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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2011

LONG-TERM DEBT

NOTE 6. LONG-TERM DEBT

Until February 20, 2004, the Company had a reducing revolving term loan credit facility with a consortium of banks (the “First Credit Facility”). On February 20, 2004, the First Credit Facility was refinanced (the “Second Credit Facility”) for $50 million. The maturity date of the Second Credit Facility was to be April 18, 2009; however, on January 20, 2009, the Second Credit Facility was amended and refinanced (the “New Credit Facility”) for $60 million. The New Credit Facility may be utilized by the Company for working capital needs, general corporate purposes and for ongoing capital expenditure requirements.

The maturity date of the New Credit Facility is January 20, 2012. Borrowings are secured by liens on substantially all of the real and personal property of the Atlantis and are guaranteed by Monarch.

The New Credit Facility contains covenants customary and typical for a facility of this nature, including, but not limited to, covenants requiring the preservation and maintenance of Company assets and covenants restricting the Company’s ability to merge, transfer ownership of Monarch, incur additional indebtedness, encumber assets and make certain investments. The New Credit Facility contains covenants requiring that the Company maintain certain financial ratios and achieve a minimum level of Earnings-Before-Interest-Taxes-Depreciation and Amortization (EBITDA) on a two-quarter rolling basis. It also contains provisions that restrict cash transfers between Monarch and its affiliates and contains provisions requiring the achievement of certain financial ratios before the Company can repurchase its common stock or pay dividends. Management does not consider the covenants to restrict normal functioning of day-to-day operations.

As of September 30, 2011, the Company was required to maintain a leverage ratio, defined as consolidated debt divided by EBITDA, of no more than 2.00:1 and a fixed charge coverage ratio (EBITDA divided by fixed charges, as defined) of at least 1.25:1. As of September 30, 2011, the Company’s leverage ratio and fixed charge coverage ratios were 0.6:1 and 27.1:1, respectively.

The maximum principal available under the New Credit Facility is reduced by $2.5 million per quarter beginning on December 31, 2009. The Company may permanently reduce the maximum principal available at any time so long as the amount of such reduction is at least $500 thousand and a multiple of $50 thousand. At September 30, 2011, the maximum principal available under the New Credit Facility was $19.5 million. Maturities of the Company’s borrowings for each of the next five years and thereafter as of September 30, 2011 are as follows (amounts in thousands):

less than

1 to 3

4 to 5

more than

Total

1 year

years

years

5 years

Maturities of Borrowings Under New Credit Facility

$

16,000,000

—

$

16,000,000

—

The Company may prepay borrowings under the New Credit Facility without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid may be reborrowed so long as the total borrowings outstanding do not exceed the maximum principal available.

The Company paid various one-time fees and other loan costs upon the closing of the refinancing of the New Credit Facility that will be amortized over the facility’s term using the straight-line method.

At September 30, 2011, the Company had $16.0 million outstanding under the New Credit Facility. At that time its leverage ratio was such that pricing for borrowings under the New Facility was LIBOR plus 2.000%. At September 30, 2011 the one-month LIBOR interest rate was 0.24%. The carrying value of the debt outstanding under the New Facility approximates fair value because the interest fluctuates with the lender’s prime rate or other market rates of interest.

On August 23, 2011, the Company entered into an agreement (the “Refinancing Commitment Agreement”) with the lead bank (the “Lead Bank”) under the New Credit Facility. The Refinancing Commitment Agreement irrevocably commits, subject to customary terms and conditions, that the Lead Bank will provide a new senior secured revolving credit facility of up to $100 million to fund a portion of the Acquisition (see Note 8.), to refinance the New Credit Facility, to pay certain fees and costs, and to finance ongoing working capital requirements and other general corporate purposes of the Company (collectively, the “$100 Million Facility”). While the definitive agreements for the $100 Million Facility have not yet been finalized, the Company expects that the pricing and covenant terms of this new financing will be substantially the same as the New Credit Facility. As a result of the Refinancing Commitment Agreement, the New Credit Facility liability has been classified as non-current. The Company paid loan commitment fees of approximately $240 thousand related to the Refinancing Commitment Agreement during the three month period ended September 30, 2011.