Line of Credit |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Line of Credit | Line of Credit On April 10, 2023, the Company entered into Amendment Number Three to the ABL Credit and Guarantee Agreement (the “LOC Amendment”) to that certain ABL Credit and Guarantee Agreement, dated as of February 12, 2018 (the “LOC Agreement”). The Amendment, among other things, (i) replaced the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the ABL Credit and Guarantee Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updates certain other provisions of the ABL Credit and Guarantee Agreement to reflect the transition from LIBOR to SOFR.
The current line of credit facility is for $80,000 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a SOFR Rate (as defined in the LOC Agreement) option is chosen by the Company. If the SOFR Rate is elected, the interest computation is equal to the SOFR Rate plus the SOFR Rate Margin of 1.25%, as of July 1, 2023. If the Base Rate (as defined in the LOC Agreement) is elected, the interest computation is equal to the Base Rate of the greatest of (a) the federal funds rate plus .5%, (b) the SOFR rate plus 1%, or (c) the financial institution’s Prime Rate (as defined in the LOC Agreement), plus the Base Rate Margin (as defined in the LOC Agreement) of .25% as of July 1, 2023. At the beginning of each quarter, the applicable margin is set and determined by the administrative agent based on the average net availability on the line of credit for the previous quarter.
As of July 1, 2023 and December 31, 2022, the interest rate in effect for the facility was 8.5% and 7.8%, respectively. The line of credit is collateralized by accounts receivable and inventories. The Company has incurred deferred loan costs in the amount of $1,483 which are being amortized over the term of the facility that expires on August 12, 2024, using the straight-line method, and are presented as part of other assets within our Unaudited Condensed Consolidated Balance Sheet. The amortization of the deferred loan costs is included in interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Amortization of approximately $62 was recognized for both the three month periods ended July 1, 2023 and July 2, 2022, and $123 was recognized for both the six month periods ended July 1, 2023 and July 2, 2022. The unamortized portion of the fees as of July 1, 2023 and December 31, 2022 was approximately $279 and $402, respectively. There were no borrowings outstanding on the line of credit as of July 1, 2023 and December 31, 2022.Long-Term Debt
Long-term debt consists of the following:
Notes Payable - Amendment No.4 First Lien - On August 18, 2021, the Company completed an incremental raise in the form of that certain Incremental Amendment No. 4 (the “Amendment No. 4 First Lien”) to the First Lien Term Loan. The Amendment No. 4 First Lien is comprised of a syndicate of lenders modified on August 18, 2021 for an aggregate principal balance of $726,413 with interest payable in arrears. The outstanding loan balance is to be repaid on a quarterly basis of 0.28% of the original balance beginning the last day of September 2021 with the remaining principal due on the maturity date of February 12, 2025. During the six months ended July 1, 2023, the Company made a voluntary prepayment of $50,000 on the Amendment No. 4 First Lien.
Notes Payable - Amendment No.5 First Lien - On June 20, 2023, the Company entered into Amendment No. 5 (the “Amendment No. 5 First Lien”) to the First Lien Term Loan. The Amendment No. 5 First Lien, among other things, (i) replaces the interest rate based on the London Interbank Offered Rate (“LIBOR”) and related LIBOR-based mechanics applicable to borrowings under the Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updates certain other provisions of the Agreement to reflect the transition from LIBOR to SOFR. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of SOFR, plus an applicable margin percent (effective rate of 8.5% as of July 1, 2023). The debt is secured by substantially all business assets.
In connection with the Company entering into the First Lien debt agreement discussed above, deferred finance fees were capitalized and are being amortized using the effective interest method. Amortization of approximately $789 and $858 was recognized for the three months ended July 1, 2023 and July 2, 2022, respectively. $2,073 and $1,709 was recognized for the six months ended July 1, 2023 and July 2, 2022, respectively, as a component of interest expense. The increase during the six months ended July 1, 2023, was primarily a result of the voluntary prepayment as noted above.
As of July 1, 2023 and December 31, 2022, the Company maintained one letter of credit totaling approximately $400 on which there were no balances due.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||