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Note 4 - Long-term Debt
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Sep. 30, 2012
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| Debt Disclosure [Text Block] |
4. Long-term
debt
On
September 22, 2011, the Company signed a Revolving Credit and
Security Agreement with PNC Bank, National Association and
its Canadian branch (collectively, “PNC”). This
revolving credit facility (the “PNC Facility”)
replaced the previous revolving loan agreement with Wells
Fargo Capital Finance Corporation (“Wells Fargo”)
and has a term of three years. The Company continues to have
a term debt facility with Export Development Canada
(“EDC”, and the “EDC Facility”), and
on September 22, 2011 signed an amendment to its agreement
with EDC to accommodate the change in revolving credit
lender, but is otherwise largely unchanged from the existing
agreement.
The
maximum amount of funds available under the PNC Facility is
$45 million. Availability under the revolving credit facility
is subject to certain borrowing base conditions based on the
eligible inventory and accounts receivable. Advances
made under the revolving credit facility will bear interest
at the base commercial lending rate of PNC in the respective
country, which should approximate prime rate. The EDC
Facility bears interest at LIBOR plus 2.5% to 3.5% depending
on the achievement of financial performance levels as
specified in the amended debt agreement.
The
Company incurred costs of $997 in 2011 (2012 – nil)
related to the PNC Facility and the amended EDC Facility.
These costs were recorded as a non-current deferred charge
and are being amortized over the terms of the respective debt
agreements.
Remaining
principal repayments of the term loan from EDC consist of
four quarterly installments of $1,158, the last of which is
due October 1, 2013.
The
PNC Facility and EDC Facility are jointly and severally
guaranteed by the Company and secured by the assets and
capital stock of each of the Company’s subsidiaries and
its future subsidiaries.
The
Company is required to use a “lock-box”
arrangement, whereby remittances from customers are swept
daily to reduce the borrowings under the revolving credit
facilities, for which events of default are objectively
determined.
At
September 30, 2012, included in the revolving debt balance
was a Canadian dollar denominated debt balance of $2,783. At
January 1, 2012, there was a Canadian dollar denominated debt
balance of $1,312.
The
Company is in compliance with the financial covenants
included in the PNC Facility and the EDC Facility as at
September 30, 2012 and management believes that the Company
will be in compliance with these covenants for at least the
next twelve months. Continued compliance with its covenants,
however, is dependent on the Company achieving certain
forecasts. Market conditions have been difficult to predict
and there is no assurance that the Company will achieve its
forecasts. In the event of non-compliance, the
Company’s lenders have the right to demand repayment of
the amounts outstanding under the lending agreements or
pursue other remedies or, if the Company can reach an
agreement with its lenders, to amend or waive the financial
covenants.
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