Company. In case of default arising from certain events of bankruptcy or insolvency, the 7¹/₈% Notes will become immediately due and payable.

The Company used the net proceeds of the 7¹/₈% Notes offering to fund, in part, the acquisition of the Rocketdyne Business, and to pay related fees and expenses.

c. Convertible Subordinated Notes:



	As of November 30,
	2015		2014
	(In millions)
Convertible subordinated debentures, bearing interest at 2.25% per annum, interest payments due in May and November, maturing in November 2024	$	0.2	$	0.2
Convertible subordinated debentures, bearing interest at 4.0625% per annum, interest payments due in June and December, maturing in December 2039	84.6		133.6
Total convertible subordinated notes	$	84.8	$	133.8

2¹/₄% Convertible Subordinated Debentures ("2¹/₄% Debentures")

As of November 30, 2015 and 2014, the Company had $0.2 million outstanding principal amount of its 2¹/₄% Debentures.

4.0625% Convertible Subordinated Debentures

As of November 30, 2015, the Company had $84.6 million outstanding principal of its 4¹/₁₆% Debentures, convertible into 9.4 million of shares of common stock.

In December 2009, the Company issued $200.0 million in aggregate principal amount of 4¹/₁₆% Debentures in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 4¹/₁₆% Debentures mature on December 31, 2039, subject to earlier redemption, repurchase, or conversion. Interest on the 4¹/₁₆% Debentures accrues at 4.0625% per annum and is payable semiannually in arrears on June 30 and December 31 of each year, beginning June 30, 2010 (or if any such day is not a business day, payable on the following business day), and the Company may elect to pay interest in cash or, generally on any interest payment that is at least one year after the original issuance date of the 4¹/₁₆% Debentures, in shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option, subject to certain conditions.

The 4¹/₁₆% Debentures are general unsecured obligations of the Company and rank equal in right of payment to all of the Company’s other existing and future unsecured subordinated indebtedness, including the 2¹/₄% Debentures. The 4¹/₁₆% Debentures rank junior in right of payment to all of the Company’s existing and future senior indebtedness, including all of its obligations under its Senior Credit Facility and all of its existing and future senior subordinated indebtedness. In addition, the 4¹/₁₆% Debentures are effectively subordinated to any of the Company’s collateralized debt, to the extent of such collateral, and to any and all debt and liabilities including trade debt of its subsidiaries.

Each holder of the 4¹/₁₆% Debentures may convert its 4¹/₁₆% Debentures into shares of the Company’s common stock at a conversion rate of 111.0926 shares per $1,000 principal amount, representing a conversion price of approximately $9.00 per share, subject to adjustment. In addition, if the holders elect to convert their 4¹/₁₆% Debentures in connection with the occurrence of certain fundamental changes to the Company as described in the indenture, the holders will be entitled to receive additional shares of common stock upon conversion in some circumstances. Upon any conversion of the 4¹/₁₆% Debentures, subject to certain exceptions, the holders will not receive any cash payment representing accrued and unpaid interest.

The Company may at any time redeem any 4¹/₁₆% Debentures for cash (except as described below with respect to any make-whole premium that may be payable) if the last reported sales price of the Company’s common stock has been at least 150% of the conversion price then in effect for at least twenty (20) trading days during any thirty (30) consecutive trading day period ending within five (5) trading days prior to the date on which the Company provides the notice of redemption.

Each holder may require the Company to repurchase all or part of its 4¹/₁₆% Debentures on December 31, 2019, 2024, 2029 and 2034 (each, an “optional repurchase date”) at an optional repurchase price equal to (1) 100% of their principal amount, plus (2) accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The Company may elect to pay the optional repurchase price in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s option, subject to certain conditions.

If a fundamental change to the Company, as described in the indenture governing the 4¹/₁₆% Debentures, occurs prior to maturity, each holder will have the right to require the Company to purchase all or part of its 4¹/₁₆% Debentures for cash at a repurchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.

