Note 5 - Debt |
9 Months Ended | ||
|---|---|---|---|
Oct. 01, 2017 | |||
| Notes to Financial Statements | |||
| Debt Disclosure [Text Block] |
(a) Revolving credit and long-term debt facilit ies The Company borrows money under a Revolving Credit and Security Agreement with PNC Bank, National Association (“PNC”) which governs the PNC Revolving Credit Facility and a Long-Term Debt Facility (“PNC Facilities”). The PNC Facilities have a term ending on
January 2, 2021. Advances made under the PNC Revolving Credit Facility bear interest at the U.S. base rate plus 0.75%. The applicable interest rate for the Long-Term Debt Facility is U.S. base rate plus 1.25%. The base commercial lending rate should approximate prime rate. The weighted average interest rate increased to 4.8% for the first nine months of 2017 compared to 4.2% for the first nine months of 2016. As at October 1, 2017
, the funds available to borrow under the PNC Revolving Credit Facility after deducting the current borrowing base conditions was
$7,106 ( January 1, 2017 -
$7,377 ). The maximum amount of funds that could be available under the PNC Revolving Credit Facility is $30,000. However, availability under the PNC Revolving Credit Facility is subject to certain conditions, including borrowing base conditions based on eligible inventory and accounts receivable, and certain conditions as determined by the lender. The Company is required to use a “lock-box” arrangement for the PNC Revolving Credit Facility, whereby remittances from customers are swept daily to reduce the borrowings under this facility. On May 15, 2017, the Company entered into the Twelfth Amendment (“Twelfth Amendment”) of the Revolving Credit and Security Agreement, which was initially entered into on September 14, 2011 with PNC Bank, National Association, as agent for the Lender.Pursuant to the Twelfth Amendment, the Lender has modified the definition of EBITDA (as defined in the Twelfth Amendment) to include additional exclusions and limits. In addition, the Lender has increased the interest rates by 0.25% during the quarter in accordance with the Twelfth Amendment; however if the Company maintains a specified fixed charge coverage ratio for a predetermined period of time and maintains its compliance with the terms of the PNC Facilities, interest rates will be reduced to the U.S. base rate plus 0.25% on advances made under the PNC Revolving Credit Facility and U.S. base rate plus 0.75% on advances made under the Long-Term Debt Facility.The PNC Long-Term Debt Facility consists of a term loan of
$10,000 that matures on January 2, 2021 with quarterly principal payments of $500 with the remaining balance due at maturity. At October
1, 2017, $5,909 ( January 1, 2017 -
$2,731 ) was outstanding under the PNC Revolving Credit Facility and is classified as a current liability based on the requirement to hold a “lock-box” under the terms of the PNC Revolving Credit Facility. At October 1, 2017,
$8,500 ( January 1, 2017 –
$10,000 ) was outstanding under the PNC Long-Term Debt Facility.The PNC Facilities are a joint and several obligations of the Company and its subsidiaries that are borrowers under the facilities and are jointly and severally guaranteed by other subsidiaries of the Company. Repayment under the PNC Facilities is collateralized by the assets of the Company and each of its subsidiaries. (b) Covenants The Revolving Credit and Security Agreement contains certain financial and non-financial covenants.
As defined under the Twelfth Amendment, the Company was required to maintain a minimum EBITDA for the
twelve months ended July 2, 2017 and the three months ended October 1, 2017. Subsequent thereafter, the financial covenant relating to a minimum consolidated fixed charge coverage ratio is in effect for the three months ended December 31, 2017,
six months ended April 1, 2018,
nine months ended July 1, 2018,
twelve months ended September 30, 2018 and thereafter on a rolling twelve month basis until January 2, 2021. The financial covenants also require that the Company limit unfunded capital expenditures (all as defined in the credit agreement governing the PNC Facilities). The Company is in compliance with the financial covenants included in the PNC Facilities as of
October 1, 2017. |