On August 19, 2013, Skullcandy entered into a credit agreement and revolving line of credit note with Wells Fargo Bank, which is providing a line of credit of up to $50 million. As a subfeature, the credit facility provides for letters of credit of up to $10 million. Proceeds from the credit facility will be used for general corporate purposes. The credit facility is secured with a first-priority lien against substantially all the assets of the company.
The credit facility carries interest based on the 3-month LIBOR, resetting daily (floating), plus applicable margin. Applicable margin is determined by the borrower’s (total liabilities / tangible net worth) quarterly as follows: < 0.25:1.00 applicable margin to be 1.30%; > 0.25:1.00 applicable Margin to be 1.50%.