Debt

Debt at June 30, 2012 and December 31, 2011 was as follows:



(in thousands)	June 30,		December 31,
	2012		2011
Short term debt
First Lien Revolver	$	21,807	$	23,850
Foreign	464		318
Total short-term debt	22,271		24,168
Long-term debt
First Lien Term Loan	14,000		16,100
Second Lien Term Loan	75,000		75,000
10% Subordinated Notes, net of unamortized discount	13,755		18,934
Other H&H debt-domestic	6,908		7,034
Foreign loan facilities	3,254		2,000
Sub total	112,917		119,068
Less portion due within one year	4,452		4,452
Long-term debt	108,465		114,616
Long-term debt - related party:
10% Subordinated Notes, net of unamortized discount	19,623		20,045
Total long-term debt	128,088		134,661
Total debt	$	154,811	$	163,281

Capital lease facility
Current portion of capital lease	$	417	$	417
Long-term portion of capital lease	624		796
Total capital lease facility	$	1,041	$	1,213

First Lien Term Loan

H&H Group, together with certain of its subsidiaries, entered into an Amended and Restated Loan and Security Agreement (the “Wells Fargo Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent for the lenders thereunder. Amounts outstanding under the Wells Fargo Facility bear interest at LIBOR plus applicable margins of between 2.25% and 3.50% (3.00% for the term loan and 2.25% for the revolver at June 30, 2012 ), or at the U.S. base rate (the prime rate) plus 0.25% to 1.50% (1.00% for the term loan and 0.25% for the revolver at June 30, 2012). The applicable margins for the First Lien Revolver and the First Lien Term Loan are dependent on H&H Group's Quarterly Average Excess Availability for the prior quarter, as that term is defined in the agreement. Principal payments of the First Lien Term Loan are due in equal monthly installments of approximately $0.35 million. All amounts outstanding under the Wells Fargo Facility are due and payable in full on July 1, 2013. Obligations under the Wells Fargo Facility ("First Lien Revolver" and "First Lien Term Loans") are collateralized by first priority security interests in and liens upon all present and future assets of H&H Group and substantially all of its subsidiaries.

Second Lien Term Loan

The Amended and Restated Loan and Security Agreement with Ableco L.L.C. (the "Ableco Facility") provides for three loans at a maximum value of $25.0 million per loan (the "Second Lien Term Loans"). Two of the three Second Lien Term Loans bear interest at the U.S. base rate (the prime rate) plus 4.50% or LIBOR (or, if greater, 1.50%) plus 6.00%. The third Second Lien Term Loan bears interest at the U.S. base rate (the prime rate) plus 7.50% or LIBOR (or, if greater, 1.75%) plus 9.00%. All amounts outstanding under the Ableco Facility are due and payable in full on July 1, 2013. Obligations under the Ableco Facility are collateralized by second priority security interests in and liens upon all present and future assets of H&H Group and substantially all of its subsidiaries.

On May 23, 2012, H&H Group and the lenders agreed to amend the Wells Fargo Facility and the Ableco Facility to, among other things, increase from $23.0 million to $28.0 million, the maximum amount of capital expenditures allowed during the previous 12 months.

The Company expects to refinance its senior debt prior to the maturity date, July 1, 2013.

Subordinated Notes

Subordinated secured notes due 2017 (the “Subordinated Notes”) were issued by H&H Group pursuant to an Indenture by and among H&H Group, the guarantors party thereto, and Wells Fargo, as trustee. All obligations outstanding under the Subordinated Notes bear interest at a rate of 10% per annum, 6% of which is payable in cash and 4% of which is payable in-kind. The Subordinated Notes, together with any accrued and unpaid interest thereon, mature on October 15, 2017. All amounts owed under the Subordinated Notes are guaranteed by substantially all of H&H Group's subsidiaries and are secured by substantially all of their assets. The Subordinated Notes are contractually subordinated in right of payment to the Wells Fargo Facility and the Ableco Facility. The Subordinated Notes are redeemable until October 14, 2013, at H&H Group's option, upon payment of all of the principal amount of the Notes, plus all accrued and unpaid interest thereon and the applicable premium set forth in the Indenture (the “Applicable Redemption Price”). If H&H Group or its subsidiary guarantors undergo certain types of fundamental changes prior to the maturity date of the Subordinated Notes, holders thereof will, subject to certain exceptions, have the right, at their option, to require H&H Group to purchase for cash any or all of their Subordinated Notes at the Applicable Redemption Price.

During the second quarter of 2012, H&H Group agreed to repurchase $5.1 million face amount of Subordinated Notes, plus accrued interest. The cash settlement of the transaction is expected to take place in the third quarter of 2012 and a liability of $5.5 million in connection with the repurchase is included in Accrued Liabilities on the Consolidated Balance Sheet as of June 30, 2012.