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Note 14 - Debt | 12 Months Ended
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Dec. 31, 2015
Notes to Financial Statements |
Long-term Debt [Text Block] |
( 14 ) | Debt
Long-term obligations consists of the following (in thousands):
|  | December 31, |
|  | 2015 |  |  | 2014 |
Revolving credit facility |  | $ | 0 |  |  | $ | 17,000 |
New Credit Facility |  |  | 2,132 |  |  |  | 0 |
Term Loan |  |  | 11,714 |  |  |  | 0 |
Note payable – related party |  |  | 5,500 |  |  |  | 0 |
|  |  | 19,346 |  |  |  | 17,000 |
Less current portion |  |  | 3,846 |  |  |  | 17,000 |
|  | $ | 15,500 |  |  | $ | 0 |
Revolving Credit Facility On October 30, 2015, all outstanding principal and interest obligations outstanding under the Company’s Revolving Credit and Security Agreement, dated May 12, 2011 with PNC (the "Loan Agreement" or the “Credit Facility”) were repaid in full in conjunction with the Company’s new financing agreements. The Credit Facility was replaced by the new financing agreements. Note Payable – Related Party During 2015, the Company has received the proceeds of subordinated indebtedness from GFCM in an amount of $5,500,000. GFCM is an entity controlled by our president and chief executive officer, Jeffrey T. Gill and one of our directors, R. Scott Gill. GFCM, Jeffrey T. Gill and R. Scott Gill are significant beneficial stockholders of the Company. The promissory note bears interest at a rate of 8.00% per year. All principal and interest on the promissory note, as amended, will be due and payable on January 30, 2019. On February 26, 2016, the Company further amended the GFCM note to increase the amount by $1,000,000 to $6,500,000. Note Payable – Meritor On July 2, 2015, the Company entered into a secured promissory note (the “Meritor Note”) in the principal amount of $3,047,000, with Meritor, in exchange for the release of certain outstanding net trade payables owed to Meritor for ongoing purchases of raw materials and the guarantee of certain inventory values related to Meritor’s business as collateral under the Credit Facility. The Meritor Note was secured by substantially all of the collateral for the Credit Facility, was senior to the promissory note previously issued to GFCM and was subordinate to the rights under the Credit Facility. The Meritor Note bore interest at a rate of 10.0% per year and all principal and interest on the Meritor Note was due and payable on the maturity date. On July 9, 2015, the Company entered an asset purchase agreement to sell certain assets and related liabilities used in the Company’s manufacturing facility in Morganton, North Carolina, to Meritor for $12,500,000. Meritor also agreed to purchase the Morganton plan facility and real estate for $3,200,000. At closing, the parties also entered into a Meritor Note Amendment, whereby the Company issued an additional secured obligation to Meritor of $412,000 on July 9, 2015 for the release of certain outstanding net trade payables and other accrued liabilities and further agreed to increase the Meritor Note by an additional $321,000 in September to reflect certain potential roof repairs required at the Morganton facility. On October 30, 2015, the Meritor Note and interest were repaid in full in conjunction with the Company’s new financing agreements. New Credit Facility and Term Loan On October 30, 2015, the Company secured debt financing consisting of a $12,000,000 term loan (“Term Loan”) and a $15,000,000 revolving credit facility (“New Credit Facility”). Proceeds from the two new financing arrangements (collectively the “New Loan Agreements”) were used in part to repay the Credit Facility and the Meritor Note. Borrowing availability under the New Credit Facility is determined by a weekly borrowing base collateral calculation that includes specified percentages of the value of eligible accounts receivable and inventory, less certain reserves and subject to certain other adjustments. Borrowing availability under the Term Loan is also evaluated using a separate borrowing base collateral calculation that includes designated percentages of real estate, machinery and equipment appraisals, in each case less certain reserves and subject to certain other adjustments. If the appraised values of such collateral causes the Term Loan borrowing base to fall below the then current Term Loan balance, the Company is required to make a partial prepayment of such difference and related fees. Based on the above mentioned calculation, at December 31, 2015, the Company had actual total borrowing base availability under the New Credit Facility of $8,369,000 of which it had drawn $2,132,000, leaving $6,237,000 still available for borrowing, $4,000,000 of which was reserved for compliance with the minimum excess availability provisions of the New Credit Facility. Along with an unrestricted cash balance of $1,349,000, the Company had total cash and available borrowing capacity of $3,586,000 as of December 31, 2015. Approximately $1,183,000 of this unrestricted cash balance related to the Company’s Mexican subsidiaries. Obligations under the New Loan Agreements are guaranteed by all of our U.S. subsidiaries and are secured by a first priority