LINES OF CREDIT AND SUBORDINATED LOAN PAYABLE

12 Months Ended

Apr. 28, 2019

LINES OF CREDIT AND SUBORDINATED LOAN PAYABLE

13.	LINES OF CREDIT AND SUBORDINATED LOAN PAYABLE

Revolving Credit Agreement – United States

At April 29, 2018, our Credit Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) provided for a revolving loan commitment of $30 million. Effective August 13, 2018, we entered into a Fifth Amendment to our Credit Agreement which reduced the amount of our line of credit from $30 million to $25 million, reduced the amount of the Unencumbered Liquid Assets maintenance covenant from $20 million to $15 million, and set the expiration date to

August 15, 2020

. Additionally, this amendment reduced the limit of outstanding letters to $1.0 million, which includes the $250,000 workers compensation letter of credit noted below.

Interest was charged at a

rate (applicable

interest rate of 3.93% and 3.36% at April 28, 2019 and April 29, 2018, respectively) as a variable spread over

LIBOR

based on our ratio of debt to EBITDA.

Outstanding borrowings are secured by a pledge of 65% of the common stock of Culp International Holdings, Ltd. (our subsidiary located in the Cayman Islands), as required by the Credit Agreement. There were no borrowings outstanding under the Credit Agreement at April 28, 2019 and April 29, 2018, respectively.

At April 28, 2019 and April 29, 2018, there were $250,000 in outstanding letters of credit (all of which related to workers compensation) provided by the Credit Agreement.

Effective August 1, 2016, we entered into a Third Amendment to our Credit Agreement which allowed us to issue letters of credit not to exceed $7.5 million. On August 3, 2016, we issued a $5.0 million letter of credit, in addition to the $250,000 letter of credit noted above, for the construction of a new building associated with our mattress fabrics segment (see Note 15 for further details). The terms of this $5.0 million letter credit expired on

May 15, 2018

Revolving Credit Agreement – China

At April 28, 2019, we had an unsecured credit agreement associated with our operations in China that provides for a line of credit up to 40 million RMB ($5.9 million USD at April 28, 2019).

This agreement has an interest rate determined by the Chinese government

and is set to expire on

January 31, 2020

. There were no outstanding borrowings as of April 28, 2019 and April 29, 2018, respectively.

Subordinated Loan Payable

On February 17, 2019, eLuxury entered into a subordinated credit agreement with the owner of its noncontrolling interest which provides a revolving loan commitment of $

1.0

million that expires on

June 22, 2023

. Interest was charged at a rate (applicable interest rate of

3.93

% April 28, 2019) as a variable spread over LIBOR based on Culp’s ratio of debt to EBITDA. At April 28, 2019, there were borrowings outstanding under this agreement totaling $675,000.

Overall

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. As of April 28, 2019, we complied with these financial covenants.

Interest paid during fiscal years 2019, 2018, and 2017 were $54,000, $181,000, and $114,000, respectively.