Note 6 - Morganton Sale

12 Months Ended

Dec. 31, 2016

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

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Morganton Sale

July

2015,

the Company entered into an asset purchase agreement (the “Agreement”) to sell certain assets used in the Company’s manufacturing facility in Morganton, North Carolina, to its largest customer, Meritor, Inc. (“Meritor”). The Company retained the Morganton plant’s axle shaft manufacturing lines and certain related assets, intellectual property and inventories, which were transitioned to the Company’s Louisville, Kentucky plant in

October

2015.

All other Morganton equipment, related assets and intellectual property were sold to Meritor (the “Morganton Sale”) for

$10,500,000

in cash paid at the closing and other consideration. Meritor purchased related inventories and accounts receivable and assumed or released certain accounts payable and other accrued liabilities, for

$2,000,000

(subject to customary post-closing adjustments to actual). Meritor also purchased the Morganton building and real estate for

$3,200,000.

The total proceeds received of

$15,700,000,

primarily in consideration for the Morganton sale, were used to pay down the Company’s prior senior secured debt. As a result of the Morganton sale, the Company recognized a gain of

$7,744,000.

At closing, the parties also entered into an amendment to a secured promissory note with Meritor in an original principal amount of

$3,047,000

(the “Meritor Note”) to increase the principal balance by

$412,000,

effective

July

2015.

The parties also agreed to increase the Meritor Note by an additional

$321,000

September

2015

to reflect certain roof repairs required at the Morganton facility. The Company repaid the Meritor Note on

October

30,

2015.