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Author: actionSUCKS Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25  
Subject: Action in DEFAULT on credit line Date: 4/26/2001 8:42 PM
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On September 29, 2000, we entered into a loan and security agreement with a subsidiary of Bank One, providing for borrowings of up to $30.0 million, subject to the limitation of a calculated borrowing base. The loan agreement replaced our previous credit agreement with First Union National Bank of North Carolina. The loan agreement consists of a $30.0 million revolving line of credit, which includes up to $15.0 million of stand-by letters of credit. The line of credit bears interest at a base rate plus 50 basis points, or LIBOR plus 250 basis points. A commitment fee of 0.5% of the average unused line of credit and 1.75-2.5% of the average unused letters of credit is payable annually on the loan. The loan agreement matures December 2002. We had outstanding letters of credit of approximately $3.9 million as of December 31, 2000 and $4.6 million as of September 30, 2000. The loan is secured principally by our inventory, receivables, and equipment and restricts the payment of dividends. The agreement contains covenants that require us to meet certain financial tests principally related to tangible net worth and EBITDA. Following our fourth quarter loss, we were in violation of these covenants. We have received a waiver of these covenant violations, and an amendment that reduces the assets available to be included in the calculated borrowing base by $5.0 million. As a result of this reduction and our intention of reducing outstanding receivables, we believe that the calculated borrowing base will generally be less than $30.0 million. We believe that the revised borrowing base will be adequate to cover our letter of credit and other liquidity needs for the next 12 months after considering anticipated cash flow from operations and the Federal Tax refund discussed above. An adverse change in economic conditions could materially affect our anticipated cash flow from operations.
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