lien on substantially all assets of the Company. On February 25, 2016, the Company entered into an amendment (the “Term Loan Amendment”) to the Term Loan and an amendment (the “New Credit Amendment”) to the New Credit Facility (together, the “Amendments”). The Amendments will have the effect, among other things, of increasing the Company’s borrowing capability under its New Credit Facility and providing for an agreement on use of proceeds from the sale of its Toluca, Mexico property and buildings, as described below. As a result of the Term Loan Amendment, the Company deposited $6,000,000 of the proceeds of the sale-leaseback of its Toluca, Mexico property and buildings (the “Toluca Sale-Leaseback”) into a Cash Collateral Account, to be held for up to one year as additional collateral for the Term Loan. Amounts deposited in the Cash Collateral Account that are used to prepay the principal of the Term Loan must be accompanied by the payment of a make-whole amount by the Company equal to the present value of any unpaid interest that would have been paid on the prepaid portion of the Term Loan through the one year anniversary of the Term Loan Amendment. The Term Loan Amendment further provides that the Company will be permitted to retain the remaining balance of the proceeds from Toluca Sale-Leaseback, and increases the interest rate of the Term Loan by 1.0%. In addition, under the Term Loan Amendment and New Credit Facility Amendment, the Company’s minimum excess availability provision was reduced from $4,000,000 to $3,000,000. The lender further agreed to remove certain reserves which had been established against the Company’s “borrowing base.” These changes are estimated to provide the Company with $1,655,000 in additional borrowing capacity under the New Credit Facility. The Company’s obligations under each of the New Credit Facility and the Term Loan, as amended, continue to be guaranteed by the Company’s U.S. subsidiaries and are secured by a first priority lien on substantially all assets of the Company and the guarantors. The New Loan Agreements, as amended, contain a number of customary representations and warranties, affirmative, negative and financial maintenance covenants, events of default and remedies upon default, including acceleration and rights to foreclose on the collateral securing each lender. If the Company’s borrowing availability under the amended New Credit Facility falls below $3,000,000, the Company must maintain a fixed charge coverage ratio of at least 1 to 1, as measured on a trailing twelve months’ basis. Non-compliance with the Company’s debt covenants would provide the debt holders with certain contractual rights, including the right to demand immediate repayment of all outstanding borrowings. Since the loss of the Dana business (see Note 2 “Management’s Recovery Plans”), the Company has also experienced negative cash flows from consolidated operations which could hamper or materially increase the costs of the Company’s ability to comply with such covenants. The Company’s consolidated financial statements have been prepared assuming the ongoing realization of assets, satisfaction of liabilities and continuity of operations as a going concern in the ordinary course of business, but there can be no assurances that the Company’s current initiatives, forecasts and plans will ultimately succeed, which could materially and adversely impair the Company’s ability to operate, its cash flows, financial condition and ongoing results. The classification of debt as of December 31, 2015 considers the debt refinanced on a long-term basis. However, the New Credit Facility allows the lender to establish certain reserves against the borrowing base which could, under certain circumstances, cause a potential event of default. Because such an event is not objectively measureable in advance and because the Company is required to maintain a lock-box arrangement, ASC 470-10-45 requires the otherwise long-term revolving advances to be classified as a current liability. As a result, all borrowings under the revolving advances have been classified in the accompanying consolidated balance sheets as a current liability. The weighted average interest rate for outstanding borrowings at December 31, 2015 was 10.5%. The weighted average interest rates for borrowings during the years ended December 31, 2015 and 2014 were 7.2% and 2.5%, respectively. The Company had no capitalized interest in 2015 or 2014. Interest paid during the years ended December 31, 2015 and 2014 totaled approximately $1,436,000 and $397,000, respectively. Based on the current forecast for 2016, the Company expects to be able to maintain the minimum required level of borrowing availability of its amended New Loan Agreements. Although the Company believes the assumptions underlying its current forecast are realistic, the Company has considered the possibility of even lower revenues and other risk factors such as its ability to onboard new business within Sypris Technologies, continued delays in program bookings within Sypris Electronics, or its ability to execute its current contingency plans.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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