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Debt | 9 Months Ended
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Dec. 31, 2013
Debt [Abstract] |
Debt | 7. Debt The Company has the following credit agreements. Financing Agreement The Company is party to a financing agreement, as amended, (the “Financing Agreement”) with a syndicate of lenders, Cerberus Business Finance, LLC (“Cerberus”), as collateral agent, and PNC Bank, National Association, as administrative agent. The loans made thereunder (the “Loans”) consist of: (i) term loans aggregating $85,000,000 (the “Term Loans”) and (ii) revolving loans of up to $20,000,000, subject to borrowing base restrictions and a $10,000,000 sublimit for letters of credit (the “Revolving Loans”). The Loans were initially scheduled to mature on January 17, 2017. In connection with the Financing Agreement, the lenders were granted a security interest in substantially all of the assets of the Company. The Term Loans required quarterly principal payments of $600,000 per quarter from April 1, 2013 to September 30, 2013 and $1,350,000 per quarter from October 1, 2013 until the final maturity date. The Term Loans bear interest at rates equal to, at the Company’s option, either LIBOR plus 8.5% or a base rate plus 7.5%. In June 2013, the Company entered into a sixth amendment to the Financing Agreement (the “Sixth Amendment”), under the terms of which the agents and lenders agreed to waive any event of default that would otherwise arise under the Financing Agreement due to the qualification in the opinion by the Company’s independent registered accounting firm with respect to the financial statements for the fiscal year ended March 31, 2013. In addition, the Sixth Amendment (i) added a reporting requirement with respect to the Company’s liquidity levels and certain inventory purchases and (ii) added a financial covenant under which the Company must maintain the following levels of liquidity on the following dates unless otherwise consented to by the lenders: on June 28, 2013, an aggregate amount of at least $25,000,000, subject to certain adjustments; on July 31, 2013, an aggregate amount of at least $26,000,000, subject to certain adjustments; and on August 30, 2013, an aggregate amount of at least $27,000,000, subject to certain adjustments. The Company was in compliance with these minimum liquidity requirements at each date. In August 2013, the Company entered into a seventh amendment to the Financing Agreement (the “Seventh Amendment”). Pursuant to the terms of the Seventh Amendment, (i) the Company borrowed an additional $20,000,000 in Term Loans, (ii) modified certain financial covenants, and (iii) provided consent from the lenders to the Company’s payment of certain subordinated debt with respect to the guaranty as described below under WX Agreement (as defined herein). Among other things, the Seventh Amendment requires quarterly principal payments of $2,100,000, with respect to the Term Loans, beginning on October 1, 2013 until the final maturity date. In October 2013, the Company entered into an eighth amendment to the Financing Agreement (the “Eighth Amendment”), which among other things, permitted the Company to purchase Mr. Joffe’s stock option pursuant to the Option Purchase Agreement (as defined herein). In November 2013, the Company entered into a ninth amendment and waiver to the Financing Agreement (the “Ninth Amendment”). Pursuant to the terms of the Ninth Amendment, (i) the agents and lenders waived a requirement for the Company to pay down the Loans with its receipt of certain state tax refunds, (ii) the Revolving Loans were increased by $10,000,000 to $30,000,000 (the “Amended Revolving Loans”), subject to certain borrowing base restrictions, (iii) the Term Loans were decreased by $10,000,000 to $95,000,000 (the “Amended Term Loans”), (iv) the final maturity date was extended to November 6, 2018, (v) the Company gained the right, subject to meeting certain conditions, to repurchase up to $10,000,000 of its equity interests, and (vi) certain other amendments and modifications were made to the Financing Agreement in the form of an amended and restated financing agreement (the “Amended Financing Agreement”). Among other things, the Amended Term Loans require quarterly principal payments of $2,100,000 and bear interest at rates equal to, at the Company’s option, either LIBOR (subject to a 1.50% LIBOR floor) plus 5.25% or a reference rate plus 4.25%. The Amended Revolving Loans bear interest at rates equal to, at the Company’s option, either LIBOR plus 2.50% or a reference rate plus 1.00%. The interest rate on the Company’s term loans using the LIBOR option was 6.75% and 10.5% at December 31, 2013 and March 31, 2013, respectively. The interest rate on the Company’s Amended Revolving Loans using the LIBOR option was 2.67% at December 31, 2013. The Amended Revolving Loans may, at the Company’s option, be prepaid in whole or in part. The Company may reduce or terminate the commitments of the lenders to make the Amended Revolving Loans or prepay the Amended Term Loans in whole or in part, but such prepayments are subject to a prepayment penalty of (i) 3.00% times the sum of the reduction of the revolving credit commitment plus the principal amount of any prepayment of the Amended Term Loans until January 18, 2014 and (ii) 2.00% times the sum of the reduction of the revolving credit commitment plus the principal amount of any prepayment of the Amended Term Loans from January 19, 2014 to January 18, 2015. Notwithstanding the foregoing, the Company has the right to prepay up to $10,000,000 of the Amended Term Loans without any prepayment penalty if such payment is made within 120 days of the Ninth Amendment effective date. The Amended Financing Agreement, among other things, requires the Company to maintain certain financial covenants including a maximum senior leverage ratio, a minimum fixed charge coverage ratio, and minimum consolidated earnings before interest, income tax, depreciation and amortization expenses (“EBITDA”). The Company was in compliance with all financial covenants as of December 31, 2013. At December 31, 2013, the Company had borrowed $10,000,000 under the Amended Revolving Loans. There was no balance on the Revolving Loans at March 31, 2013. The Company had reserved $476,000 of the