Notes Payable

6 Months Ended

Oct. 31, 2012

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

(7)           Notes Payable

Notes payable consist of the following (in thousands):

	October 31, 2012		April 30, 2012
Credit facilities:
Media Services operations	$	5,098	$	-
Real estate operations		16,214		16,839
Other notes payable		4,420		4,486
	$	25,732	$	21,325

Media Services has a Revolving Credit and Security Agreement with a bank (the “Media Services Credit Facility”) that provides for a revolving credit loan and letter of credit facility, with availability within the facility’s limit based upon the lesser of (i) a percentage of the borrowers’ eligible accounts receivable or (ii) the recent level of collections of accounts receivable.  The facility’s original maturity date was May 12, 2013, but the lender and the borrowers entered into the First Amendment dated October 1, 2012 (the “First Amendment”) to the Media Services Credit Facility extending the term of the facility by one year to May 12, 2014.  In addition, the First Amendment revised certain covenants and reduced the facility’s borrowing limit from the original $20,000,000 to $15,000,000, in accordance with Media Services’ request.  Among the borrowers’ covenants in the Media Services Credit Facility is one requiring the borrowers to maintain a minimum fixed charge coverage ratio (as defined).  Subject to certain terms, funds may be borrowed, repaid and re-borrowed at any time.  Borrowings under the Media Services Credit Facility are being used for Media Services working capital needs and general business purposes and, subject to the Media Services minimum fixed charge coverage ratio, as defined, being at a stated level, may also be used to provide payments on certain indebtedness due the borrowing group’s parent that is not a party to the Media Services Credit Facility.  At October 31, 2012, the borrowing availability under the Media Services Credit Facility was $13,601,000, and there was $5,098,000 outstanding against this availability.  The highest amount borrowed during the quarter ended October 31, 2012 was $5,668,000.

The borrowers' obligations under the Media Services Credit Facility are secured by substantially all of their assets other than real property.  The revolving loans under the Media Services Credit Facility may be fluctuating rate borrowings or Eurodollar fixed rate based borrowings or a combination of the two as the borrowers may select.  Fluctuating rate borrowings bear interest at a rate which is, at the borrowers’ option, either (i) the reserve adjusted daily published rate for one month LIBOR loans

plus a margin of 3%, or (ii) the highest of two daily published market rates and the bank lender’s base commercial lending rate in effect from time to time, but in any case not less than 3% plus a margin of 2% (that is, not less than 5%).  Eurodollar fixed rate based borrowings may be for one, two or six months and bear interest at the reserve adjusted Eurodollar interest rates for borrowings of such durations, plus a margin of 3%, which may be reduced to 2.75% depending on the borrowers’ financial condition.

AMREP Southwest has a non-revolving loan (the “ASW Loan”) which in August 2012 had and continues to have an outstanding principal amount of $16,214,000.  The ASW Loan was scheduled to mature on September 1, 2012.  In August 2012, a company (the “New Lender”) wholly-owned by the Vice Chairman of the Company’s Board of Directors and holder of more than 40% of its outstanding shares purchased the ASW Loan from the bank that made it and agreed to extend its maturity to December 1, 2012 on its existing terms except for the elimination of a requirement that a portion of proceeds received by AMREP Southwest from real estate sales be applied to the principal.  Another director and holder of more than 10% of the Company’s outstanding shares purchased a 20% participation in the ASW Loan from the New Lender.  In November 2012, the terms of the ASW Loan were further amended effective December 1, 2012 (the “December 2012 Amendment”).  The maturity of the ASW Loan has been extended by five years to December 1, 2017.  From December 1, 2012, the ASW Loan bears interest monthly at 8.5% per annum.  No payments of principal are required until maturity except that on a quarterly basis AMREP Southwest is required to make principal payments in an amount equal to 25% of the net cash from sales of land (as defined) it received in the prior quarter.  As additional security for the ASW Loan, the New Lender has received a pledge of the stock of AMREP Southwest’s wholly-owned subsidiary, Outer Rim Investments, Inc., and a first mortgage on the land AMREP Southwest owns in Rio Rancho, New Mexico that was not previously mortgaged to secure the ASW Loan.  Outer Rim Investments, Inc. owns approximately 12,000 acres of land in Sandoval County, New Mexico, largely comprised of scattered lots, which at present is not being actively offered for sale.  A sale transaction by AMREP Southwest of the newly mortgaged land for more than $50,000 or of any AMREP Southwest-owned land other than land zoned and designated as a residential classification for more than $100,000 requires the New Lender’s approval.  Otherwise, the New Lender is required to release the lien of its mortgage on any land being sold by AMREP Southwest in the ordinary course to an unrelated party on terms AMREP Southwest believes to be commercially reasonable and at a price AMREP Southwest believes to be not less than the land’s fair market value or, in the case of the newly mortgaged land, its wholesale value, upon receipt of AMREP Southwest’s certification to such effect.  The ASW Loan may be prepaid at any time without premium or penalty except that if the prepayment is in connection with the disposition of AMREP Southwest or substantially all of its assets there is a prepayment premium, initially 5% of the amount prepaid, with the percentage declining by 1% each year.  The ASW Loan continues to contain a number of covenants and restrictions, including a requirement that AMREP Southwest maintain a cash reserve of not less than $500,000 in the control of the New Lender to fund interest payments and covenants requiring AMREP Southwest to maintain a minimum tangible net worth (as defined) and restricting AMREP Southwest from making any distributions or other payments to the Company beyond a stated management fee, which management fee AMREP Southwest is not currently paying to the Company.

Prior to December 1, 2012, the interest on the ASW Loan was at the fluctuating rate of reserve adjusted 30-day LIBOR (0.212% at October 31, 2012) plus 3.5%, but not less than 5%.  At October 31, 2012, the interest rate was 5% and the cash reserve was $529,000.  Prior to its purchase by the New Lender, the ASW Loan was secured by a mortgage on certain real property of AMREP Southwest with a book value of approximately $55,000,000, which mortgage remains in place in favor of the New Lender in addition to the new collateral that the New Lender received in connection with the December 2012 Amendment, and the terms of the ASW Loan included a requirement, eliminated by the December 2012 Amendment, that the appraised value of the collateral be at least 2.5 times the outstanding principal of the loan.

Other notes payable consist of a $4,374,000 mortgage note payable on a warehouse with a maturity date of February 2018 and an interest rate of 6.35%, and $46,000 of equipment financing loans with maturity dates through April 2014 and an average interest rate of 7.54%.  The amount of Other notes payable due within one year totals $139,000.