WORKING CAPITAL LINE OF CREDIT AND OVERDRAFT FACILITY

12 Months Ended

Dec. 31, 2016

Line Of Credit Facility [Abstract]

WORKING CAPITAL LINE OF CREDIT AND OVERDRAFT FACILITY

10. WORKING CAPITAL LINE OF CREDIT AND OVERDRAFT FACILITY

On September 27, 2013, the Company’s wholly owned subsidiary, CUI, Inc., closed on a two year revolving Line of Credit (LOC) with Wells Fargo Bank with the following terms:

(in thousands)
		12/31/16		Expiration
Credit Limit		balance		Date	Interest rate
$	4,000	$	—	October 1, 2018	Fixed rate at 1.75% above the LIBOR in effect on the first day of the applicable fixed-rate term, or Variable rate at 1.75% above the daily one-month LIBOR rate

On October 1, 2016, the Company extended the term of the LOC to October 1, 2018.

At December 31, 2016, the LOC is secured by the following collateral via a security agreement on CUI, Inc.:

(in thousands)

CUI Inc. General intangibles, net	$	9,213
CUI Inc. Accounts receivable, net		5,350
CUI Inc. Inventory, net		6,984
CUI Inc. Equipment, net		851

CUI Global, Inc., the parent company is a payment guarantor of the LOC. Other terms included in this revolving line of credit for CUI Inc. limit capital expenditures by CUI Inc. to $1.2 million in any fiscal year.

At December 31, 2016 and 2015, respectively, the balance outstanding on the line of credit was $0.  The LOC contains certain financial covenants, one of which the Company was not in compliance with at December 31, 2016. The Company has obtained a waiver from Wells Fargo Bank for the instance of non-compliance through March 31, 2017, the next measuring date. CUI Global, Inc., the parent company, is a payment guarantor of the LOC.

On October 5, 2016, Orbital Gas Systems Ltd. signed a five-year agreement with the London branch of Wells Fargo Bank N.A. for a multi-currency variable rate overdraft facility with a facility limit of 1.5 million pounds sterling ($1.9 million at December 31, 2016) that expires on October 5, 2021. The interest rate on the facility is a base rate plus a 2.25% margin. The facility had an interest rate of 2.5% at December 31, 2016. The overdraft facility is primarily secured by land, equipment, intellectual property rights, and rights to potential future insurance proceeds held by Orbital Gas Systems Ltd. At December 31, 2016, there was no balance outstanding on the overdraft facility. Wells Fargo Bank has waived the cross-default provision on the promissory note payable owed by CUI Properties for a period beyond one year from the date of this report as it relates to the LOC covenant violation, therefore the note is not considered to be in default and continues to include a portion classified as long term.