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Debt
6 Months Ended
Jun. 30, 2015
Debt Disclosure [Abstract]  
Debt

9.            Debt

 

On June 16, 2015, the Company entered into a Loan Agreement (the Loan) with Bank of America, N.A. (the Bank) to replace its previous line of credit with the Bank discussed below. The Loan contains three different credit facilities for our use in future capital requirements and strategic initiatives. All the credit facilities under the Loan are available until July 31, 2016 and may be renewed subject to all the terms and conditions as set forth in the Loan. Except as otherwise stated in the Loan, all interest and fees, if any, will be computed on the basis of a 360-day year and the actual number of days elapsed. The Loan is secured by equipment and fixtures, inventory and receivables owned by the Company and guaranteed by MTI Instruments. The Loan requires the Company to provide specified financial information within 120 days of the fiscal year end and maintain on a consolidated basis a Debt Service Coverage Ratio of at least 1.25 to 1.0. The Company is also subject to other restrictions as set forth in the Loan.

 

The Company may borrow under the Facility No. 1 Commitment revolving line of credit from time to time up to $1 million. This facility is similar to the line of credit that was entered into in May 2014. The Facility No. 1 Commitment is payable no later than the expiration date of the Loan and interest is payable on the last day of each month beginning on June 30, 2015 and until payment has been made in full. The interest rate on funds borrowed under the Facility No. 1 Commitment is equal to the LIBOR Daily Floating Rate plus 2.50%.

 

The Company may borrow under the Facility No. 2 Commitment non-revolving line of credit from time to time up to $1 million. Any amount borrowed under the Facility No. 2 Commitment permanently reduces the amount remaining available to borrow under this line of credit. Any principal borrowed under the Facility No. 2 Commitment is payable in equal installments beginning on August 31, 2016, and on the same day of each month thereafter, and ending on July 31, 2021 (the Repayment Period) and may be prepaid in full or in part at any time. The interest rate on funds borrowed under the Facility No. 2 Commitment is equal to the LIBOR Rate (Adjusted Periodically) plus 2.50% and will be adjusted on the first day of the month of every month (the Adjustment Date) and remain fixed until the next Adjustment Date. This facility provides for payment of any accrued interest on June 30, 2015, and then on the last day of each month thereafter until payment in full of any principal outstanding under this facility. Each prepayment of an amount bearing interest must be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee. During the Repayment Period, the Company has a one-time option to convert the interest rate on the loan from the rate specified above to a fixed rate, provided no event of default exists.

 

The Company may borrow under the Facility No. 3 Commitment non-revolving line of credit from time to time up to $500 thousand. Any amount borrowed under the Facility No. 3 Commitment permanently reduces the amount remaining available to borrow under this line of credit. Any principal borrowed under the Facility No. 3 Commitment is payable in equal installments beginning on August 31, 2016, and on the same day of each month thereafter, and ending on July 31, 2021 (the Repayment Period) and may be prepaid in full or in part at any time. The interest rate on funds borrowed under the Facility No. 3 Commitment is equal to the LIBOR Rate (Adjusted Periodically) plus 2.50% and will be adjusted on the first day of the month of every month (the Adjustment Date) and remain fixed until the next Adjustment Date. This facility provides for payment of any accrued interest on June 30, 2015, and then on the last day of each month thereafter until payment in full of any principal outstanding under this facility. Each prepayment of an amount bearing interest must be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee. During the Repayment Period, the Company has a one-time option to convert the interest rate on the loan from the rate specified above to a fixed rate, provided no event of default exists.

 

As of June 30, 2015, there were no amounts outstanding under these credit facilities.

 

On May 5, 2014, the Company entered into a revolving line of credit with the Bank. The Company was allowed to borrow under the line of credit from time to time up to $1 million to support its working capital needs. The line of credit was available until July 31, 2015. The loan was payable no later than the expiration date of the loan and interest was payable on the last day of each month beginning on May 30, 2014 and until payment was made in full. The interest rate on funds borrowed under the line of credit was equal to the LIBOR Daily Floating Rate plus 2.75%. The loan was secured by equipment and fixtures, inventory and receivables owned by the Company and guaranteed by MTI Instruments. The Company was required to hold a balance of $0 for 30 consecutive days during the period from May 5, 2014 through July 31, 2015, and each subsequent one-year period of the loan, if any. Upon the occurrence of an event of default, the Bank was allowed to set off against our repayment obligations any amounts we maintained at the Bank. The Company was also subject to other restrictions as set forth in the loan. As of June 30, 2015 and December 31, 2014, there were no amounts outstanding under this line of credit.