Note 6 - Borrowings

12 Months Ended

Dec. 25, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 6 —    Borrowings

On January 21, 2019, the Company entered into an Amended and Restated Credit Agreement (“2019 Restated Credit Agreement”) with the Lender. Under the terms of the 2019 Restated Credit Agreement, the Lender has made available to the Company a senior revolving credit facility with increased maximum availability of $50.0 million. The maturity date was extended to January 31, 2022. In addition to the increased borrowing amount and extended maturity date, other significant changes reflected in the 2019 Restated Credit Agreement include: more favorable interest rate provisions; increases in borrowing base availability; releases of existing mortgages on the Company’s real property; and increasing to $25.0 million the total consideration that the Company may use for acquisitions without obtaining the Lender’s consent, as long as no event of default exists.

The 2019 Restated Credit Agreement allows Escalade to request the issuance of letters of credit of up to $5.0 million.

On December 14, 2020, the Company entered into the Third Amendment dated as of December 14, 2020 (the “Third Amendment”) to the 2019 Restated Credit Agreement dated as of January 21, 2019. Under the terms of the Third Amendment, the maximum availability under the senior revolving credit facility increased to $75.0 million, up from $50.0 million. The maturity date of the revolving credit facility was extended to December 14, 2023. In addition to the increased borrowing amount and extended maturity date, other significant changes reflected in the Third Amendment include: increases in borrowing base availability if the Company’s funded debt to EBITDA ratio is less than 1.75 to 1:00; increasing to $30.0 million the total consideration that the Company may use for acquisitions without obtaining the Lender’s consent, as long as no event of default exists; resetting the maximum authorized stock repurchases to $15.0 million for the period commencing upon entry into the Third Amendment; increasing the interest rate on borrowings by twenty five basis points; increasing the unused facility fee by five basis points; and adding more specific provisions and procedures for replacement of LIBOR if and when LIBOR would no longer be the benchmark for determining interest rates.

On July 7, 2021, the Company and its wholly owned subsidiary, Indian Industries, Inc. (“Indian”), entered into the Fourth Amendment dated as of July 7, 2021 (the “Fourth Amendment”) to the Amended and Restated Credit Agreement dated as of January 21, 2019 among the Company, Indian, each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent and as Lender (the “Lender”), as amended (the “Credit Agreement”). Under the terms of the Fourth Amendment, the Lender extended a $50.0 million term loan to the Company and reduced the maximum availability under the senior revolving credit facility from $75.0 million to $50.0 million. The proceeds of the term loan are being used to pay down the Company’s outstanding indebtedness under the revolving credit facility, with the balance of the term loan proceeds being available for general working capital purposes. The maturity date of the term loan is July 7, 2026 and the maturity date of the revolving credit facility likewise was extended to July 7, 2026. The Company may prepay the revolving credit facility, in whole or in part, and reborrow prior to the revolving loan maturity date.

Each loan will bear interest at the Adjusted LIBO Rate for the interest period in effect plus the Applicable Rate. Applicable Rate means the applicable rate per annum set forth below, based upon Escalade’s Funded Debt to Adjusted Ratio as of the most recent determination date:

Funded Debt to EBITDA Ratio	Revolving Eurodollar Borrowing			ABR Revolving Borrowing			Letter of Credit Fee			Commitment Fee
Category 1 Greater than or equal to 2.50 to 1.0		2.25	%		0.25	%		2.25	%		0.35	%
Category 2 Greater than or equal to 1.50 to 1.0 but less than 2.50 to 1.0		2.00	%		-0-			2.00	%		0.35	%
Category 3 Less than 1.50 to 1.0		1.75	%		(0.25%	)		1.75	%		0.35	%

The Applicable Rate shall be determined as of the end of each quarter based upon the Company’s annual or quarterly consolidated financial statements and shall be effective during the period commencing the date of delivery to the agent.

Indebtedness under the 2019 Restated Credit Agreement continues to be collateralized by liens on all of the present and future equity of each of the Company’s and Indian Industries’ domestic subsidiaries and substantially all of the assets of their respective assets pursuant to the Pledge and Security Agreement dated January 25, 2019 by and among the Company, Indian Industries, their domestic subsidiaries, and Chase. The 2019 Pledge and Security Agreement supersedes the pledge and security agreements previously entered into by the Company, Indian Industries, and their domestic subsidiaries. In addition, each direct and indirect domestic subsidiary of the Company and Indian Industries, Inc. continues to unconditionally guarantee all of the indebtedness of Escalade arising under the 2019 Restated Credit Agreement pursuant to the terms thereof. The subsidiary guarantees arising under the 2019 Restated Credit Agreement supersede the unlimited continuing guaranty agreements previously entered into by such domestic subsidiaries.

Long-Term Debt

Long-term debt at fiscal year-ends was as follows:

In Thousands	2021			2020
Senior secured revolving credit facility of $50.0 million with a maturity of July 7, 2026. The interest rate at December 25, 2021 was 3.00% and 2.15% at December 26, 2020.	$	10,515		$	30,073
Term loan of $50.0 million with a maturity date of July 7, 2026. The interest rate at December 25, 2021, was 2.97%.		47,024			--
		57,539			30,073
Current portion of long-term debt		(7,143	)		--
	$	50,396		$	30,073

The Company makes monthly principal payments under the Term loan of $595 thousand. Maturities of long-term debt outstanding at December 25, 2021 are as follows: $7.1 million in 2022, $7.1 million in 2023, $7.1 million in 2024, $7.1 million in 2025 and $29.0 million in 2026.