Annual report pursuant to Section 13 and 15(d)

Financings

v3.3.1.900
Financings
12 Months Ended
Dec. 31, 2015
Financings
15. Financings

In August 2015, in connection with the acquisition of Energy Source (see Note 2), the Company issued $10 million of promissory notes bearing interest at 5% per annum. The promissory notes are due on July 20, 2016 and are supported by an irrevocable letter of credit from RVL.

In August 2014, the Company entered into a three-year loan and security agreement with Bank of America (“the Revolving Credit Facility”) pursuant to which the Company can borrow up to specified percentages against eligible accounts receivable and inventory as defined in the Revolving Credit Facility (the “Borrowing Base”) up to a maximum of $25 million.

In April 2015, our Chairman and Chief Executive Officer guaranteed $5 million of borrowings under the Revolving Credit Facility, increasing the Borrowing Base (but not the $25 million maximum) by that amount. This guarantee may be terminated under certain circumstances. Bank of America agreed to amend the Revolving Credit Facility to enable the Company to borrow up to $30 million under certain conditions.

Borrowings under the arrangement bear interest at a LIBOR rate or a defined base rate, each plus an applicable margin. The weighted average annual interest rate was 3.65% at December 31, 2015. The Company is also obligated to pay various fees monthly. Outstanding loans become payable on demand to the extent that such loans exceed the Borrowing Base, and all outstanding amounts must be repaid on August 20, 2017. All obligations under the Revolving Credit Facility are secured by the assets of the Company and its subsidiaries and are guaranteed by the Company and its subsidiaries. Borrowings outstanding as of December 31, 2015 amount to $22 million and are included in non-current liabilities in the accompanying Consolidated Balance Sheet. We are in compliance with our covenants and obligations under the facility, and we estimate that as of December 31, 2015 we are eligible to borrow an additional $2.6 million under the facility based upon current levels of inventory and accounts receivable.

The Loan Agreement contains covenants which limit the ability of the Company to, among other things, (i) create, incur, guarantee or suffer to exist any indebtedness; (ii) create or suffer any lien upon any property; (iii) declare or make distributions to equity holders or create any restriction on the ability of a subsidiary to make such a distribution; (iv) make investments; (v) sell, lease, license, consign or otherwise dispose of any property; (vi) make loans or other advances of money to any person; (vii) make payments on certain indebtedness; and (viii) enter into transactions with affiliates. In addition, the Loan Agreement includes financial covenants that, on a consolidated basis, requires the Company to maintain, for the most recent twelve fiscal months, a ratio of (i) EBITDA minus Capital Expenditures (as defined in the Loan Agreement) and cash taxes paid to (ii) Fixed Charges (as defined in the Loan Agreement), of not less than 1.1 to 1.0, and a ratio of (i) Senior Debt (as defined in the loan agreement) to (ii) EBITDA of not more than 3.5 to 1.0.

From time to time the Company enters into financing arrangements with RVL and its affiliates (see Note 14).

In conjunction with the acquisition of Value Lighting (see Note 2), the Company refinanced $3.7 million of Value Lighting’s trade accounts payable by issuing a note payable to the creditor. The note is payable in installments through November 2018, at which time a balloon payment of $1.4 million is due.

Maturities of long-term borrowings for each of the next five years are as follows:

 

(in thousands)

      

2016

     10,360   

2017

     24,951   

2018

     2,066   

2019

     —     

2020

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