Bank Loans and Line of Credit

9 Months Ended

Sep. 30, 2019

Bank Loans and Line of Credit

Bank Loans and Line of Credit

Note 16. Bank Loans and Line of Credit

On November 6, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”), by and between the Company and Wells Fargo Bank, National Association, which established a $10 million secured revolving line of credit with a $1.0 million letter of credit sublimit facility. The revolving credit facility is collateralized by substantially all of the assets of the Company located within the United States, subject to certain exceptions. The commitments under the Credit Agreement expire on November 30, 2020 and any loans thereunder will bear interest at a rate based on the daily one-month London Inter-bank Offered Rate (“LIBOR”) for the applicable interest period plus a margin of 2.00%.  As of September 30, 2019, no loans or letters of credit were outstanding under the Credit Agreement.

On August 9, 2019, Tongmei entered into a credit facility with the Bank of China with a $5.8 million line of credit at an annual interest rate of approximately 0.4% over the average interest rate quoted by the National Interbank Funding Center. Accrued interest is calculated monthly and paid quarterly. The annual interest rate was approximately 4.7% as of September 30, 2019. The credit facility is collateralized by Tongmei Baoding’s land use rights and all of its buildings located at its facility in Dingxing. The primary intended use of the credit facility is for general purposes, which may include working capital and other corporate expenses.

On August 9, 2019, we borrowed $2.8 million against the credit facility. The repayment of the full amount is due on August 9, 2020. On September 12, 2019 we borrowed an additional $2.8 million against the credit facility. The repayment of the full amount is due on September 12, 2020, unless the parties agree to a renewal. As of September 30, 2019, $5.6 million was included in “Bank loan” in our condensed consolidated balance sheets.