Note 4 - Long-term debt |
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Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
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 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 to EDC consist of two
quarterly installment of $1,235, followed by six quarterly
installments of $926 until the maturity date of August 13,
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.
At
October 2, 2011 there was a Canadian dollar denominated debt
balance of $1,319 million. At January 2, 2011, there was a
Canadian dollar denominated cash balance of $78, which was
classified as an offset to debt balances as it was used to
reduce the outstanding revolving credit facilities.
The
Company is in compliance with the financial covenants
included in the PNC Facility and the EDC Facility as at
October 2, 2011. Management believes that the Company will be
in compliance with these covenants for the foreseeable
future. Accordingly, the outstanding balances under the
lending agreements continue to be classified as long-term.
Continued compliance with its covenants, however, is
dependent on the Company achieving certain forecasts. While
management is confident in its plans, 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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