Note 6 - Long-Term Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Text Block]

NOTE 6 – LONG-TERM DEBT

 At December 31, 2012 and 2011, the carrying amount of the Company’s outstanding debt is summarized as follows (dollars in thousands):

	December 31,
	2012			2011
Zero coupon secured convertible term loan due June 29, 2013.  Interest accruing at 5% per annum until June 29, 2009 and at 6% thereafter	$	65,262		$	56,673
Other loans		50			4
Debt discount		(2,051	)		(4,641	)
		63,261			52,036
Less current portion		11			4
	$	63,250		$	52,032

 The carrying value of the Company’s debt, before discount, approximates fair value.  The fair value of the Company’s debt (Level 2) is determined based on an estimation of discounted future cash flows of the debt at rates currently quoted or offered to the Company for similar debt instruments of comparable maturities by its lenders. 

 Pursuant to the Company’s loan agreements, annual maturities of long-term debt outstanding on December 31, 2012, are as follows:

12 Months Ending December 31	$	000’s
2013		65,273
2014		11
2015		11
2016		11
2017		6
	$	65,312

 In June 2006, the Company raised $36.4 million through the private placement of a five-year zero coupon convertible term loan with Peloton, as administrative agent, and an affiliate of Peloton and another investor, as lenders (the “Term Loan”).  The proceeds of the Term Loan were partially used to repay the Company’s prior term loan facility with ING.  On April 16, 2008, the Company was advised that Peloton’s interest in the Term Loan had been assigned to an affiliate of Lampe Conway, and Lampe Conway subsequently replaced Peloton as administrative agent of the loan.  On June 4, 2009, the Company completed arrangements to amend the Term Loan as to certain of its conversion features and extend its maturity to June of 2013.  This facility was further modified as to certain of its conversion features on October 19, 2010, in connection with a new $10 million working capital facility with the existing lenders.  On October 30, 2012, the Company increased the capacity of its existing Term Loan facility with an additional $5 million facility.  The Term Loan consisted of the following tranches as of December 31, 2012:

Tranche	Principal Amount (in thousands)		Conversion Price (per share)		Potential Number of Shares Issuable
Tranche A-1	$	4,550	$	7.00		650,000
Tranche A-2a		2,411	$	35.00		68,889
Tranche A-2b		7,419		Non-Convertible		-
Tranche B-1		2,856	$	13.50		211,565
Tranche B-2		2,190	$	12.50		175,239
Tranche B-3a		6,810	$	35.00		194,558
Tranche B-3b		26,072		Non-Convertible		-
Tranche C-1		5,712	$	13.50		423,130
Tranche C-2		2,190	$	12.50		175,239
Tranche D		5,052		Non-Convertible		-
	$	65,262				1,898,620

 On March 5, 2013, the Company completed arrangements to amend and restate its credit facility with the existing lenders.  Under the new terms of the agreement, the existing lenders hold $30 million of non-convertible secured debt, with the balance of the Company’s outstanding debt of approximately $36 million held in a convertible bond instrument.  Further, the Company increased the capacity of the convertible bond instrument with an additional $17.5 million to be used for working capital purposes.  See Note 15, “Subsequent Events”.

 The Term Loan is collateralized by substantially all of the assets of the Company, and contains representations, warranties and covenants that are typical for agreements of this type, including restrictions that would limit the Company’s ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investments and merge or consolidate with another entity.  However, while there are affirmative covenants, there are no financial maintenance covenants and no restrictions on the Company’s ability to issue additional common stock to fund future working capital needs.  The debt covenants associated with the loan were negotiated by the parties with a view towards the Company’s operating and financial condition as it existed at the time the agreements were executed.  At December 31, 2012, the Company was in compliance with its debt covenants.

 As a result of the modifications of the convertible debt arrangements in June 2009 and October 2010, the change in conversion value between the original and modified instrument totaling approximately $3.2 million was recorded as additional debt discount with an offsetting amount recorded as additional paid-in capital.  Such debt discount is accreted to the redemption value of the instrument over the remaining term of the loan as additional interest expense.  In connection with the modification transaction in October 2010, the Company recorded a derivative liability related to the conversion option.  The fair value of the derivative liability was marked-to-market at the end of each reporting period with the associated change in fair value recorded as other income (expense).  On July 25, 2011, the Company entered into an amendment to the facility eliminating the availability to the Company of the unused $3 million portion of the facility.  As a result, the conversion option related to the unused portion of the facility no longer exists and a derivative liability is no longer being recorded.  On October 30, 2012, the Company increased the capacity of the Term Loan with an additional $5 million facility.  As a result of this transaction, the Company issued warrants to the lenders to purchase shares of common stock.  The value of the warrants totaled approximately $533 thousand and was recorded as additional debt discount with a corresponding amount recorded as additional paid-in capital.

 The Company incurred $73,500 and $42,000 in 2010 and 2012 respectively, of outside legal expenses and lenders fees related to the negotiation and documentation of the loan, which is amortized over the life of the loan.