Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Other Long Term Debt

v3.20.1
Notes Payable and Other Long Term Debt
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Notes Payable and Other Long Term Debt

Note 5 – Notes Payable and Other Long-Term Debt

Notes Payable

The following table presents the balances of notes payable as of the dates indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rates

 

Truist Bank

 

Maturity Date

 

March 31,

2020

 

 

December 31,

2019

 

 

March 31,

2020

 

 

December 31,

2019

 

Working Capital Loan

 

November 28, 2021

 

$

10,000,000

 

 

 

 

 

 

2.75

%

 

 

%

$38.2 Million Equipment Loan

 

March 9, 2024

 

 

30,294,000

 

 

 

32,244,000

 

 

 

2.75

%

 

 

3.52

%

$ 4.5 Million Equipment Loan

 

March 7, 2024

 

 

4,500,000

 

 

 

 

 

 

2.75

%

 

 

%

Total notes payable

 

 

 

 

44,794,000

 

 

 

32,244,000

 

 

 

 

 

 

 

 

 

Less unamortized debt issuance costs

 

 

 

 

63,672

 

 

 

71,577

 

 

 

 

 

 

 

 

 

Total notes payable, net

 

 

 

 

44,730,328

 

 

 

32,172,423

 

 

 

 

 

 

 

 

 

Less current portion of notes payable, net

 

 

 

 

8,895,427

 

 

 

7,769,497

 

 

 

 

 

 

 

 

 

Notes payable net, less current portion

 

 

 

$

35,834,901

 

 

$

24,402,926

 

 

 

 

 

 

 

 

 

 

As of March 31, 2020, the Company, and the Company’s wholly owned subsidiaries Southeast Power Corporation (“Southeast Power”), Pineapple House of Brevard, Inc. (“Pineapple House”), Bayswater Development Corporation (“Bayswater”), Power Corporation of America (“PCA”), Precision Foundations, Inc. (“PFI”) and C and C Power Line, Inc. (“C&C”), collectively (the “Debtors,”) were parties to a Master Loan Agreement, dated May 24, 2018 (the “2018 Master Loan Agreement”), with Branch Banking and Trust Company, now known as Truist Bank (the “Bank”), as amended on March 7, 2019 by the First Amendment to the 2018 Master Loan Agreement (the “Amendment”), and on December 6, 2019 by the Note Modification Agreement and related Addendum to Note Modification to the 2018 Master Loan Agreement (collectively, the “Ancillary Loan Document”).

As of March 31, 2020, the Company, the Debtors and the Bank were parties to the Working Capital Loan, evidenced by a promissory note and a series of related ancillary agreements with the Bank, under the 2018 Master Loan Agreement and the Amendment, that has a maximum principal amount of $23.0 million. On March 23, 2020, the Company drew $10.0 million from its Working Capital Loan to enhance liquidity in view of the uncertainties caused by the COVID-19 pandemic. As of March 31, 2020, borrowings under the Working Capital Loan were $10.0 million. There were no borrowings under the Working Capital Loan as of December 31, 2019.

As a credit guarantor to the Bank, the Company is contingently liable for the guaranty of a subsidiary obligation under an irrevocable letter of credit related to workers’ compensation. The amount of this letter of credit was $0.6 million as of both March 31, 2020 and December 31, 2019.

As of March 31, 2020, the Company, the Debtors and the Bank were parties to a $38.2 Million Equipment Loan. Under the documentation related to the $38.2 Million Equipment Loan, principal payments of $598,000 plus accrued interest commenced on March 9, 2019 and continued monthly thereafter until and including the payment due on December 9, 2019. Thereafter, equal monthly principal payments of $650,000, plus accrued interest, commenced on January 9, 2020, and will continue monthly thereafter until the March 9, 2024 maturity date. Borrowings under the $38.2 Million Equipment Loan were $30.3 million as of March 31, 2020 and $32.2 million as of December 31, 2019.

As of March 31, 2020, the Company, the Debtors and the Bank were also parties to a $4.5 Million Equipment Loan. Under the documentation related to the $4.5 Million Equipment Loan, borrowings will be made only for the purchase of equipment currently held by the Company under master lease agreements and will not exceed the cost of the lease buy-out. Interest only payments on any amounts drawn commenced on April 7, 2019, and continued monthly through and including the payment due on March 7, 2020. Thereafter, principal payments of $93,750 plus accrued interest commenced on April 7, 2020, and will continue monthly thereafter until and including the payment due on March 7, 2024. As of March 31, 2020, the borrowings under the $4.5 Million Equipment Loan were $4.5 million, which amount was drawn on March 2, 2020. There were no borrowings under the $4.5 Million Equipment Loan as of December 31, 2019.

As of March 31, 2020, all loan agreements between the Debtors and the Bank, under the 2018 Master Loan Agreement, the Amendment, and the Ancillary Loan Document are guaranteed by the Debtors and include the grant of a continuing security interest in all now owned and after acquired and wherever located personal property of the Debtors.

The Working Capital Loan, the $38.2 Million Equipment Loan and the $4.5 Million Equipment Loan each bear interest at a rate per annum equal to one month LIBOR (as defined in the documentation related to each loan) plus 1.80%, which will be adjusted monthly and subject to a maximum rate as described in the documentation related to each loan.

The Company’s debt arrangements contain various financial and other covenants including, but not limited to: minimum tangible net worth, maximum debt to tangible net worth ratio and fixed charge coverage ratio. Other loan covenants prohibit, among other things, a change in legal form of the Company, and entering into a merger or consolidation. The loans also have cross-default provisions whereby any default under any loans of the Company (or its subsidiaries) with the Bank, will constitute a default under all of the other loans of the Company (and its subsidiaries) with the Bank.