Annual report pursuant to Section 13 and 15(d)

Notes Payable

v3.19.1
Notes Payable
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Notes Payable
Notes Payable
The following table presents the balances of our notes payables as of December 31 as indicated:
Branch Banking and Trust Company
 
Maturity Date
 
2018
 
2017
 
Interest Rates
 
 
 
 
2018
 
2017
Working Capital Loan
 
November 28, 2020
 
$
5,000,000

 
$

 
4.31
%
 
%
$27.49 Million Equipment Loan (previously $22.6 Million Equipment Loan)
 
May 1, 2022
 
23,920,000

 
19,540,000

 
4.31
%
 
3.25
%
Previous Working Capital Loan
 

 

 
2,750,000

 
%
 
3.38
%
Total notes payable
 
 
 
28,920,000

 
22,290,000

 
 
 
 
Less unamortized debt issuance costs
 
27,086

 
38,646

 
 
 
 
Total notes payable, net
 
28,892,914

 
22,251,354

 
 
 
 
Less current portion of notes payable, net
 
7,161,890

 
6,099,787

 
 
 
 
Notes payable net, less current portion
 
$
21,731,024

 
$
16,151,567

 
 
 
 

As of December 31, 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.
As of December 31, 2018, the Company had a promissory note and a series of related ancillary agreements with the Bank 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” (the “Working Capital Loan”). The Company entered into the Working Capital Loan on May 24, 2018, the Working Capital Loan restates and replaces all previous renewals and or modifications on the previous working capital loan entered into on August 26, 2005 (the “Previous Working Capital Loan”) on substantially the same terms and conditions as those set forth in the Previous Working Capital Loan. 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 December 31, 2018, borrowings under the Working Capital Loan were $5.0 million. As of December 31, 2018 and December 31, 2017, borrowings under the Previous Working Capital Loan were zero and $2.8 million, respectively.
As a credit guaranty 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 December 31, 2018 and December 31, 2017, respectively.
On January 1, 2018, the Company had a loan agreement with the Bank for a $22.6 Million equipment loan (the “$22.6 Million Equipment Loan”). The $22.6 Million Equipment Loan between the Company and the Bank was modified on May 24, 2018 increasing the principal amount to $27.49 Million (the “$27.49 Million Equipment Loan”). 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 after January 1, 2018.
As of December 31, 2018, the Company had a loan agreement with the Bank for the $27.49 Million Equipment Loan. Under the documentation related to the $27.49 Million Equipment Loan, principal payments in the amount of $510,000 plus accrued interest commenced on June 9, 2018 and continued monthly thereafter until and including the payment due on December 9, 2018. On December 31, 2018, the outstanding principal balance of the $27.49 Million Equipment Loan was amortized over a forty (40) month period. Equal monthly payments of principal in the amount of $598,000 plus accrued interest commenced on January 9, 2019 and will 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 December 31, 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), and the Working Capital Loan, which are 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 $27.49 Million Equipment Loan (previously $22.6 Million Equipment Loan) and the Working Capital 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.
Subsequently, on March 7, 2019, the Company, the Debtors and the Bank entered into a First Amendment to the 2018 Master Loan Agreement (the “Amendment”). The Amendment provides an exhibit which lists new loans, or modifications of loans, which will be governed by the 2018 Master Loan Agreement and which were also entered into on March 7, 2019.
Also, on March 7, 2019, the Company, the Debtors and the Bank entered into a modification of the $27.49 Million Equipment Loan, increasing it to a $38.2 million equipment loan (as increased, the “$38.2 Million Equipment Loan”) and a new $4.5 million equipment promissory note (the “$4.5 Million Equipment Note”).
Borrowings of $22.7 million, outstanding as of March 7, 2019, plus accrued interest under the $27.49 Million Equipment Loan will continue under the $38.2 Million Equipment Loan. The $15.5 million balance remaining on the $38.2 Million Equipment Loan was drawn by the Company on March 8, 2019 for equipment purchases that were made on or after August 1, 2018.
Under the documentation related to the $38.2 Million Equipment Loan, principal payments of $598,000 plus accrued interest will commence on March 9, 2019 and continue monthly thereafter until and including the payment due on December 9, 2019. On January 9, 2020, equal monthly principal payments of $650,000, plus accrued interest, will commence and continue monthly thereafter on the same day of each month until the March 9, 2024 maturity date.
Under the documentation related to the $4.5 Million Equipment Note, 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 will commence on April 7, 2019, and continue monthly on the same day through and including the payment due on March 7, 2020. Thereafter, principal payments of $93,750 plus accrued interest will commence on April 7, 2020, and continue monthly thereafter until and including the payment due on March 7, 2024.
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.
The schedule of payments of the notes payable as of December 31, 2018 is as follows:
2019
$
7,176,000

2020
12,176,000

2021
7,176,000

2022
2,392,000

Total payments of notes payable
$
28,920,000


Other Long Term Debt
As of December 31, 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 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 provisions.
The schedule of payments of the other long term debt as of December 31, 2018 is as follows:
2019
$
113,855

2020
120,697

2021
63,047

2022

Total payments of other long term debt
$
297,599