March 29, 2020				December 29, 2019
Revolving credit facility		$	33,340			$	34,701
Term loans:
Term loan A facility		$	38,438			$	38,750
Less deferred debt issue costs			(2,140	)			(2,286	)
Less unamortized discount on debt			(1,371	)			(1,464	)
Total term loans		$	34,927			$	35,000
Less current portion			(1,562	)			(1,250	)
Long term portion		$	33,365			$	33,750

 

 

The Company borrows money under an Amended and Restated Revolving Credit and Security Agreement with PNC Bank, National Association (“PNC”) which governs the Company’s revolving credit facility (“PNC Facility”). The PNC Facility has a term ending on Advances made under the PNC Facility bear interest at the U.S. base rate plus a grid ranging from to or or -month fully-absorbed PNC LIBOR plus a grid ranging from to The base commercial lending rate should approximate U.S. prime rate.  

 

The Company also borrows money under a Financing Agreement (the “Financing Agreement”), by and among the Company and certain of its subsidiaries, the lenders party to the Financing Agreement from time to time (collectively, the “Lenders”), and TCW Asset Management Company, LLC, as collateral agent for the Lenders (“TCW”). The Financing Agreement governs a term loan A facility (the “Term A Loan Facility” and together with the PNC Facility, the “Credit Facilities” and previously governed a term loan B facility (the “Term Loan B Facility”) until it was paid in full on The Term Loan A Facility matures on the “Maturity Date”). The Term Loan A Facility bears interest LIBOR plus an applicable margin of through and borrowings under the Financing Agreement will thereafter bear interest at LIBOR plus an applicable margin ranging from to Payments made under the Term Loan A Facility at any time prior to the Maturity Date (other than scheduled amortization payments and mandatory prepayments) are subject to an applicable premium equal to the amount of such payment multiplied by (i) in the event that such payment occurs before ii) in the event that such payment occurs after and on or before and (iii) in the event that such payment occurs after and on or before such applicable premium is payable for any payment of loans made under the Term Loan A Facility occurring after

 

As at the funds available to borrow under the PNC Facility after deducting the current borrowing base conditions were ( ). The maximum amount of funds that could be available under the PNC Facility is However, availability under the PNC Facility is subject to certain conditions, including borrowing base conditions based on eligible inventory and accounts receivable, and certain conditions as determined by PNC. The Company is required to use a “lock-box” arrangement for the PNC Facility, whereby remittances from customers are swept daily to reduce the borrowings under this facility.

 

At ( ) was outstanding under the PNC Facility and is classified as a current liability based on the requirement to hold a “lock-box” under the terms of the PNC Facility.

 

At ( ) was outstanding under the TCW Term Loan A Facility. The TCW Facilities are reported on the consolidated balance sheet net of deferred financing fees of ( ) and a discount on debt of ( ) related to the outstanding warrants described below.

 

The Credit Facilities are joint and several obligations of the Company and its subsidiaries that are borrowers under the Credit Facilities and are jointly and severally guaranteed by other subsidiaries of the Company. Repayment under the PNC Facility and Term A Loan Facility are collateralized by the assets of the Company and each of its subsidiaries.

 

 

The Credit Facilities contain certain financial and non-financial covenants, including restrictions on dividend payments. The financial covenants require the Company to maintain a fixed charge coverage ratio and a total leverage ratio quarterly during the term of the Credit Facilities.

 

The Company was in compliance with the covenants included in the Credit Facilities as at The Company’s continued financial covenant compliance will depend on key variables, including the Company’s cash flow from earnings before interest, income taxes and depreciation as well as debt levels.  For context, assuming change to debt balances, a reduction of approximately and of earnings before interest, income taxes, depreciation and amortization over the next month period, could jeopardize covenant compliance at the end of our and quarters respectively, which test our ratios against -month trailing results.  The Company attempts to address risks of covenant compliance by taking measures to reduce its inventory, revolving credit facility and term debt balances as necessary.

 

Market conditions, including the implications of the COVID- pandemic, negatively impact our ability to secure and source alternative methods of financing. We do currently foresee a material impact in the short term based on our working capital needs, however if a number of our customers reduce or temporarily cease payments to us, this would present a risk and negatively impact our cash flow and ability to meet our working capital obligations to operate our business, which could require us to secure alternative methods of financing.

 

The Company continues to monitor operations and results closely and manage debt levels relative to our operational results to ensure compliance with its lenders covenants.

 

 

On warrants were issued to TCW in connection with the Financing Agreement and are outstanding as at As a result of the anti-dilution provisions contained in the warrants that were triggered in connection with the Rights Offering and the Registered Direct Offering in the warrants were exercisable to purchase an additional shares of common stock (or a total of ) at These warrants are exercisable on a cashless basis, or for an exercise price of The Company initially recorded the value of the warrants as a warrant liability with a corresponding discount on the long-term debt in the amount of The fair value has been assessed at per unit or as at per unit or – The fair value of the warrant obligation is presented as a warrant liability on the consolidated balance sheet with changes to the fair value recorded each reporting period as either a gain or a loss in the consolidated statement of operations and comprehensive income.