SHORT-TERM AND LONG-TERM DEBT

9 Months Ended

Jun. 30, 2022

SHORT-TERM AND LONG-TERM DEBT

SHORT-TERM AND LONG-TERM DEBT

11.  SHORT-TERM AND LONG-TERM DEBT

Short-term debt consists of the following:

On July 13, 2022, the Company received a one-year extension on its line of credit (“Operating Line of credit (2022)”) effective June 28, 2022. The $15.0 million revolving line of credit has a $12.5 million component and a $2.5 million component, each with separate borrowing requirements. The interest rate on the line of credit is the “Wall Street Journal” Prime Rate (the index) with a floor of 4.99%. Based on the borrowing base calculation, the Company was able to borrow up to $11.9 million and had $2.1 million borrowed, leaving $9.8 million available on the line of credit as of June 30, 2022. The interest rate at June 30, 2022, was 4.99%. Based on the borrowing base calculation, the Company was able to borrow up to $12.2 million as of September 30, 2021. The Company had $4.5 million in borrowings on the line of credit, leaving $7.7 million available on the line of credit as of September 30, 2021. The interest rate at September 30, 2021, was 4.99%.

Major items excluded from the borrowing base calculation are receivables from bonded jobs and retainage as well as all items greater than ninety (90) days old. Line of credit borrowings are collateralized by the Company’s accounts receivable. Cash available under the line is calculated based on 70.0% of the Company’s eligible accounts receivable.

Under the terms of the agreement, the Company must meet the following loan covenants to access the first $12.5 million:

1. Minimum tangible net worth of $21.5 million to be measured quarterly,

2. Minimum traditional debt service coverage of 1.25x to be measured quarterly on a rolling twelve- month basis,

3. Minimum current ratio of 1.50x to be measured quarterly,

4. Maximum debt to tangible net worth ratio (“TNW”) of 1.5x to be measured semi-annually,

5. Full review of accounts receivable aging report and work in progress. The results of the review shall be satisfactory to the lender in its sole and unfettered discretion.

Under the terms of the agreement, the Company must meet the following additional requirements for draw requests causing the borrowings to exceed $12.5 million:

1. Minimum traditional debt service coverage of 2.0x to be measured quarterly on a rolling twelve-month basis,

2. Minimum tangible net worth of $24.0 million to be measured quarterly.

The Company was not in compliance with all covenants but received a waiver on the $12.5 million component of the line of credit at June 30, 2022. The Company projects to be in compliance with all covenants for the next twelve months.

The Company also finances insurance policy premiums on a short-term basis through a financing company. These insurance policies include workers’ compensation, general liability, automobile, umbrella, and equipment policies. The Company makes a down payment in January and finances the remaining premium amount over ten monthly payments. In January 2022, the Company financed $3.4 million in insurance premiums. At June 30, 2022, there was a $1.4 million outstanding balance for insurance premiums financed.

A summary of short-term and long-term debt as of June 30, 2022, and September 30, 2021, is as follows:

	June 30,		September 30,
	2022		2021
Line of credit payable to bank, monthly interest at 4.99%, expiring on June 28, 2022 (extended to June 30, 2023), guaranteed by certain directors of the Company.	$	2,100,000	$	4,500,000
Term note payable to United Bank, WV Pipeline acquisition, due in monthly installments of $64,853 interest at 4.25%, final payment due by March 25, 2026, secured by receivables and equipment, guaranteed by certain directors of the Company.		2,695,331		3,183,549
Notes payable to finance companies, due in monthly installments totaling $75,000 at June 30, 2022 and $70,062 at September 30, 2021, including interest ranging from 0.00% to 6.03%, final payments due July 2022 through August 2026, secured by equipment.		1,081,899		1,066,580
Note payable to finance company for insurance premiums financed, due in monthly installments totaling $279,000 in FY 2022 and $272,000 in FY 2021, including interest rate at 3.50%, final payment November 2022.		1,408,341		540,250
Notes payable to bank, due in monthly installments totaling $7,799, including interest at 4.82%, final payment due November 2034 secured by building and property.		880,522		919,017
Notes payable to bank, due in monthly installments totaling $11,602, including interest at 4.25%, final payment due November 2025 secured by building and property, guaranteed by certain directors of the Company.		442,198		530,750
Notes payable to bank, due in monthly installments totaling $98,865, including interest at 4.99%, final payment due July 2022 secured by equipment, guaranteed by certain directors of the Company.		—		872,452
Notes payable to David Bolton and Daniel Bolton, due in annual installments totaling $500,000, including interest at 3.25%, final payment due December 31, 2026, unsecured		2,372,500		2,850,000
Notes payable to bank, interest at 4.25% of outstanding balance due monthly between August 2021 and January 2022. Note payments due in monthly installments totaling $68,073, including interest at 4.25%, beginning February 2022 with final payment due January 2026, secured by equipment, guaranteed by certain directors of the Company.		2,713,375		3,000,000
Term note payable to United Bank, Tri-State Paving acquisition, due in monthly installments of $140,000 including interest at 4.50%, final payment due by June 1, 2027, secured by receivables and equipment, guaranteed by certain directors of the Company.		7,293,787		—
Notes payable to Corns Enterprises, $1,000,000 with fair value of $936,000, due in annual installments totaling $250,000, including interest at 3.50%, final payment due April 29, 2026, unsecured		938,667		—
Operating lease liability payable to third party, $129,198, due in monthly installments totaling $5,537, final payment due May 31, 2024, unsecured		124,041		—
Operating lease liability payable to Corns Enterprises, $236,201, due in monthly installments totaling $7,000, final payment due April 29, 2025, unsecured		218,747		—
Total debt	$	22,269,408	$	17,462,598
Less current maturities		7,839,649		8,441,824
Total long term debt	$	14,429,759	$	9,020,774