If the Company elects to deliver shares of its common stock as all or part of any interest payment, any make-whole premium or any optional repurchase price, such shares will be valued at the product of (x) the price per share of the Company’s common stock determined during: (i) in the case of any interest payment, the twenty (20) consecutive trading days ending on the second trading day immediately preceding the record date for such interest payment; (ii) in the case of any make-whole premium payable as part of the redemption price, the twenty (20) consecutive trading days ending on the second trading day immediately preceding the redemption date; and (iii) in the case of any optional repurchase price, the forty (40) consecutive trading days ending on the second trading day immediately preceding the optional repurchase date; (in each case, the “averaging period” with respect to such date) using the sum of the daily price fractions (where “daily price fraction” means, for each trading day during the relevant averaging period, 5% in the case of any interest payment or any make-whole premium or 2.5% in the case of any optional repurchase, multiplied by the daily volume weighted average price per share of the Company’s common stock for such day), multiplied by (y) 97.5%. The Company will notify holders at least five (5) business days prior to the start of the relevant averaging period of the extent to which the Company will pay any portion of the related payment using shares of common stock.

Effective December 21, 2010, in accordance with the terms of the indenture, the restrictive legend on the 4¹/₁₆% Debentures was removed and the 4¹/₁₆% Debentures are freely tradable pursuant to Rule 144 under the Securities Act of 1933 without volume restrictions by any holder that is not an affiliate of the Company at the time of sale and has not been an affiliate during the preceding three months.

Issuance of the 4¹/₁₆% Debentures generated net proceeds of $194.1 million, which were used to repurchase long-term debt and other debt related costs.

During fiscal 2013, $1.6 million of 4¹/₁₆% Debentures were converted to common stock. Additionally, during fiscal 2013, the Company repurchased $5.2 million principal amount of its 4¹/₁₆% Debentures at various prices ranging from 176% of par to 195% of par. During fiscal 2014, the Company repurchased $59.6 million principal amount of its 4¹/₁₆% Debentures at various prices ranging from 195% of par to 212% of par (see Note 14 for additional information).

During fiscal 2015, $49.0 million of 4¹/₁₆% Debentures were converted to 5.5 million shares of common stock.

d. Other Debt:



	As of November 30,
	2015		2014
	(In millions)
Delayed draw term loan, bearing interest at variable rates (rate of 9.50% as of November 30, 2015), maturing in April 2022	$	13.0	$	89.0
Capital lease, payable in monthly installments, maturing in March 2017	0.4		0.6
Total other debt	$	13.4	$	89.6

Delayed Draw Term Loan

On April 18, 2014, the Company entered into a subordinated delayed draw credit agreement (the “Subordinated Credit Facility”) with the lenders identified therein, and The Bank of New York Mellon, as administrative agent.

The Subordinated Credit Facility provides a term loan facility in an aggregate principal amount of up to $100.0 million. Outstanding indebtedness under the Subordinated Credit Facility may be voluntarily prepaid at any time, in whole or in part, in general without premium or penalty.

In general, borrowings under the Subordinated Credit Facility bear interest at a rate equal to the sum of (x) the greater of LIBOR and 1.00% per annum plus (y) 8.50%, or in the case of base rate loans, the base rate as it is defined in the credit agreement governing the Subordinated Credit Facility plus 7.50%.

The Company is subject to certain limitations under the Subordinated Credit Facility including the ability to incur additional debt, make certain investments and acquisitions, and make certain restricted payments, including stock repurchases and dividends. The Subordinated Credit Facility does not have any financial maintenance covenants. The Subordinated Credit Facility includes events of default usual and customary for facilities of this nature, the occurrence of which could lead to an acceleration of the Company’s obligations thereunder.

The proceeds from the term loan facility were used to repurchase a portion of the outstanding 4¹/₁₆% Debentures.

During fiscal 2015, the Company retired $76.0 million principal amount of its delayed draw term loan.