This excerpt taken from the GFSI 10-Q filed May 14, 2009.
Revolving Line of Credit and Long-Term Debt
The Company is party to a Second Amended and Restated Credit Agreement with Bank of America, N.A., Wachovia Bank, N.A., and The Peoples Bank of Winder, dated November 30, 2006, which was amended on January 17, 2008, December 24, 2008, and February 18, 2009. January 15, 2010 is the maturity date of this credit agreement.
The revolving line of credit is classified as a current liability as of March 31, 2009, compared to a long term liability as of December 31, 2008, as the maturity date of the credit agreement, which is January 15, 2010, causes this liability to be due in less than one year from the balance sheet date. The Company is currently in the process of working with its lending partners to refinance the existing credit facility under similar terms. The refinancing is expected to be complete by the end of the 2009 fiscal year.
The material terms of the syndicated credit facility are as follows:
· the revolving loan commitment is $45.0 million;
· the limit on annual capital expenditures is $7.0 million;
· two additional applicable interest rates are included in the pricing grid, with a minimum level of LIBOR plus 1.375%, and maximum level of LIBOR plus 3% (or base rate plus 0.50%), determined by the funded debt to EBITDA ratio (as defined); the rate used is at the option of the Company;
· the funded debt to EBITDA ratio (as defined) is 3.0;
· the senior funded debt to EBITDA ratio (as defined) is 3.0; and
· the Company is to maintain a fixed charge coverage ratio (as defined) of not less than 2:1.
We borrowed $32.0 million against the line of credit to fund the Alogent acquisition in January 2008. As of March 31, 2009 and December 31, 2008 we owed $36.9 million and $37.5 million, respectively, on the revolving line of credit. As of March 31, 2009, we were in compliance with the restrictive financial and non-financial covenants contained in the second amended and restated credit agreement. At March 31, 2009, we had eligible capacity as defined to borrow $8.1 million under the second amended and restated credit agreement.
On February 18, 2009, we amended the definition of EBITDA under the Credit Agreement so that the first sentence of the definition was deleted in its entirety and replaced by the following text:
EBITDA means, with respect to any Person for any period, on a consolidated basis the sum of (a) net income available to common stockholders plus (b) to the extent deducted in arriving at net income, the sum of: (i) preferred stock dividends paid and preferred stock deemed distributions, (ii) income tax expense (less income tax benefit), (iii) interest expense, (iv) depreciation and amortization, (v) annual maintenance fees that will be required to be excluded from deferred revenue and the profit and loss statement in accordance with GAAP purchase accounting rules and (vi) any non-cash charges and expenses, including goodwill impairment charges, minus (c) to the extent included in arriving at net income, any (i) non-cash gains and (ii) gains as a result of payments in connection with the sale of the core data processing and teller system business disposed of by Borrower including, without limitation, earn out payments; provided, however, for calculation periods ending on or after December 31, 2008, to the extent otherwise included for such calculation period, EBITDA shall not include EBITDA from the core data processing and teller system business disposed of by Borrower.
The Company executed convertible notes of $7.0 million delivered to the Alogent shareholders on January 17, 2008, having a 24 month term and a 7.0% annual interest rate payable quarterly in arrears. The principal under the notes is convertible, at the option of the holder, into shares of our common stock at a conversion price of $4.50 per share. These notes have a maturity date of January 17, 2010 and, therefore, are classified as a current liability as of March 31, 2009 compared to a long-term liability as of December 31, 2008.