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Debt | 12 Months Ended
--- | ---
Dec. 29, 2024
Debt Disclosure [Abstract] |
Debt | Debt The components of debt outstanding at December 29, 2024 and December 31, 2023 are as follows:
| December 29, 2024 |  | December 31, 2023
Short-term financing |  |  |
Revolver | $ | 30,171 |  |  | $ | 21,794 |
Tool financing advance payments (1) | — |  |  | 3,822 |
Unamortized debt issuance costs | (2,502) |  |  | (2,851) |
Total short-term financing, net of unamortized debt issuance costs | 27,669 |  |  | 22,765 |
Long-term debt |  |  |
VIE Financing | 34,671 |  |  | 35,765 |
Tool financing loans (1) | 7,253 |  |  | 6,799 |
Unamortized debt issuance costs | (2,147) |  |  | (2,490) |
Total long-term debt, including current maturities | 39,777 |  |  | 40,074 |
Less: Current portion of long-term debt | (5,073) |  |  | (3,976) |
Total long-term debt, excluding current portion | $ | 34,704 |  |  | $ | 36,098 |
__________________ (1)Tool financing advance payments represent proceeds received from equipment lenders prior to the Company placing the tools into service. When the tools are placed into service, financing agreements are executed to repay the equipment lenders the financed acquisition cost of the tools, and any advance payments received from the equipment lenders are converted to tool financing loans and classified as long-term debt in the Company’s condensed consolidated balance sheets. Tool financings are often accounted for as failed sale and leasebacks. Revolver On December 28, 2022, the Company entered into a Loan and Security Agreement with Siena Lending Group LLC (“Siena”), which was amended on November 19, 2024 (as amended, the “Loan Agreement”). The Loan Agreement provides for a revolving line of credit o f up to $130,000 with a scheduled maturity date of December 2028 (the “Revolver”). The Company has incurred $4,277 of debt issuance costs, which are being amortized as additional interest expense over the life of the Revolver. In connection with the entry into the Loan Agreement, the Company repaid $43,495 in outstanding indebtedness under and terminated its lending agreement with Wells Fargo, and recognized a $1,101 write-off of unamortized debt issuance costs during its fiscal year ended January 1, 2023. Borrowing under the Loan Agreement is limited by a borrowing base of specified advance rates applicable to billed accounts receivable, unbilled accounts receivable, inventory, and equipment, subject to various conditions, limits, and any availability block as provided in the Loan Agreement. The Loan Agreement also provides for borrowing base sublimits applicable to each of unbilled accounts receivable and equipment. Under certain circumstances, Siena may, from time to time, establish and revise reserves against the borrowing base and/or the maximum revolving facility amount. Borrowings under the Loan Agreement bear interest at a rate that depends upon the type of borrowing, whether a term secured overnight financing rate (“SOFR”) loan or base rate loan, plus the applicable margin. The term SOFR loan rate is a forward-looking term rate based on SOFR for a tenor of one month on the applicable day, subject to a minimum of 2.5% per annum. The base rate is the greatest of the prime rate, the Federal funds rate plus 0.5%, and 7.0% per annum. The applicable margin is an applicable percentage based on the fixed charge coverage ratio that ranges from 4.00% to 5.00% per annum for term SOFR loans and ranges from 3.00% to 4.00% per annum for base rate loans. The Loan Agreement contains customary representations and warranties and financial and other covenants and conditions. Subject to certain cure rights, the Loan Agreement requires $10,000 in minimum EBITDA (as defined in the Loan Agreement) calculated as of the last day of each calendar month for the preceding twelve calendar months, prohibits unfunded capital expenditures in excess of $15,000 calculated as of the last day of each calendar month for the preceding twelve calendar months, and requires a minimum fixed charge coverage ratio, measured on a trailing twelve month basis, of not less than 1.00 to 1.00 if the Company’s liquidity is less than $15,000. In addition, the Loan Agreement places certain restrictions on the Company’s ability to incur additional indebtedness (other than permitted indebtedness), to create liens or other encumbrances (other than liens relating to permitted indebtedness), to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to its stockholders. The Company is also obligated