requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebted- ness, thereby reducing amounts available for working capital, capital expenditures and other general corpo- rate purposes;
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
placing us at a competitive disadvantage compared to our competitors that have less debt; and
limiting our ability to borrow additional funds.
Although we believe we are able to service and repay such debt, there is no assurance that we will be able to do so. If we do not generate sufficient operating profits, our ability to make required payments on our debt would be impaired. Failure to pay our indebtedness when due could have a material adverse effect.
Because We Are Subject to Many Restrictions in Our Existing Credit Facilities and Securitization Transac- tions, Our Ability to Pay Dividends or Engage in Specified Transactions May Be Impaired.
The terms of our existing credit facilities, term securitizations and our other outstanding debt impose significant operating and financial restrictions on us and our subsidiaries and require us to meet certain financial tests. These restrictions may have an adverse effect on our business activities, results of operations and financial condition. These restrictions may also significantly limit or prohibit us from engaging in certain transactions, including the following:
incurring or guaranteeing additional indebtedness;
making capital expenditures in excess of agreed upon amounts;
paying dividends or other distributions to our stockholders or redeeming, repurchasing or retiring our capital stock or subordinated obligations;
creating or permitting liens on our assets or the assets of our subsidiaries;
issuing or selling capital stock of our subsidiaries;
transferring or selling our assets;
engaging in mergers or consolidations;
permitting a change of control of our company;
liquidating, winding up or dissolving our company;
changing our name or the nature of our business, or the names or nature of the business of our subsidiaries; and
engaging in transactions with our affiliates outside the normal course of business. These restrictions may limit our ability to obtain additional sources of capital, which may limit our ability to
generate earnings. In addition, the failure to comply with any of the covenants of one or more of our debt agree- ments could cause a default under other debt agreements that may be outstanding from time to time. A default, if not waived, could result in acceleration of the related indebtedness, in which case such debt would become imme- diately due and payable. A continuing default or acceleration of one or more of our credit facilities or any other debt agreement, would likely cause a default under other debt agreements that otherwise would not be in default, in which case all such related indebtedness could be accelerated. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance our indebtedness. Even if any new financing is available, it may not be on terms that are acceptable to us or it may not be sufficient to refinance all of our indebtedness as it becomes due.
In addition, the transaction documents for our securitizations restrict our securitization subsidiaries from declar- ing or making payment to us of (i) any dividend or other distribution on or in respect of any shares of their capital stock, or (ii) any payment on account of the purchase, redemption, retirement or acquisition of any option, warrant or other right to acquire shares of their capital stock unless (in each case) at the time of such declaration or pay- ment (and after giving effect thereto) no amount payable under any transaction document with respect to the re- lated securitization is then due and owing, but unpaid. These restrictions may limit our ability to receive distribu- tions in respect of the residual interests from our securitization facilities, which may limit our ability to generate earnings.