Amended Revolving Loans for standby letters of credit for workers’ compensation insurance and $2,128,000 for commercial letters of credit as of December 31, 2013. As of December 31, 2013, $17,530,000 was available under the Amended Revolving Loans. Cerberus Warrant In connection with the Financing Agreement, the Company issued a warrant (the “Cerberus Warrant”) to Cerberus. Pursuant to the Cerberus Warrant, Cerberus could purchase up to 219,355 shares of the Company’s common stock (the “Warrant Shares”) for an adjusted exercise price of $7.75 per share exercisable on or before May 24, 2017. The exercise price was subject to adjustments, among other things, for sales of common stock by the Company at a price below the exercise price. In November 2013, the Company entered into a warrant purchase agreement (the “Cerberus Warrant Purchase Agreement”) with Cerberus to purchase the Cerberus Warrant. Pursuant to the Cerberus Warrant Purchase Agreement, the Company paid $2,194,000, which is an amount equal to the closing price of the Company’s common stock on November 22, 2013 of $17.75 less the adjusted per share exercise price of $7.75, ($10.00 per Warrant Share) multiplied by the number of Warrant Shares. The fair value of the Cerberus Warrant as of the settlement date was $2,410,000 using the Monte Carlo simulation model. The following assumptions were used to calculate the fair value of the Cerberus Warrant: dividend yield of 0%; expected volatility of 45.69%; risk-free interest rate of 0.77%; subsequent financing probability of 0%; and an expected life of 3.5 years. As a result of this settlement, the Company recorded a gain of $216,000 which is included in general and administrative expenses during the three and nine months ended December 31, 2013. The fair value of the Cerberus Warrant using the Monte Carlo simulation model was $375,000 at March 31, 2013. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at March 31, 2013. During the three months ended December 31, 2013 and 2012, a loss of $996,000 and $214,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of this warrant liability. During the nine months ended December 31, 2013 and 2012, a loss of $2,035,000 and a gain of $36,000, respectively, were recorded in general and administrative expenses due to the change in the fair value of this warrant liability. Fenco Loans As of May 31, 2013, $48,520,000 of revolving loan - in default and $10,000,000 of term loan - in default at the discontinued subsidiary were deconsolidated from the consolidated financial statements of the Company (see Note 2). WX Agreement In August 2012, the Company entered into a Revolving Credit/Strategic Cooperation Agreement (the “WX Agreement”) with Wanxiang America Corporation (the “Supplier”) and the discontinued subsidiary. Under the terms of the WX Agreement, the Supplier agreed to provide a revolving credit line for purchases of automotive parts and components by the discontinued subsidiary in an aggregate principal amount not to exceed $22,000,000 (the “Fenco Credit Line”), of which $2,000,000 would only be available for accrued interest and other amounts payable (the “Obligations”). Payment for all purchases became due and payable 120 days after the date of the bill of lading. Any amounts remaining unpaid following the due date would bear interest at a rate of 1% per month. The Fenco Credit Line was scheduled to mature on July 31, 2017. Pursuant to a guaranty (the “Guaranty”), the Obligations under the WX Agreement were guaranteed by the Company and certain of its subsidiaries. On July 9, 2013, the Company received notice from the Supplier that the filing of the voluntary petition for relief under Chapter 7 of Title 11 of the United States Code in the U.S. Bankruptcy Court for the District of Delaware by the Fenco Entities constituted an “Event of Default” under the WX Agreement. As a result of the Event of Default, all amounts outstanding under the WX Agreement together with all accrued interest and all other amounts payable automatically became immediately due and payable subject to the terms of the Guaranty and a subordination agreement with the lender under the Financing Agreement. In addition, subject to certain adjustments, the interest rate applicable to all amounts remaining unpaid will increase, to the extent permitted by law, to 1.25% per month, compounding monthly, on December 10, 2013, and to 1.50% per month, compounding monthly, on June 10, 2014. On August 26, 2013, in connection with the Seventh Amendment, the Company paid $20,843,000 to the Supplier for payments of all outstanding liabilities, including interest payments, of the Company under the Guaranty. In connection with the WX Agreement and the Guaranty, the Company also issued a warrant (the “Supplier Warrant”) to the Supplier to purchase up to 516,129 shares of the Company’s common stock for an initial exercise price of $7.75 per share exercisable at any time after August 22, 2014 and on or prior to September 30, 2017. The exercise price is subject to adjustments, among other things, for sales of common stock by the Company at a price below the exercise price. The fair value of the Supplier Warrant using the Monte Carlo simulation model was $6,485,000 and $1,639,000 at December 31, 2013 and March 31, 2013, respectively. This amount is recorded as a warrant liability which is included in other liabilities in the consolidated balance sheets at December 31, 2013 and March 31, 2013. During the three months ended December 31, 2013 and 2012, a loss of $1,924,000 and $668,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of this warrant liability. During the nine months ended December 31, 2013 and 2012, a loss of $4,846,000 and $861,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of this warrant liability. The Company no longer has any material obligations under the WX Agreement other than indemnification. The Company has not assumed all or a material portion of the Fenco product lines, and therefore the Company is not subject to the strategic cooperation provisions of the WX Agreement.

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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 SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: 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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