(13) Debt

At July 2, 2011 the Company had $166,000 (September 30, 2010, $190,000) outstanding under a U.K. bank loan entered into in July 2010, with a fixed interest rate of 6.8%. The loan, which was entered into by the U.K. metalized film capacitor subsidiary to purchase an item of capital equipment, is denominated in British Pounds. The loan agreement provides for equal monthly installments comprising interest and principal for a five year period which commenced in May 2010. Of the total amount outstanding at July 2, 2011, $40,000 is shown in the current liabilities section of the accompanying consolidated balance sheet under current portion of long-term debt, representing the principal element of the loan installments in the twelve months commencing July 2, 2011. Included in long term debt, at July 2, 2011, is $126,000 which represents the principal element of the loan installments for the years 2012 to 2015. The carrying value of the debt at July 2, 2011 approximated to fair value based on current interest rates.

On June 15 2011, the Company's wholly owned subsidiary, Sevcon USA, Inc., entered into a $3.5 million secured revolving credit facility with RBS Citizens N.A. for working capital and general corporate purposes. The loan and security agreement will expire on June 14, 2014 when all outstanding principal and unpaid interest will be due and payable in full. The facility may be paid before maturity in whole or in part at the option of Sevcon USA, Inc., without penalty or premium. Interest on the loan is payable monthly at a margin over LIBOR. Upon entering into the revolving credit facility, Sevcon USA, Inc., drew down $1.7 million, which was the total amount outstanding at July 2, 2011. This $1.7 million is shown in the accompanying consolidated balance sheet under long-term debt. The carrying value of the debt approximated to fair value based on current interest rates.

In March 2011, the Company's U.K. bank renewed the overdraft facilities of the Company's U.K. subsidiary operations. The Company's U.K. subsidiaries have a multi-currency overdraft facility of $1,450,000 which is secured against real estate owned by the U.K. subsidiary companies. In common with bank overdrafts in Europe, the facility renewal is for a twelve month period although in line with normal practice in Europe, it can be withdrawn on demand by the bank. The facility was unused as at July 2, 2011.

Annual principal payments on long term debt at July 2, 2011 are as follows:

(in thousands
of dollars)