to pay to Siena, for its own benefit, certain customary fees. Due to a lockbox clause in the Loan Agreement, the outstanding Revolver loan balance is required to be serviced with working capital; accordingly, the entire Revolver loan balance is classified as current portion of long-term debt on the consolidated balance sheets. The outstanding balance of the Revolver was $30,171 as of December 29, 2024 at an interest rate of 8.9% and is due in December 2028. The remaining availability under the Revolver was $99,829 as of December 29, 2024. As of December 29, 2024, the Company was in compliance with applicable financial covenants of the Revolver. VIE Financing On September 30, 2020, Oxbow Realty, the Company’s consolidated VIE entered into a loan agreement for $39,000 (the “VIE Financing”) to finance the acquisition of the building and land of the SkyWater Minnesota facility (see Note 13 – Related Party Transactions and Note 15 – Variable Interest Entity). 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 Industries, who is also the sole equity holder of Oxbow Realty. The VIE financing is not subject to financial debt default covenants. 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 SkyWater Minnesota facility and SkyWater’s financial performance. The occurrence of a triggering event does not represent a default event as per the loan agreement, nor does it result in the VIE Financing becoming callable, rather the protective rights become enforceable by the lender. As defined in the loan agreement, a triggering event occurred beginning in the three-month period ended January 1, 2023 based on the level of earnings before interest, taxes, depreciation, amortization and rent, as defined in the loan agreement, reported by SkyWater historically. Pursuant to its protective rights, the lender retained in a restricted account amounts paid by SkyWater to Oxbow Realty that were in excess of the scheduled debt payments paid by Oxbow Realty to the lender. The triggering event was cured during the three-month period ended June 30, 2024 and the funds held in the restricted account were remitted back to Oxbow Realty. No triggering events as defined in the loan agreement existed as of December 29, 2024. The VIE Financing is secured by a security interest in the land and building which was the subject of the sale-leaseback transaction (see Note 13 – Related Party Transactions). The Company and Oxbow Realty, the Company’s VIE, incurred third-party transaction costs of $3,487 a nd $65, respectively, which have been capitalized as debt issuance costs, presented as a reduction of the outstanding loan balance, and are being amortized as additional interest expense over the remaining maturity of the VIE Financing. Tool Financing Loans The Company, from time to time, enters into financing arrangements with lenders to finance the purchase of tools. When the tool is placed into service, the Company executes a sales agreement to transfer ownership of the tool to the equipment lender and concurrently enters into a debt agreement to repay the lender the acquisition cost of the tool over a period of time - typically three years. The sales agreements include bargain purchase options at the end of the lease terms, which the Company intends to exercise; accordingly, these transactions represent failed sale leasebacks with the associated tools recorded in property and equipment, net and the proceeds received, net of scheduled repayments of the financings, recorded as long-term debt on the Company’s consolidated balance sheets. Advance payments received from the equipment lender before the sale and financing agreements are executed are recorded as short-term financing on the Company’s consolidated balance sheets. For the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 borrowing under these arrangements totaled $0, $5,190, and $3,100, respectively. Additionally, advance payments of tools that have been financed by equipment lenders prior to placing the underlying tool into service totaled $0 and $3,822 as of December 29, 2024 and December 31, 2023, respectively. The Revolver is due on December 31, 2028. The VIE Financing is repayable in equal monthly installments of $194 over 10 years, with the balance payable at the maturity date of October 6, 2030. Future principal payments as of December 29, 2024 of the Company’s long-term debt are as follows:
2025 | $ | 5,073 |
2026 | 4,491 |
2027 | 1,219 |
2028 | 1,259 |
2029 | 1,307 |
Thereafter | 28,575 |
Total | $ | 41,924 |

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