Debt

12 Months Ended

Dec. 31, 2011

Debt

Debt

Note 6 - Debt

(In millions)	December 31, 2011		December 31, 2010
Foreign operation’s working capital line of credit	$	4.8	$	7.1
Current maturities of capital lease and other obligations	0.3		0.5
Current maturities of term B loan	7.5		5.0
Current maturities of 6.75% senior subordinated notes due 2015	—		15.0
Short-term borrowings and current maturities of long-term debt	12.6		27.6
Senior secured credit facility — new term B loan due 2015	85.0		92.5
Senior secured credit facility — revolving loan due 2015	78.0		—
6.75% senior subordinated notes due 2015	73.5		210.0
Capital lease and other obligations	1.8		2.1
Long-term notes payable and capital lease obligations	238.3		304.6
Total debt	$	250.9	$	332.2

Estimated Fair Values of Notes Payable

The approximate, aggregate fair value of our notes payable as of December 31, 2011 and 2010 were as follows:

(In millions)	December 31, 2011		December 31, 2010
6.75% senior subordinated notes, due 2015	$	74.0	$	225.6
Senior secured credit facility — New Term B loan due 2015	$	93.0	$	98.0

The aggregate fair values of the notes payable were estimated on the basis of quoted market prices.

Senior Secured Credit Facility

Hexcel Corporation has a $385 million senior secured credit facility (the “Facility”), consisting of a $285 million revolving loan and a $100 million term loan.  The Facility matures on July 9, 2015.  The interest rate on the Facility is LIBOR plus 2.75% and ranges down to LIBOR plus 2% depending upon the leverage ratio.  For the year ended December 31, 2010, our leverage ratio was less than 1.75; accordingly in 2011 the margin paid on our borrowing rate was 2%.  The term loan was borrowed at closing and once repaid cannot be reborrowed.  The term loan is scheduled to be repaid at an initial rate of $1.3 million per quarter and approximately $2.5 million per quarter, beginning in September 2012, with two payments of $10.0 million in September 2014 and December 2014 and two final $25.0 million payments in March and June 2015.

The Facility permits us to issue letters of credit up to an aggregate amount of $40 million and allows us to draw up to $75 million in Euros.  Amounts drawn in Euros or any outstanding letters of credit reduce the amount available for borrowing under the revolving loan.  As of December 31, 2011, we had issued letters of credit totaling $2.2 million under the Facility.  In addition, we had $78.0 million of borrowings under the revolving loan at December 31, 2011.  Total undrawn availability under the Senior Secured Credit Facility as of December 31, 2011 was $204.8 million.

The credit agreement contains financial and other covenants including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio, and limitations on capital expenditures. In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 4.00 (based on the ratio of EBITDA, as defined in the credit agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.00 (based on the ratio of total debt to EBITDA) throughout the term of the Facility.  In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default. A violation of any of these covenants could result in a default under the credit agreement, which would permit the lenders to accelerate the payment of all borrowings and to terminate the credit agreement.  In addition, such a default could, under certain circumstances, permit the holders of other outstanding unsecured debt to accelerate the repayment of such obligations. As of December 31, 2011, we were in compliance with all debt covenants and expect to remain in compliance.

Additionally we have interest rate swaps totaling approximately $98 million that expire in March 2014.  These interest rate swaps are designated as cash flow hedges to our term loan.  The interest rate swaps trade LIBOR for a fixed rate at an average rate of 1.03%.

6.75% Senior Subordinated Notes, due 2015

On February 1, 2005, we issued $225 million of 6.75% senior subordinated notes due 2015. The senior subordinated notes are unsecured senior subordinated obligations of Hexcel Corporation.  Interest accrues at the rate of 6.75% per annum and is payable semi-annually in arrears on February 1 and August 1.  The senior subordinated notes mature on February 1, 2015.

On February 1, 2011, we redeemed $150 million of these notes at a call premium of 2.25%.  The redemption was primarily funded by a $135.0 million add-on to our senior secured credit facility that was completed in December 2010. As a result of the redemption, we accelerated the unamortized financing costs of the senior subordinated notes being redeemed and expensed the call premium incurring a pretax charge of $4.9 million (after tax of $0.03 per diluted share) in the first quarter of 2011.

As of February 1, 2012, we had the option to redeem all or a portion of the remaining senior subordinated notes at 101.25%, with this percentage decreasing to 100.0% any time on or after February 1, 2013.  In the event of a “change of control” (as defined in the indenture), we are generally required to make an offer to all noteholders to purchase all outstanding senior subordinated notes at 101% of the principal amount plus accrued interest.

The indenture contains various customary covenants including, but not limited to, restrictions on incurring debt, making restricted payments (including dividends), the use of proceeds from certain asset dispositions, entering into transactions with affiliates, and merging or selling all or substantially all of our assets.  The indenture also contains many other customary terms and conditions, including customary events of default, some of which are subject to grace and notice periods.

Other Credit Facility

We have a $12.0 million borrowing facility for working capital needs of our Chinese entity with an outstanding balance of $4.8 million on December 31, 2011. The facility contains a $10.0 million revolving credit line and a $2.0 million factoring facility.  The factoring facility was not used in 2011.  These funds can only be used locally, and accordingly, we do not include this facility in our borrowing capacity disclosures.  The facility expires on September 6, 2012 and is guaranteed by Hexcel.

Aggregate Maturities of Debt

The table below reflects aggregate scheduled maturities of notes payable, excluding capital lease obligations, as of December 31, 2011.  See Note 7 for capital lease obligation maturities.

Payable during the years ending December 31:	(In millions)
2012	$	12.4
2013	10.0
2014	25.0
2015	201.5
2016	—
Total debt	$	248.9