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Note 4 - Long-term Debt
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Mar. 31, 2013
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| Debt Disclosure [Text Block] |
4.
Debt
(a)
Revolving credit facility
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, in both the United States and
Canada (collectively, the “PNC Facility”), has a
term of three years expiring in September,
2014. Advances
made under the revolving credit facility will bear interest
at the base commercial lending rate of PNC in the respective
country plus one quarter of one percent. The base
commercial lending rate of each respective country of
borrowing, should approximate prime rate. At
March 31, 2013 there was a Canadian dollar denominated credit
balance of $355. At December 30, 2012, there was a Canadian
dollar denominated debt balance of $1,245.
The
maximum amount of funds available under the PNC Facility is
$45 million. Availability under the revolving credit facility
is subject to certain conditions, including borrowing base
conditions based on the eligible inventory and accounts
receivable, and certain conditions which are not objectively
determinable. 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 the revolving credit facility.
The
PNC Facility is 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
PNC agreement contains certain financial and non-financial
covenants (note 4(c)).
(b)
Term facility
The
following table shows the classification of the term facility
as at:
The
Company has a term debt facility with Export Development
Canada expiring in October, 2013 (“EDC”, and the
“EDC Facility”). Remaining principal
repayments of the term loan to EDC consist of three quarterly
installments of $1,158 until the maturity date of October 13,
2013. 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
EDC Facility is 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.
(c)
Covenants
The
PNC agreement contains certain financial and non-financial
covenants, including certain cross-default provisions.
The
Company violated certain covenants included in the PNC and
EDC agreements as of March 31, 2013. Subsequent to
March 31, 2013, the Company secured waivers and amendments
from PNC and EDC covering these events of default.
Under
the amended PNC Facility, the financial covenants require the
Company to maintain minimum amounts of earnings before
interest, taxes and depreciation and amortization and
specified maximum cash conversion cycle days, and limit
unfunded capital expenditures (all as defined in the PNC
agreement). Market conditions have been difficult
to predict and there is no assurance that the Company will
achieve its forecasts. A failure to comply with covenants
could result in an event of default. If an event of default
occurs and is not cured or waived, it could result in all
amounts outstanding, together with accrued interest, becoming
immediately due and payable.
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