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Debt | 9 Months Ended
--- | ---
Sep. 30, 2015
Debt Disclosure [Abstract] |
Debt |
8. | Debt
Debt consisted of the following at September 30, 2015 and December 31, 2014:
(Table only in thousands) |  | September 30, 2015 |  |  | December 31, 2014 |
Outstanding borrowings under Credit Facility (defined below). Term loan payable in quarterly principal installments of $3.2 million through September 2017, $4.3 million through September 2018, and $5.3 million thereafter with balance due upon maturity in September 2020. |  |  |  |  |  |  |  |
- Term loan |  | $ | 170,000 |  |  | $ | 90,072 |
- U.S. Dollar revolving loans |  |  | 19,000 |  |  |  | 24,000 |
- Multi-currency revolving loans |  |  | — |  |  |  | — |
- Unamortized debt discount |  |  | (4,500 | ) |  |  | (2,368 | )
Total outstanding borrowings under Credit Facility |  |  | 184,500 |  |  |  | 111,704 |
Outstanding borrowings (U.S. dollar equivalent) under Aarding Facility (defined below) |  |  | 3,750 |  |  |  | — |
Outstanding borrowings (U.S. dollar equivalent) under PCMC Facility (defined below) |  |  | 4,404 |  |  |  | — |
Outstanding borrowings (U.S. dollar equivalent) under PCMC LOC (defined below) |  |  | 1,573 |  |  |  | — |
Outstanding borrowings (U.S. dollar equivalent) under Euro-denominated note payable to a bank, payable in quarterly installments of €25 ($28 as of September 30, 2015), plus interest, at a fixed rate of 3.82%, maturing January 2016. Collateralized by the Heerenveen, Netherlands building. |  |  | 56 |  |  |  | 152 |
Total outstanding borrowings |  |  | 194,283 |  |  |  | 111,856 |
Less: current portion |  |  | 19,699 |  |  |  | 8,887 |
Total debt, less current portion |  | $ | 174,584 |  |  | $ | 102,969 |
U.S. Debt On August 27, 2013, the Company entered into a credit agreement (the “Credit Agreement”) with various lenders (the “Lenders”) and letter of credit issuers (each, an “L/C Issuer”), and Bank of America, N.A., as Administrative Agent (the “Agent”), swing line lender and an L/C Issuer, providing for various senior secured credit facilities (collectively, the “Credit Facility”) comprised of a $65.0 million senior secured term loan, a $70.5 million senior secured U.S. dollar revolving credit facility for U.S. dollar revolving loans with sub-facilities for letters of credit and swing-line loans, and a $19.5 million senior secured multi-currency revolving credit facility for U.S. dollar and specific foreign currency loans. Concurrent with the closing of our Met-Pro Corporation (“Met-Pro”) acquisition on August 27, 2013, the Company borrowed $65.0 million in term loans and $52.0 million in U.S. dollar revolving loans and used the proceeds to (i) finance the cash portion of the acquisition, (ii) pay off certain outstanding indebtedness of the Company and its subsidiaries (including certain indebtedness of Met-Pro and its subsidiaries), and (iii) pay certain fees and expenses incurred in connection with the Credit Agreement and the acquisition. On November 18, 2014, the Company amended the Credit Agreement. Pursuant to the amendment (i) certain lenders provided an additional term loan under the Credit Agreement in an aggregate principal amount of $35.0 million and certain lenders increased their revolving credit commitments in an aggregate principal amount of up to $15.0 million, and (ii) the Credit Agreement was amended to, among other things, (a) modify the calculation of Consolidated EBITDA to include certain pro forma adjustments related to certain acquisitions and other transactions, (b) modify the Consolidated Leverage Ratio covenant and (c) permit additional investments in foreign subsidiaries and additional indebtedness by foreign subsidiaries. The proceeds from the additional term loan were used primarily to finance the acquisition of Emtrol and related expenses. Additionally, the Company has the option to obtain additional commitments for either the U.S. dollar revolving credit facility or the term loan facility in an aggregate principal amount not to exceed $50.0 million. On September 3, 2015, concurrent with the closing of the PMFG acquisition, the Company amended the Credit Agreement. Pursuant to the amendment, the Lenders provided a term loan under the Credit Agreement in an aggregate principal amount of $170.0 million and the Lenders decreased their senior