Note 3—Long-term Debt and Other Credit Arrangements

On May 6, 2013, the Company entered into a credit and security agreement (the “Loan Agreement”) with a new lender consisting of (1) a $20 million revolving credit facility which matures on May 1, 2016 (“Line of Credit”), (2) a term loan in the amount of $3,450,000 which matures on May 1, 2020 (“Term Loan A”) and (3) a term loan in the amount of $1,550,000 which matures on May 1, 2020 (Term Loan B and together with Term Loan A, the “Term Loans”). The Loan Agreement provided funds to refinance all existing indebtedness to the Company’s previous lender and for working capital and other general corporate purposes. In addition, it provides a sub-line for the issuance of up to $4.7 million of letters of credit.

At April 30, 2014, there were advances of $2.9 million outstanding under the Line of Credit, and the borrowing rate at that date was 1.75%. Monthly interest payments under the Line of Credit were payable at the Daily One Month LIBOR interest rate plus 1.5% per annum. Payments are due under Term Loan A in consecutive equal monthly principal payments in the amount of $17,000 until August 1, 2017, and then in consecutive equal monthly principal payments in the amount of $79,000 each, commencing on September 1, 2017 and continuing on the first business day of each month thereafter until May 1, 2020, and at that time, all principal, accrued unpaid interest and other charges outstanding under Term Loan A shall be due and payable in full. The interest rate on Term Loan A, after consideration of related interest rate swap agreements, is a fixed rate per annum equal to 4.875%, and effective August 1, 2017, such rate converts to a fixed rate per annum of 4.37%. Payments are due under Term Loan B in consecutive equal monthly principal payments in the amount of $18,000 until May 1, 2020, and at that time, all principal, accrued unpaid interest and other charges outstanding under Term Loan B shall be due and payable in full. The interest rate on Term Loan B, after consideration of the related interest rate swap agreement, is a variable rate per annum equal to Daily One Month LIBOR plus 1.575% per annum, and effective November 3, 2014, such rate converts to a fixed rate per annum of 3.07%. The interest rate on Term Loan B was 1.73% at April 30, 2014. Scheduled annual principal payments for the term loans are $421,000 for fiscal years 2015 through 2017 and $915,000, $1,164,000, and $1,271,000 for fiscal years 2018, 2019 and 2020, respectively.

The Loan Agreement includes financial covenants with respect to certain ratios, including (a) debt-to-net worth, (b) fixed charge coverage, and (c) asset coverage. At April 30, 2014, the Company was in compliance with all of the financial covenants and there was $12.8 million of unused and available credit under the revolving credit facility. At April 30, 2014, there were $4.3 million in letters of credit outstanding under the Loan Agreement to support bank guarantees issued by a foreign bank from time to time on behalf of the Company’s subsidiaries in India to guarantee performance on customer orders. At April 30, 2014, there were foreign bank guarantees outstanding to customers in the amount of $1,784,000 and $576,000 with expiration dates in fiscal years 2015 and 2016, respectively.

On June 10, 2014, the Loan Agreement was amended to increase the allowable aggregate undrawn amount of all outstanding letters of credit under the Line of Credit from $4,700,000 to $8,510,000 with such allowable amount to be reduced to $6,510,000 on August 10, 2014.

At April 30, 2013, the Company had an unsecured revolving credit facility in the amount of $15 million with an expiration date of July 31, 2014. Monthly interest payments under the facility were payable calculated at the 30-day LIBOR Market Interest Rate plus a variable rate ranging from 1.575% to 2.175%. The borrowing rate at April 30, 2013 was 1.773%, including a variable rate adjustment of 1.575%. The credit facility included financial covenants with respect to certain ratios, including (a) debt-to-net worth, (b) fixed charge coverage, and (c) asset coverage. At April 30, 2013, the Company was in compliance with all of the financial covenants.

At April 30, 2013, there were advances of $6.7 million outstanding under the revolving credit facility, and the Company’s Asia subsidiaries had standby letters of credit and bank guarantees in the aggregate amount of $2.1 million outstanding under the facility to guarantee performance on certain customer projects. At April 30, 2013, the Company had a $4 million seven-year term loan secured by the Company’s real property and equipment located in Statesville, North Carolina. The term loan required monthly principal payments of $17,000, plus interest calculated at the 30-day LIBOR Market Index Rate plus 1.575%, with payment of the outstanding principal balance and any unpaid interest at the term loan maturity date. The interest rate on the term loan, after consideration of the related interest swap agreement, was a fixed rate per annum of 4.875%.

Amounts outstanding under the term loans were as follows as of April 30:


$ in thousands	2014		2013
Term loans payable	$	4,613	$	3,467
Less: current portion		(421)		(200)

Long-term debt	$	4,192	$	3,267