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Note 9 - Long-Term Debt

9 Months Ended

Feb. 28, 2014

9. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

Senior Secured Credit Facilities, Security Agreement and Guaranty

	As of
	February 28, 2014			May 31, 2013

Term Loan Facility, net of $9,928 and $11,384 debt discounts, respectively	$	646,774			650,293
Notes, net of $3,998 and $4,370 debt discounts, respectively		396,002			395,630
Capital lease agreements		33			67
		1,042,809			1,045,990
Less current portion, net of discounts		(4,624	)		(6,712	)
Long-term debt, net of current portion	$	1,038,185			1,039,278

The Company is party to a credit agreement and related security and other agreements as subsequently amended, with a bank syndicate of lenders, and Citibank N.A. as the Administrative Agent. The credit agreement, as amended, provides for (1) a $663.4 million senior secured term loan facility with Term B-2 Loans (the “Term Loan Facility”) and (2) a $100.0 million senior secured revolving loan facility (the “Revolving Facility,” and together with the Term Loan Facility, the “Senior Credit Facilities”). In addition to borrowings upon prior notice, the Revolving Facility includes borrowing capacity in the form of letters of credit and borrowings on same-day notice, referred to as swing line loans, in each case, up to $25.0 million, and is available in U.S. dollars, GBP, Euros, Yen, Canadian dollars and in such other currencies as the Company and the Administrative Agent under the Revolving Facility may agree (subject to a sublimit for such non-U.S. currencies).

During the first quarter of fiscal 2013, the Company modified the Senior Credit Facilities via a loan amendment. This amendment provided for a new class of term loan debt, lowered the interest rates on the Term Loan Facility by 1.5% and the Revolving Facility by 1.25%, and extended the maturity date of the Revolving Facility to August 2017. As a result of this amendment and debt modification, the Company recognized a $6.7 million loss on debt extinguishment.

During the third quarter of fiscal 2013, the Company refinanced its Senior Credit Facilities which lowered interest rates on the Term Loan Facility by 0.75% and provided for additional borrowings under the Term Loan Facility of $6.0 million. The refinancing completed in February 2013 also lowered the interest rate on the Revolving Facility and modified the financial covenant per the Senior Credit Facilities to only apply to the Revolving Facility.

Borrowings under the Senior Credit Facilities bear interest at a rate per annum equal to an applicable margin plus, at the Company’s option, either (a) in the case of borrowings in U.S. dollars, a base rate determined by reference to the highest of (1) the prime rate of Citibank, N.A., (2) the federal funds effective rate plus 0.50% and (3) a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (b) in the case of borrowings in U.S. dollars or another currency, a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, which, in the case of the Term Loan Facility only, shall be no less than 1.25%. The applicable margin for borrowings under the Term Loan Facility is 2.75% with respect to base rate borrowings and 3.75% with respect to LIBOR borrowings. The applicable margin for borrowings under the Revolving Facility is 2.75% with respect to base rate borrowings and 3.75% with respect to LIBOR borrowings. The applicable margin for borrowings under the Revolving Facility is subject to a 0.25% step-down, when the Company’s senior secured net leverage ratio at the end of a fiscal quarter is less than or equal to 3:00 to 1:00.

The interest rate on the Term Loan Facility was 5.00% as of February 28, 2014 and May 31, 2013. At February 28, 2014, there were no outstanding borrowings under the Revolving Facility and no outstanding letters of credit.

The Company is required to make scheduled principal payments on the last business day of each calendar quarter equal to 0.25% of the original principal amount of loans under the Term Loan Facility with the balance due and payable on August 19, 2018. Currently scheduled principal payments are $1.7 million per quarter. The Company is also required to repay loans under the Term Loan Facility based on annual excess cash flows as defined in the credit agreement governing the Term Loan Facility and upon the occurrence of certain other events set forth in that credit agreement. The $2.0 million additional principal due under the terms of the excess cash flow requirement was paid in September 2013. The terms of the Senior Credit Facilities provide that any principal paid as a result of the excess cash flow requirement, shall be applied to the scheduled installments of principal following the date of prepayment in direct order of maturity.

All obligations under the Senior Credit Facilities are unconditionally guaranteed by the parent company of Immucor (the “Parent”) and certain of Immucor’s existing and future wholly owned domestic subsidiaries (such subsidiaries collectively, the “Subsidiary Guarantors”), and are secured, subject to certain exceptions, by substantially all of the Company’s assets and the assets of the Parent and Subsidiary Guarantors, subject in each case to customary exceptions and exclusions.

Indenture and the Senior Notes Due 2019

The Company has also issued $400.0 million in principal amount of Notes. The Notes bear interest at a rate of 11.125% per annum, and interest is payable semi-annually on February 15 and August 15 of each year. The Notes mature on August 15, 2019.

Subject to certain exceptions, the Notes are guaranteed on a senior unsecured basis by each of Immucor’s current and future wholly owned domestic restricted subsidiaries (and non-wholly owned subsidiaries if such non-wholly owned subsidiaries guarantee the Company’s or another guarantor’s other capital market debt securities) that is a guarantor of certain debt of the Company or another guarantor, including the Senior Credit Facilities. The Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future indebtedness that is not expressly subordinated in right of payment thereto. The Notes will be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto and effectively junior to (a) the Company’s existing and future secured indebtedness, including the Senior Credit Facilities described above, to the extent of the value of the collateral securing such indebtedness and (b) all existing and future liabilities of the Company’s non-guarantor subsidiaries.

The Company is not aware of any violations of the covenants pursuant to the terms of the indenture governing the Notes or the credit agreement governing the Senior Credit Facilities.

Future Commitments

The following is a summary of the combined principal maturities of all long-term debt and principal payments to be made under the Company’s capital lease agreements for the remainder of fiscal 2014 and each of the fiscal years presented in the table below (in thousands):

2014	$	1,663
2015		6,653
2016		6,639
2017		6,632
2018		6,632
Thereafter		1,028,516
	$	1,056,735

Interest Expense

The significant components of interest expense are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	February 28				February 28
	2014		2013		2014		2013

Notes, including OID amortization	$	11,250		11,236		33,747		33,705
Term Loan Facility, including OID amortization		8,702		9,097		26,427		29,997
Amortization of deferred financing costs		1,577		1,210		4,713		3,600
Interest rate swaps		246		247		766		772
Revolving Facility fees and interest		125		160		379		612
Interest accreted on contingent liability		-		-		134		-
Other interest		-		2		6		5
Total interest expense	$	21,900		21,952		66,172		68,691