secured U.S. dollar revolving credit commitments to the aggregate principal amount of $60.5 million. All other provisions of the agreement remained substantially unchanged. The proceeds from the increased term loan were used primarily to (i) finance the cash portion of the PMFG purchase price, (ii) pay off certain outstanding indebtedness of the Company and its subsidiaries (including certain indebtedness of PMFG and its subsidiaries), and (iii) pay certain fees and expenses incurred in connection with the amendment to the Credit Agreement and the PMFG acquisition. As of September 30, 2015 and December 31, 2014, $15.3 million and $9.5 million of letters of credit were outstanding, respectively. Total unused credit availability under the Credit Facility was $45.7 million and $71.5 million at September 30, 2015 and December 31, 2014, respectively. Revolving loans may be borrowed, repaid and reborrowed until September 3, 2020, at which time all amounts borrowed pursuant to the Credit Facility must be repaid. At the Company’s option, revolving loans and the term loans accrue interest at a per annum rate based on either the highest of (a) the federal funds rate plus 0.5%, (b) the Agent’s prime lending rate, and (c) one-month LIBOR plus 1.00%, plus a margin ranging from 1.0% to 2.0% depending on the Company’s consolidated leverage ratio (“Base Rate”), or a Eurocurrency Rate (as defined in the Credit Agreement) plus 2.0% to 3.0% depending on the Company’s consolidated leverage ratio. Interest on swing line loans is the Base Rate. Accrued interest on Base Rate loans is payable quarterly in arrears on the last day of each calendar quarter and at maturity. Interest on Eurocurrency Rate loans is payable on the last date of each applicable Interest Period (as defined in the agreement), but in no event less than once every three months and at maturity. The weighted average interest rate on outstanding borrowings was 3.20% and 2.24% at September 30, 2015 and December 31, 2014, respectively. The Company has granted a security interest in substantially all of its assets to secure its obligations pursuant to the Credit Agreement. The Company’s obligations under the Credit Agreement are guaranteed by the Company’s U.S. subsidiaries and such guaranty obligations are secured by a security interest on substantially all of the assets of such subsidiaries, including certain real property. The Company’s obligations under the Credit Agreement may also be guaranteed by the Company’s material foreign subsidiaries to the extent no adverse tax consequences would result to the Company. The Credit Agreement contains customary affirmative and negative covenants, including the requirement to maintain compliance with a consolidated leverage ratio of less than 3.75 and a consolidated fixed charge coverage ratio of more than 1.25. The Credit Agreement also includes customary events of default and the occurrence of an event of default could result in an increased interest rate equal to 2.0% above the applicable interest rate for loans, the acceleration of the Company’s obligations pursuant to the Credit Agreement and an obligation of the subsidiary guarantors to repay the full amount of the Company’s borrowings pursuant to the Credit Agreement. As of September 30, 2015 and December 31, 2014, the Company was in compliance with all related financial and other restrictive covenants under the Credit Agreement. The Company has paid $6.0 million of customary closing fees, arrangement fees, administration fees, letter of credit fees and commitment fees for the Credit Agreement and amendments thereto. Of these customary closing fees, $2.9 million were paid in the third quarter of 2015 in connection with the September 3, 2015 amendment to the Credit Agreement. As of September 30, 2015 and December 31, 2014, unamortized deferred financing costs of $4.5 million and $2.4 million, respectively, are included as a discount to debt in the accompanying Condensed Consolidated Balance Sheets. Amortization expense was $0.2 million and $0.1 million for the three-month periods ended September 30, 2015 and 2014, respectively, and $0.4 million and $0.4 million for the nine-month periods ended September 30, 2015 and 2014, respectively, and is classified as interest expense. Also, during the three-month period ended September 30, 2015, an additional $0.3 million of the