Long-term Loans

12 Months Ended

Dec. 31, 2015

Long-term Loans [Text Block]

Note 9 - Long-term Loans

Long-term loans at December 31, 2015 and 2014 consisted of the following:

		2015			2014
Due January 24, 2018, with interest of 6.60%	$	4,623,000		$	7,321,500
Credit line due April 18, 2017, with interest of 7.35% (see Note 3)		12,328,000			19,524,000
		16,951,000			26,845,500
Long-term loans, currently in default		(12,328,000	)		(19,524,000	)
Long-term loans	$	4,623,000		$	7,321,500

All long-term loans are collateralized by Company buildings and land use rights. The credit line due April 18, 2017 is also collateralized by all the capital stock of Hainan Shiner, the Company’s primary operating subsidiary. Aggregate future maturities of long-term loans at December 31, 2015 are as follows:

Year ending December 31,
2016	$	-
2017		12,328,000
2018		4,623,000
	$	16,951,000

The weighted average interest rate on long-term loans is 7.15% .

On August 2, 2010, Hainan Shiner entered into a credit facility with the Hainan Branch of the Bank of China. It is a secured revolving credit facility of RMB70 million (or $11.1 million based on the exchange rate on December 31, 2010) for seven years. Under the credit facility, Hainan Shiner may only use the loan proceeds to improve the technology of its BOPP film and to purchase certain equipment necessary for this improvement. Proceeds under the facility not used for these purposes would be subject to a misappropriation penalty interest rate that is 100% of the current interest rate on the loan.

The initial interest rate on each withdrawal from the facility is the 5 -year benchmark lending rate announced by the People’s Bank of China on the date of such withdrawal, and is subject to adjustment every 12 months based upon the benchmark. Additional interest is paid on an overdue loan under this credit facility at 50% of the current interest rate on the loan. Hainan Shiner and certain of its affiliates, including the Company, have provided guarantees and certain land use rights, buildings, and property as collateral under this facility.

The credit facility includes covenants that prohibit Hainan Shiner from making distributions to the Company, its sole shareholder, if (a) its after-tax net income for the fiscal year is zero or negative, (b) its after-tax net income is insufficient to make up its accumulated loss, (c) its income before tax is not utilized in paying off the capital, interest and expense of the lender, or (d) its income before tax is insufficient to pay the capital, interest and expense of the lender.

As of December 31, 2015, the outstanding balance under this credit facility was RMB30 million or $4.6 million.

The Company also has a RMB120 million (approximately $19.5 million) credit facility that it drew down in its entirety on April 17, 2014. The credit facility is collateralized by the stock of Hainan Shiner, bears interest at 7.35% per annum and is due on April 17, 2017. Under the terms of the credit facility agreement, the proceeds of the funds borrowed under this credit facility are to be used solely for the construction of an office building and research facility at the Hainan Xiandai Packaging Industrial Park and for the purchase of research and development equipment, however, the Company has loaned the entire proceeds of the credit facility to unrelated third parties who have no collateral on such loans other than a guarantee from each of the borrowers and an unrelated fourth party (See Note 3). During the year ended December 31, 2015, some of the loans made to unrelated third parties were repaid. The Company has not been able to obtain a waiver for the violation of the loan agreement, therefore the amount due under this credit facility is being shown as a current liability, as the lender will retain the right to declare a breach of the credit agreement and enforce its right to ownership of the stock, buildings and land use rights of Hainan Shiner, the Company’s primary operating subsidiary. Except as set forth above, as at December 31, 2015 and 2014, the Company is in compliance with all its obligations under the foregoing loan commitments. During the year ended December 31, 2015, the Company repaid approximately $7.2 million of this credit facility.