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Debt
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9 Months Ended |
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Sep. 30, 2013
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| Debt [Abstract] | |
| Debt |
(2) Debt
We have a loan agreement with a group of banks that was entered into in June 2011 to fund our acquisition of Wheeler Bros., Inc ("WBI") and provide working capital for our continuing operations. The loan agreement, which expires in June 2016, consists of a term loan facility and a revolving loan facility that also provides us with letters of credit. Financing costs associated with the loan inception of approximately $1.7 million were capitalized and are being amortized over the five-year term of the loan.
The term loan requires quarterly installment payments. Our scheduled term loan payments after September 30, 2013 are $6.2 million in 2013, $25.0 million in 2014, and $34.4 million in 2015. The amount of our term loan borrowings outstanding as of September 30, 2013 was approximately $65.6 million. The amount of term loan borrowings outstanding as of December 31, 2012 was approximately $92.2 million.
The maximum amount of credit available to us from the banking group for revolving loans and letters of credit as of September 30, 2013 was $125 million. The loan agreement provides that we may elect to increase this maximum to $175 million. Under the loan agreement terms, we may borrow revolving loan amounts at any time and can repay the borrowings at any time without premium or penalty. We pay an unused commitment fee and fees on letters of credit that are issued. We had approximately $39.3 million in revolving loan amounts outstanding and $573 thousand of letters of credit outstanding as of September 30, 2013. We had approximately $48 million in revolving loan amounts outstanding and $1.3 million of letters of credit outstanding as of December 31, 2012.
Total bank loan borrowed funds outstanding as of September 30, 2013, including term loan borrowings and revolving loan borrowings, were approximately $104.9 million. Total bank loan borrowed funds outstanding as of December 31, 2012 were $140.2 million. The fair value of outstanding debt as of September 30, 2013 under our bank loan facilities approximates its carrying value using Level 2 inputs based on market data on companies with a corporate rating similar to ours that have recently priced credit facilities.
We pay interest on the term loan borrowings and revolving loan borrowings at LIBOR plus a base margin or at a base rate (typically the prime rate) plus a base margin. As of September 30, 2013, the LIBOR base margin is 2.00% and the base rate base margin is 0.25%. The base margins may increase or decrease in increments as our Total Funded Debt/EBITDA Ratio increases or decreases.
We have employed interest rate hedges on a portion of our outstanding borrowings. In July 2011, we purchased a three- year amortizing LIBOR interest rate swap on the term loan debt for a notional amount of $101 million. The swap amount amortizes as the term loan amortizes, with reductions in the swap amount occurring on the same dates and for approximately the same amounts as term loan repayments. With the swap in place, we pay an effective rate of 1.615% plus our base margin through June 2014. The amount of swapped term loan debt outstanding as of September 30, 2013 is $57.2 million.
After taking into account the impact of hedging instruments, as of September 30, 2013, interest rates on portions of our outstanding debt ranged from 2.18% to 3.62%, and the effective interest rate on our aggregate outstanding debt was 3.08%.
Interest expense incurred on bank loan borrowings and interest rate hedges was approximately $877 thousand and $2.9 million for the three- and nine-month periods ended September 30, 2013, respectively, and approximately $1.4 million and $3.9 million for the three- and nine-month periods ended September 30, 2012, respectively.
The loan agreement contains collateral requirements to secure our loan agreement obligations, restrictive covenants, a limit on annual dividends, and other affirmative and negative covenants, conditions and limitations. As of September 30, 2013, the aggregate amount of our construction performance bonds associated with our discontinued ICRC operations exceeded the amount permitted by the loan agreement. Our bank lending group has waived this non-compliance as of September 30, 2013. Most of the construction efforts covered by our performance bonds are expected to be completed during the fourth quarter of 2013. We believe that as of December 31, 2013 we will be in compliance with the loan agreement limitation on construction performance bonds. Restrictive covenants include a maximum Total Funded Debt/EBITDA Ratio, a minimum Fixed Charge Coverage Ratio, and a minimum Asset Coverage Ratio, which increases over time. We were in compliance with required ratios and other terms and conditions at September 30, 2013.
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