fees were expensed, and classified as interest expense, as a result of the modification of the Credit Agreement. Foreign Debt The Company has a €10.5 million ($11.8 million) facilities agreement, originally dated August 17, 2012 (as amended from time to time), made between our Netherland’s subsidiaries ATA Beheer B.V. and Aarding Thermal Acoustics B.V., as borrowers and ING Bank N.V. as the lender (“Aarding Facility”). The facilities agreement includes a €7.0 million ($7.9 million) bank guarantee facility and a €3.5 million ($3.9 million) overdraft facility. The bank guarantee interest rate is the three months Euribor plus 265 basis points (2.65% as of September 30, 2015) and the overdraft interest rate is three months Euribor plus 195 basis points (1.95% as of September 30, 2015). All of the borrowers’ assets are pledged for this facility, and the borrowers’ solvency ratio must be at least 30% and net debt/last twelve months EBITDA less than 3.0. As of September 30, 2015 and December 31, 2014, the borrowers were in compliance with all related financial and other restrictive covenants, and expect continued compliance. As of September 30, 2015, €6.2 million ($7.0 million) of the bank guarantee and €3.3 million ($3.7 million) of the overdraft facility are being used by the borrowers. As of December 31, 2014, €5.5 million ($6.7 million) of the bank guarantee and none of the overdraft facility was being used by the borrowers. There is no stated expiration date on the facilities agreement. In conjunction with the PMFG acquisition, the Company assumed the debt of Peerless China Manufacturing Co. Ltd. (“PCMC”), a subsidiary of PMFG in China. The original long-term loan agreement was entered into in July of 2013 and is with Bank of China Limited (“PCMC Facility”). The loan agreement provides for a loan commitment of ¥43.0 million ($6.9 million). The loan is secured by PCMC’s property, plant and equipment. The loan matures on December 20, 2017. At September 30, 2015, there was an outstanding borrowing of ¥28.0 million ($4.4 million). The Company is required to make semi-annual principal payments on the loan. This loan was paid off subsequent to September 30, 2015. Interest rates use floating rates as established by The People’s Bank of China. The rate at September 30, 2015 was 7.0%. The loan agreement also contains covenants, including restrictions on additional debt, dividends, acquisitions and dispositions. At September 30, 2015, PCMC was in compliance with all of its debt covenants. PCMC had bank guarantees of $0.4 million at September 30, 2015, secured by $0.4 million of restricted cash balances. PCMC also entered into a short-term financing with Bank of China Limited (“PCMC LOC”). The financing provides for borrowing up to ¥10 million ($1.6 million) at an interest rate of 6.5%, with interest payable monthly. The short-term financing is due in December 2015. A subsidiary of the Company located in the U.K. has a debenture agreement used to facilitate issuances of letters of credit and bank guarantees of £6.0 million ($9.1 million) at September 30, 2015. This facility was secured by substantially all of the assets of the Company’s U.K. subsidiary, a protective letter of credit issued by the Company to HSBC Bank and a cash deposit of £1.9 million ($2.8 million) at September 30, 2015. At September 30, 2015, there was £3.6 million ($5.4 million) of outstanding stand-by letters of credit and bank guarantees under this debenture agreement. A subsidiary of the Company located in Germany has a debenture agreement used to facilitate issuances of letters of credit and bank guarantees of €4.8 million ($5.4 million) at September 30, 2015. This facility is secured by substantially all of the assets of the Company’s German subsidiary and by a cash deposit of €0.6 million ($0.7 million) at September 30, 2015. At September 30, 2015, there was €1.8 million ($2.0 million) of outstanding stand-by letters of credit and bank guarantees under this debenture agreement. A subsidiary of the Company located in Singapore had bank guarantees of $1.1 million at September 30, 2015. At September 30, 2015, these guarantees are secured with a cash deposit of $0.3 million, and a protective letter of credit issued by the Company to Citibank.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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