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Short-Term Debt
 6 Months Ended
Jun. 30, 2012
Debt Disclosure [Abstract]  
Short-Term Debt

 

3.       Short-term debt

 

           Solitario entered into a secured credit line agreement between Solitario and UBS Bank. At June 30, 2012, the credit line is secured by all of Solitario’s assets held in its UBS brokerage account, consisting primarily of 460,000 of Solitario’s Kinross shares. The UBS Bank credit line carries an interest rate which floats, based upon a base rate of 2.25% plus the one-month London Interbank Offered Rate ("LIBOR"), which is 0.25% as of June 30, 2012. The average base rate was approximately 2.54% and 2.49% for the three and six months ended June 30, 2012. UBS Bank may change the base rate at any time. The UBS Bank credit line provides that Solitario may borrow up to $2 million and that Solitario maintain a minimum equity value percentage in its UBS brokerage account above 40%, based upon the value of its Kinross shares and any other assets held in Solitario's UBS brokerage account, less the value of its UBS Bank credit line and any other balances owed to UBS Bank. UBS Bank may modify the minimum equity value percentage of the loan at any time. In addition, if the equity value in Solitario's UBS brokerage account falls below the minimum equity value, UBS Bank may sell enough Kinross shares held in Solitario's UBS brokerage account or liquidate any other assets to restore the minimum equity value. At June 30, 2012, the equity value in Solitario's UBS brokerage account was 47%. As of August xx, the outstanding balance under the UBS credit line has been reduced to $x,xxx,000.

 

          Solitario also maintains a short-term margin account with RBC Capital Markets, LLC ("RBC"). At June 30, 2012, the credit line is secured by all of Solitario’s assets held in its RBC brokerage account, consisting primarily of 210,000 of Solitario’s Kinross shares. Solitario has utilized short-term margin loans from RBC, using Solitario's investment in Kinross held at RBC as collateral for the short-term margin loans. During the three and six months ended June 30, 2012, the loans carried interest at a margin loan rate of 4.25% per annum, which floats based upon the London Interbank Offered Rate. The margin loan rate can be modified by RBC at any time. The margin loans are callable by RBC at any time. Per the terms of the margin loans, Solitario is required to maintain a minimum equity value in the account of 35%, based upon the value of its Kinross shares and any other assets held at RBC, less any short-term margin loan balance and any other balances owed to RBC. The equity value percentage may be modified by RBC at any time. If the equity value in Solitario's account at RBC falls below the minimum, RBC may call the loan, or may sell enough Kinross shares held in Solitario's brokerage account or liquidate any other assets to restore the minimum equity value. At June 30, 2012 the equity balance in Solitario's account at RBC was 35%. As of August xx, the outstanding balance under the RBC short-term margin account has been reduced to $xxx,000.

 

The following tables summarize Solitario’s short-term debt:

 

(in thousands)   June 30, 2012    December 31, 2011 
  Outstanding UBS short-term credit line  $2,000   $2,000 
 Outstanding RBC short term margin loan   1,123    —   
Total short-term margin loans  $3,123   $2,000 

 

(in thousands)  Three months ended
June 30,		  Six months ended
June 30,
   2012  2011  2012  2011
Interest expense UBS short-term credit line  $13   $13   $24   $23 
Interest expense RBC short-term margin loan   11    6    15    21 
Total interest expense, short term margin loans  $24   $19   $39   $44