Debt

6 Months Ended

Jul. 02, 2023

The components of debt outstanding at July 2, 2023 and January 1, 2023 are as follows:


	July 2, 2023		January 1, 2023
Revolver	$	57,796	$	60,093
VIE Financing	36,299		36,826
Tool financing loan	3,102		3,037
Unamortized debt issuance costs 1	(6,222)		(7,103)
Total long-term debt, including current maturities	90,975		92,853
Less: Current portion of long-term debt	(56,197)		(57,672)
Total long-term debt, excluding current portion	$	34,778	$	35,181

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1 Unamortized debt issuance costs as of July 2, 2023 included $3,563 for the Revolver (as defined below) and $2,659 for the VIE Financing (as defined below). Unamortized debt issuance costs as of January 1, 2023 included $4,277 for the Revolver and $2,826 for the VIE Financing.

Revolver

The outstanding balance of the revolving line of credit (the “Revolver”) under the Company's Loan and Security Agreement with Siena Lending Group LLC was $57,796 as of July 2, 2023 at an interest rate of 11.6% due in December 2025. The remaining availability under the Revolver was $34,635 as of July 2, 2023. As of July 2, 2023, the Company was in compliance with applicable financial covenants of the Revolver and expect to be in compliance with applicable financial covenants over the next twelve months.

VIE Financing

On September 30, 2020, Oxbow Realty, our consolidated VIE (see Note 12 – Related Party Transactions and Note 13 – Variable Interest Entity), entered into a loan agreement for $39,000 (the “VIE Financing”) to finance the acquisition of the building and land associated with SkyWater's primary operating location in Bloomington, Minnesota. The VIE Financing is repayable in equal monthly installments of $194 over 10 years, with the remaining balance payable at the maturity date of October 6, 2030. The interest rate under the VIE Financing is fixed at 3.44%. The VIE Financing is guaranteed by Oxbow, who is also the sole equity holder of Oxbow Realty.

The terms of the VIE Financing include provisions that grant the lender several protective rights when certain triggering events defined in the loan agreement occur, including events tied to SkyWater’s occupancy of the Bloomington, Minnesota facility and SkyWater’s financial performance. The occurrence of these triggering events do not represent events of default, nor do they result in the VIE Financing becoming callable, rather the protective rights become enforceable by the lender. Based on the level of SkyWater’s earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs relative to gross rents paid from SkyWater to Oxbow Realty, as defined in the loan agreement, a trigger event exists and the lender’s protective rights are currently enforceable. Pursuant to its protective rights, the lender has retained in a restricted account amounts paid by SkyWater to Oxbow Realty pursuant to the Company’s related party lease agreement that are in excess of the scheduled debt payments paid by Oxbow Realty to the lender. The funds held in the restricted accounts become remittable back to Oxbow Realty once the trigger event is cured. As of July 2, 2023, Oxbow Realty maintained a $4,542 receivable for the cumulative amount of excess payments held by the lender in the restricted account.

Tool Financing Loan

Between fourth quarter 2022 and first quarter 2023, SkyWater entered into an arrangement to sell a manufacturing tool to an equipment financing lender for $3,596. The agreements include bargain purchase options at the end of the lease terms which the Company intends to exercise. These transactions represent failed sale leasebacks with the manufacturing tool retained on the Company's balance sheet and the proceeds received recorded as financial obligations.

Maturities

Future principal payments of the Revolver, the VIE Financing, and tool financing loan, excluding unamortized debt issuance costs, are as follows:


Remainder of 2023	$	58,801
2024	2,103
2025	2,185
2026	1,752
2027	1,219
Thereafter	31,137
Total	$	97,197