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Note 12 - Debt | 9 Months Ended
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Oct. 04, 2020
Notes to Financial Statements |
Long-term Debt [Text Block] |
( 1 2 ) | Debt
Debt outstanding consists of the following (in thousands):
|  | October 4, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
|  | (Unaudited) |  |  |
Current: |  |  |  |  |  |  |  |
Finance lease obligation, current portion |  | $ | 383 |  |  | $ | 684 |
PPP Loan, current portion |  |  | 2,174 |  |  |  | 0 |
Note payable – related party, current portion |  |  | 2,500 |  |  |  | 0 |
Current portion of long term debt |  | $ | 5,057 |  |  | $ | 684 |
Long Term: |  |  |  |  |  |  |  |
Finance lease obligation |  | $ | 2,029 |  |  | $ | 2,351 |
PPP Loan |  |  | 1,384 |  |  |  | 0 |
Note payable – related party |  |  | 4,000 |  |  |  | 6,500 |
Less unamortized debt issuance and modification costs |  |  | (26 | ) |  |  | (37 | )
Long term debt net of unamortized debt costs |  | $ | 7,387 |  |  | $ | 8,814 |
Pay check Protection Program During the second quarter of 2020, the Company secured a $3,558,000 term loan with BMO. Proceeds from the PPP Loan have been used to retain workers and maintain payroll and make lease and utility payments. The PPP Loan is evidenced by a promissory note in favor of BMO, as lender, with a principal amount of $3,558,000 that bears interest at a fixed annual rate of 1.00%, with the first six months of principal and interest deferred. Under the terms of the PPP Loan, 18 equal monthly payments of principal and interest would begin in November 2020 with the final payment due in April 2022, however recent legislation under the Paycheck Protection Program Flexibility Act of 2020 provides for an extension of the maturity date up to five years, an extension of the principal and interest deferral period to the date of a loan forgiveness determination and modifications to the debt amortization schedule if the Company and BMO reach an agreement on modified terms. The PPP Loan may be accelerated upon the occurrence of an event of default. The PPP Loan is unsecured and guaranteed by the U.S. Small Business Administration (the “SBA”). The Company may apply for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company during the 24 -week period beginning upon receipt of funds from the PPP Loan, subject to limitations and calculated in accordance with the terms of the CARES Act. Any forgiveness of the PPP Loan shall be subject to approval of the SBA and will require the Company and BMO to apply to the SBA for such treatment in the future. We intend to comply with the necessary requirements to seek forgiveness of all or a portion of the PPP Loan, but no assurance can be provided that we will obtain forgiveness of the PPP Loan in whole or in part. As a result, the Company is taking the approach that a portion of the PPP Loan is short-term and a portion is long-term, and has reflected such borrowing on the Company's consolidated balance sheet, as appropriate. The Company will record any amounts of the loan that are forgiven as a gain on extinguishment in the period in which legal release is received. Note Payable – Related Party The Company has received the benefit of cash infusions from Gill Family Capital Management, Inc. (“GFCM”) in the form of secured promissory note obligations totaling $6,500,000 in principal as of October 4, 2020 and December 31, 2019. GFCM is an entity controlled by the Company's Chairman, 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 8.0% per year through March 31, 2019 and, thereafter is reset on April 1 st of each year, at the greater of 8.0% or 500 basis points above the five -year Treasury note average during the preceding 90 -day period, in each case, payable quarterly. The maturity dates for the obligation are as follows: $2,500,000 of the obligation on April 1, 2021, $2,000,000 on April 1, 2023, and the balance on April 1, 2025. The note allows for up to an 18 -month deferral of payment for up to 60% of the interest due on the portion of the notes maturing in April of 2021 and 2023. During the first quarter of 2020, the Company provided notice to GFCM of its intention to elect to defer the specified portion of the interest payments due beginning on April 6, 2020. Obligations under the promissory note are guaranteed by all of the subsidiaries and are secured by a first priority lien on substantially all assets of the Company. Finance Lease Obligations On March 9, 2016, the Company completed the sale of its 24 -acre Toluca property for 215,000,000 Mexican Pesos, or approximately $12,182,000 in U.S. dollars. Simultaneously, the Company entered into a ten -year lease of the nine acres and buildings occupied by the Company and needed for its ongoing business in Toluca. As a result of the Toluca sale-leaseback, the Company has a finance lease obligation of $2,219,000 for the property as of October 4, 2020. In February 2019, the Company entered into a 60 -month finance lease for $269,000 for new machinery at its Sypris Technologies facility in the U.S. The balance of the finance lease obligation as of October 4, 2020 was $193,000.

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