NOTE 10 – BORROWINGS

The Company’s borrowings at December 31, 2018 and 2017, net of deferred financing costs and incorporating the impact of interest rate swaps on our effective interest rates, are summarized below:



	As of December 31, 2018
(Dollars in thousands)	Maturity Date	Contractual Facility		Balance, Gross		Balance, Net(3)		Stated Interest Rate	Effective Interest Rate (1)
Denominated in USD
Trust Preferred Securities (USA)	April 30, 2027	$	27,913	$	27,913	$	26,061	6.52%	6.52%
Bank of America Credit Facility (USA)	May 1, 2020		55,000		25,000		25,000	5.02%	5.02%
Bank of America Line of Credit (USA)	October 31, 2019		5,000		—		—	5.48%	5.48%
Banc of America digital projector loan (USA)	December 28, 2019		2,604		2,604		2,604	5.00%	5.00%
Cinema 1, 2, 3 Term Loan (USA)	September 1, 2019		19,086		19,086		18,838	3.25%	3.25%
Minetta & Orpheum Theatres Loan (USA)	November 1, 2023		8,000		8,000		7,857	4.88%	4.88%
U.S. Corporate Office Term Loan (USA)	January 1, 2027		9,495		9,495		9,373	4.64% / 4.44%	4.61%
Union Square Construction Financing (USA)	December 29, 2019		57,500		27,182		25,280	6.76% / 12.51%	8.35%
Denominated in foreign currency ("FC")(2)
NAB Corporate Loan Facility (AU)	December 31, 2023		46,856		37,696		37,660	3.05%	3.05%
Westpac Corporate Credit Facility (NZ)	December 31, 2023		21,475		10,067		10,067	3.80%	3.80%
Total		$	252,929	$	167,043	$	162,740

(1)

Both interest rate derivatives associated with the Trust Preferred Securities and Bank of America Credit Facility expired in October 2017 so the effective interest rate no longer applies as of December 31, 2018.

(2)

The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollars based on exchange rates as of December 31, 2018.

(3)

Net of deferred financing costs amounting to $4.3 million.



	As of December 31, 2017
(Dollars in thousands)	Maturity Date	Contractual Facility		Balance, Gross		Balance, Net(3)		Stated Interest Rate	Effective Interest Rate (1)
Denominated in USD
Trust Preferred Securities (USA)	April 30, 2027	$	27,913	$	27,913	$	27,554	5.38%	5.38%
Bank of America Credit Facility (USA)	November 28, 2019		55,000		31,000		31,000	4.57%	4.57%
Bank of America Line of Credit (USA)	October 31, 2019		5,000		—		—	4.57%	4.57%
Cinema 1, 2, 3 Term Loan (USA)	September 1, 2019		19,500		19,500		19,105	3.25%	3.25%
Minetta & Orpheum Theatres Loan (USA)	June 1, 2018		7,500		7,500		7,470	4.13%	4.13%
U.S. Corporate Office Term Loan (USA)	January 1, 2027		9,719		9,719		9,582	4.64%/4.44%	4.61%
Union Square Construction Financing (USA)	December 29, 2019		57,500		8,000		5,033	5.81%	5.81%
Denominated in FC (2)
NAB Corporate Loan Facility (AU)	June 30, 2019		51,970		30,869		30,781	3.66%	3.66%
Westpac Bank Corporate (general/non-construction) Credit Facility (NZ)	December 31, 2019		24,850		—		—	3.70%	3.70%
Westpac Bank Corporate (-construction) Credit Facility (NZ)	December 31, 2019		12,780		—		—	3.70%	3.70%
Total		$	271,732	$	134,501	$	130,525

(1)

(2)

The contractual facilities and outstanding balances of the FC-denominated borrowings were translated into U.S. dollar based on exchange rates as of December 31, 2017.

(3)

Net of deferred financing costs amounting to $4.0 million.

Our loan arrangements are presented, net of the deferred financing costs, on the face of our consolidated balance sheet as follows:



(Dollars in thousands)	December 31,
Balance Sheet Caption	2018		2017
Debt - current portion	$	30,393	$	8,109
Debt - long-term portion		106,286		94,862
Subordinated debt		26,061		27,554
Total borrowings	$	162,740	$	130,525

Debt denominated in USD

Minetta and Orpheum Theatres Loan

On October 12, 2018, we refinanced our $7.5 million loan with Santander Bank, which is secured by our Minetta and Orpheum Theaters, with a loan for a five year term of $8.0 million. Such modification was not considered to be substantial under US GAAP.

