Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Other Long Term Debt

v3.10.0.1
Notes Payable and Other Long Term Debt
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Notes Payable and Other Long Term Debt
Notes Payable and Other Long-Term Debt
Notes Payable
The following table presents the balances of notes payable as of the dates indicated:
Branch Banking and Trust Company
 
Maturity Date
 
September 30,
2018
 
December 31, 2017
 
Interest Rates
 
 
 
 
September 30, 2018
 
December 31, 2017
Previous Working Capital Loan
 
November 28, 2019
 
$

 
$
2,750,000

 
%
 
3.38
%
Working Capital Loan
 
November 28, 2020
 

 

 
4.02
%
 
%
$27.49 Million Equipment Loan (previously $22.6 Million Equipment Loan)
 
May 1, 2022
 
25,450,000

 
19,540,000

 
4.02
%
 
3.25
%
Total notes payable
 
 
 
25,450,000

 
22,290,000

 
 
 
 
Less unamortized debt issuance costs
 
30,738

 
38,646

 
 
 
 
Total notes payable, net
 
25,419,262

 
22,251,354

 
 
 
 
Less current portion of notes payable, net
 
6,897,725

 
6,099,787

 
 
 
 
Notes payable net, less current portion
 
$
18,521,537

 
$
16,151,567

 
 
 
 

As of September 30, 2018, the Company, and the Company’s wholly owned subsidiaries 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 (the “Bank”). The 2018 Master Loan Agreement restates substantially the same terms and conditions as those set forth in the previous Master Loan Agreement (the “Previous Master Loan Agreement”) among the Debtors and the Bank, originally entered into on June 9, 2017, except for the update in the exhibit for the loan modification and the new Working Capital Loan described below and an increase in the permissible outside debt and leases amount from $500,000 in the Previous Master Loan Agreement to $2.0 million.
On May 24, 2018, the Company entered into a $18.0 million Working Capital Loan, which replaces all previous renewals and or modifications on the previous Working Capital Loan (the “Previous Working Capital Loan”). The Working Capital Loan restates substantially the same terms and conditions as those set forth in the Previous Working Capital Loan, originally entered into on August 26, 2005. Borrowings of $2.78 million, outstanding as of May 24, 2018, from the Working Capital Loan were used to pay in full the outstanding amount of the Previous Working Capital Loan, plus accrued interest and loan closing costs.
As of September 30, 2018, the Company had a loan agreement and a series of related ancillary agreements with the Bank under the 2018 Master Loan Agreement providing for a revolving line of credit loan for a maximum principal amount of $18.0 million, to be used as a “Working Capital Loan.”
As of September 30, 2018, borrowings under the Working Capital Loan were zero. 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 $575,000 and $420,000 as of September 30, 2018 and December 31, 2017, respectively.
Borrowings of $16.99 million outstanding as of May 24, 2018, plus accrued interest, under the $22.6 Million Equipment Loan were continued under the $27.49 Million Equipment Loan. The remaining portion of the $27.49 Million Equipment Loan balance was drawn by the Company for equipment purchases that were made on or after January 1, 2018. Under the documentation related to the $27.49 Million Equipment Loan, principal payments of $510,000 plus accrued interest commenced on June 9, 2018 and continue monthly thereafter until and including the payment due on December 9, 2018. On December 31, 2018, the then outstanding principal balance of the $27.49 Million Equipment Loan shall be amortized over a forty (40) month period. Equal monthly payments of principal, plus accrued interest, shall thereafter commence on January 9, 2019 and continue monthly on the same day of each month thereafter, with all outstanding principal, accrued interest, and all other amounts then due and owing to be payable on May 1, 2022, its maturity date.
As of September 30, 2018, the Debtors had a loan agreement with the Bank under the 2018 Master Loan Agreement for the $27.49 Million Equipment Loan (previously $22.6 Million Equipment Loan), which is guaranteed by the Debtors and includes 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 and the $27.49 Million Equipment Loan (previously $22.6 Million Equipment Loan) 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.
Other Long-Term Debt
As of September 30, 2018, the Company had an equipment purchase loan agreement for a specialty piece of equipment to be used in the Company’s electrical construction operations, entered into on January 15, 2018 in the amount of $405,000 plus interest and sales tax. The agreement requires monthly payments of $10,687 plus interest at a 5.85% fixed rate. The loan matures on June 14, 2021 and there are no early payment penalties.