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Note 11 - Debt

12 Months Ended

Dec. 28, 2014

11. Debt

Loan Agreement

Lakes had a two-year interest-only $8.0 million revolving line of credit loan agreement (the “Loan Agreement”) with Centennial Bank that expired on October 28, 2014. The Loan Agreement was collateralized by primarily all of Lakes’ interest in the real property it owns in Minnetonka, Minnesota. Lakes’ Chief Executive Officer, Lyle Berman, personally guaranteed the Loan Agreement on behalf of Lakes. The Loan Agreement allowed for an interest rate of 8.95% on any amounts borrowed. No amounts were ever borrowed under the Loan Agreement.

Financing Facility

In December 2012, Lakes closed on a $17.5 million financing facility with Centennial Bank (the “Financing Facility”) to finance a portion of Rocky Gap project costs. Approximately $13.4 million has been drawn on the Financing Facility, which is collateralized by the leasehold estate and the furniture, fixtures and equipment of Rocky Gap. In addition, Lakes guaranteed repayment of the loan and granted a second mortgage on its real property located in Minnetonka, Minnesota. Effective November 1, 2013, Lakes amended the Financing Facility with Centennial Bank to reduce the interest rate from 10.5% to 5.5%. Monthly payments of principal and interest began on December 1, 2013 and continue for 84 months. Although Lakes does not currently plan to make further draws on the Financing Facility, Lakes has the ability to draw the remaining $4.1 million on the Financing Facility through December 31, 2018. As of December 28, 2014 and December 29, 2013, $11.7 million and $13.3 million of principal was outstanding under the Financing Facility, respectively.

As a result of the amendment of the Financing Facility with Centennial Bank effective November 1, 2013, Lakes recorded a $1.7 million gain on modification of debt during the fourth quarter of 2013. This amount included $2.0 million recorded as a discount to the principal amount of the Financing Facility, which is being accreted to interest expense over the term of the Financing Facility using the effective interest method, and $0.3 million of original debt issuance costs expensed at the time of the amendment. Accretion of the discount to interest expense was approximately $0.5 million and $0.1 million for the fiscal years ended December 28, 2014 and December 29, 2013, respectively.

Summary of Outstanding Debt

Long-term debt, net of current maturities and discount, is comprised of the following as of December 28, 2014 and December 29, 2013, respectively (in thousands).

	December 28, 2014			December 29, 2013
Financing Facility	$	11,691		$	13,315
Capital lease obligations		50			182
Total debt		11,741			13,497
Less: current maturities, net of discount		(1,368	)		(1,251	)
Less: unamortized debt discount		(1,432	)		(1,925	)
Long-term debt, net of current maturities and discount	$	8,941		$	10,321

Future Principal Payments on Long-Term Debt

The aggregate principal payments due on long-term debt as of December 28, 2014 over the next five years and thereafter, are as follows (in thousands):

Fiscal years ending:
2015	$	1,766
2016		1,813
2017		1,918
2018		2,028
2019		2,144
Thereafter		2,072
	$	11,741

- 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.

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