Banc of America Digital Projector Loan

On February 5, 2018, we purchased our U.S. digital cinema projectors, which had previously been held on operating leases, using a $4.6 million loan from Banc of America. We made further U.S. digital cinema projector purchases, of projectors similarly held on other operating leases, in March and April 2018, increasing this loan to $4.9 million. This loan carries an interest rate of 5% and is due and payable on December 28, 2019.

Union Square Construction Financing

On December 29, 2016, we closed our new construction finance facilities totaling $57.5 million to fund the non-equity portion of the anticipated construction costs of the redevelopment of our property at 44 Union Square in New York City. The combined facilities consist of $50.0 million in aggregate loans (comprised of three loan tranches) from Bank of the Ozarks (“BOTO”), and a $7.5 million mezzanine loan from Tammany Mezz Investor, LLC, an affiliate of Fisher Brothers. As of December 31, 2016, Bank of the Ozarks advanced $8.0 million to repay the existing $8.0 million loan with East West Bank.

Presented in the table below is the breakdown of the Union Square construction financing as of December 31, 2018:



(Dollars in thousands)		Facility Limits and Advances
Financing Component	Lender	Facility Limit		Advanced -to-Date		Remaining Facility		Interest Rate(1)	Maturity Date(2)
Mezzanine loan	Tammany Mezz Investor LLC	$	7,500	$	7,500	$	—	Greater of (i) 10.50% and (ii) Adjusted LIBOR + 10%	December 29, 2019
Senior loan	Bank of the Ozarks		8,000		8,000		—	Greater of (i) 4.75% and (ii) Adjusted LIBOR + 4.25%	December 29, 2019
Building loan	Bank of the Ozarks		31,130		10,603		20,527	Greater of (i) 4.75% and (ii) Adjusted LIBOR + 4.25%	December 29, 2019
Project loan	Bank of the Ozarks		10,870		1,079		9,791	Greater of (i) 4.75% and (ii) Adjusted LIBOR + 4.25%	December 29, 2019
Total Union Square Financing		$	57,500	$	27,182	$	30,318

(1)

Not to exceed the New York State maximum lawful borrowing rate, which typically is 16%.

(2)

Allowable for up to two (2) extension request options, one (1) year for each extension request.

U.S. Corporate Office Term Loan

On December 13, 2016, we obtained a ten-year $8.4 million mortgage loan on our new Los Angeles Corporate Headquarters at a fixed annual interest rate of 4.64%. This loan provided for a second loan upon completion of certain improvements. On June 26, 2017, we obtained a further $1.5 million under this provision at a fixed annual interest rate of 4.44%.

Bank of America Line of Credit

In October 2016, the term of this $5.0 million line of credit was extended for another two (2) years until October 31, 2019. Such modification was not considered to be substantial under US GAAP.

Cinemas 1,2,3 Term Loan and Line of Credit

On August 31, 2016, Sutton Hill Properties LLC (“SHP”), a 75% subsidiary of RDI, refinanced its $15 million Santander Bank term loan with a new lender, Valley National Bank. This new $20.0 million loan is collateralized by our Cinema 1,2,3 property and bears an interest rate of 3.25% per annum, with principal installments and accruing interest paid monthly. The new loan matures on September 1, 2019, with a one-time option to extend maturity date for another year. The Company presently intends to exercise that option and to extend the maturity date until September 1, 2020.

Bank of America Credit Facility

On March 3, 2016, we amended our $55.0 million credit facility with Bank of America to permit real property acquisition loans. This amendment reduces the applicable consolidated leverage ratio covenant by 0.25% and modifies the term of the facility based on the earlier of the eighteen months from the date of such borrowing or the maturity date of the credit agreement. Such modification was not considered substantial in accordance with U.S. GAAP. On March 5, 2019, this Credit Facility was extended for six (6) months to May 1, 2020.

