Debt

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt

5. Debt

On October 3, 2016, in connection with the Vertex acquisition, HWC Wire & Cable Company, the Company, Vertex, and Bank of America, N.A., as agent and lender, entered into a First Amendment (“the Loan Agreement Amendment”) amending the Fourth Amended and Restated Loan and Security Agreement (the “2015 Loan Agreement”). The Loan Agreement Amendment adds Vertex as borrower (and lien grantor) and provides the terms for inclusion of Vertex’s eligible accounts receivable and eligible inventory in the borrowing base for the 2015 Loan Agreement. The 2015 Loan Agreement was expanded to include incremental availability on eligible accounts receivable and inventory up to $5 million, which will be amortized quarterly, starting April 1, 2017, over two and a half years. The 2015 Loan Agreement provides a $100 million revolving credit facility and expires on September 30, 2020. Under certain circumstances the Company may request an increase in the commitment by an additional $50 million.

Portions of the loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 100 to 150 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. The unused commitment fee is 25 basis points.

Availability under the 2015 Loan Agreement is limited to a borrowing base equal to 85% of the value of eligible accounts receivable, plus the lesser of 70% of the value of eligible inventory or 90% of the net orderly liquidation value percentage of the value of eligible inventory, in each case less certain reserves. The 2015 Loan Agreement is secured by substantially all of the property of the Company, other than real estate.

The 2015 Loan Agreement includes, among other things, covenants that require the Company to maintain a specified minimum fixed charge coverage ratio, unless certain availability levels exist. Additionally, the 2015 Loan Agreement allows for the unlimited payment of dividends and repurchases of stock, subject to the absence of events of default and maintenance of a fixed charge coverage ratio and minimum level of availability. The 2015 Loan Agreement contains certain provisions that may cause the debt to be classified as a current liability, in accordance with GAAP, if availability falls below certain thresholds, even though the ultimate maturity date under the loan agreement remains as September 30, 2020. At December 31, 2016, the Company was in compliance with the availability-based covenants governing its indebtedness.

The Company’s borrowings at December 31, 2016 and 2015 were $60.4 million and $39.2 million, respectively. The weighted average interest rates on outstanding borrowings were 2.4% and 1.7% at December 31, 2016 and 2015, respectively.

During 2016, the Company had an average available borrowing capacity of approximately $38.7 million. This average was computed from the monthly borrowing base certificates prepared for the lender. At December 31, 2016, the Company had available borrowing capacity of $25.6 million under the terms of the 2015 Loan Agreement. During the years ended December 31, 2016 and 2015, the Company paid $0.2 million each year and for the year ended December 31, 2014, paid $0.1 million, for the unused facility.

Principal repayment obligations for succeeding fiscal years are as follows:

	(In thousands)
2017	$	—
2018		—
2019		—
2020		60,388
Total	$	60,388