Trust Preferred Securities (“TPS”)

On February 5, 2007, we issued $51.5 million in 20-year fully subordinated notes to a trust over which we have significant influence, which in turn issued $51.5 million in securities. Of the $51.5 million, $50.0 million in TPS were issued to unrelated investors in a private placement and $1.5 million of common trust securities were issued by the trust to Reading called “Investment in Reading International Trust I” on our balance sheets. Effective May 1, 2012, the interest rate on our Trust Preferred Securities changed from a fixed rate of 9.22%, which was in effect for five years, to a variable rate of three month LIBOR plus 4.00%, which will reset each quarter through the end of the loan unless we exercise our right to re-fix the rate at the current market rate at that time. There are no principal payments due until maturity in 2027 when the notes and the trust securities are scheduled to be paid in full. We may pay off the debt after the first five years at 100% of the principal amount without any penalty. The trust is essentially a pass through, and the transaction is accounted for on our books as the issuance of fully subordinated notes. The credit facility includes a number of affirmative and negative covenants designed to monitor our ability to service the debt. The most restrictive covenant of the facility requires that we must maintain a fixed charge coverage ratio at a certain level. However, on December 31, 2008, we secured a waiver of all financial covenants with respect to our TPS for a period of nine years (through December 31, 2017), in consideration of the payment of $1.6 million, consisting of an initial payment of $1.1 million, a payment of $270,000 made in December 2011, and a payment of $270,000 in December 2014. The covenant waiver expired January 1, 2018, after which a further covenant waiver was secured on October 11, 2018 for the remaining term of the loan, in consideration of payments totaling $1.6 million, consisting of an initial payment of $1.1 million paid on October 31, 2018, and a further contractual obligation to pay $270,000 in October 2021 and $225,000 in October 2025.

During the first quarter of 2009, we took advantage of the then current market illiquidity for securities such as our TPS to repurchase $22.9 million in face value of those securities through an exchange of $11.5 million worth of marketable securities purchased during the period for the express purpose of executing this exchange transaction with the third party holder of these TPS. During the twelve months ended 2009, we amortized $106,000 of discount to interest income associated with the holding of these securities prior to their extinguishment. On April 30, 2009, we extinguished $22.9 million of these TPS, which resulted in a gain on retirement of subordinated debt (TPS) of $10.7 million net of loss on the associated write-off of deferred loan costs of $749,000 and a reduction in our Investment in Reading International Trust I from $1.5 million to $838,000.

During the three years ended December 31, 2018, we paid $1.4 million in 2016 and 2017 and $1.6 million in 2018 in preferred dividends to unrelated investors that are included in interest expense. At December 31, 2018 and 2017, we had preferred dividends payable of $299,000 and $250,000, respectively. Interest payments for this loan are required every three months.

Debt denominated in foreign currencies

Australian NAB Corporate Loan Facility

On March 15, 2019, we amended our Revolving Corporate Markets Loan Facility with National Australia Bank (“NAB) from a facility comprised of (i) a AU$66.5 million loan facility with an interest rate of 0.95% above the Bank Bill Swap Bid Rate (“BBSY) and a maturity date of June 30, 2019 and (ii) a bank guarantee of AU$5.0 million at a rate of 1.90% per annum into a (i) AU$120.0 million Corporate Loan facility at rates of 0.85%-1.3% above BBSY depending on certain ratios with a due date of December 31, 2023, of which AU$80.0 million is revolving and AU$40.0 million is core and (ii) a Bank Guarantee Facility of AU$5.0 million at a rate of 1.85% per annum. Prior to this, on June 12, 2018, we had extended the maturity of these facilities from June 30, 2019, to December 31, 2019. Such modifications of this particular term loan were not considered to be substantial under US GAAP.

New Zealand Westpac Bank Corporate Credit Facility

On December 20, 2018, we restructured our Westpac Corporate Credit Facilities. The maturity of the 1st tranche (general/non-construction credit line) was extended to December 31, 2023, with the available facility being reduced from NZ$35.0 million to NZ$32.0 million. The facility bears an interest rate of 1.75% above the Bank Bill Bid Rate on the drawn down balance and a 1.1% line of credit charge on the entire facility. The 2nd tranche (construction line) with a facility of NZ$18.0 million was removed.

As of December 31, 2018, our aggregate amount of future principal debt payments is estimated as follows:



(Dollars in thousands)	Future Principal Debt Payments
2019	$	30,393
2020		43,960
2021		258
2022		270
2023		56,045
Thereafter		36,117
Total future principal debt payments	$	167,043

The estimated amount of future principal payments in U.S. dollars is subject to change because the payments in U.S. dollars on the debt denominated in foreign currencies, which represents a significant portion of our total outstanding debt balance, will fluctuate based on the applicable foreign currency exchange rates.