Note 4 - Credit Facility

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

4.

    

CREDIT FACILITY

On

May 1, 2019,

Ultralife, SWE, and CLB, INC., a Texas corporation and wholly owned subsidiary of SWE (“CLB”), as borrowers, entered into the First Amendment Agreement (the “First Amendment Agreement”) with KeyBank National Association (“KeyBank” or the “Bank”), as lender and administrative agent, to amend the Credit and Security Agreement by and among Ultralife and KeyBank dated

May 31, 2017 (

the “Credit Agreement”, and together with the First Amendment Agreement, the “Amended Credit Agreement”).

The Amended Credit Agreement, among other things, provides for a

five

-year,

$8,000

senior secured term loan (the “Term Loan Facility”) and extends the term of the

$30,000

senior secured revolving credit facility (the “Revolving Credit Facility”, and together with the Term Loan Facility, the “Credit Facilities”) through

May 31, 2022.

Up to

six

months prior to

May 31, 2022,

the Revolving Credit Facility

may

be increased to

$50,000

with the Bank’s concurrence.

Upon closing of the SWE acquisition on

May 1, 2019,

the Company drew down the full amount of the Term Loan Facility and

$6,782

under the Revolving Credit Facility. As of

March 31, 2020,

the Company had

$6,791

outstanding principal on the Term Loan Facility, of which

$1,467

is included in current portion of long-term debt on the balance sheet, and

$10,182

outstanding principal on the Revolving Credit Facility. As of

March 31, 2020,

total unamortized debt issuance costs of

$152

associated with the Amended Credit Agreement are classified as a reduction of long-term debt on the balance sheet.

The Company is required to repay the borrowings under the Term Loan Facility in

sixty

(

60

) equal consecutive monthly payments commencing on

May 31, 2019,

in arrears, together with applicable interest. All unpaid principal and accrued and unpaid interest with respect to the Term Loan Facility is due and payable in full on

April 30, 2024.

All unpaid principal and accrued and unpaid interest with respect to the Revolving Credit Facility is due and payable in full on

May 31, 2022.

The Company

may

voluntarily prepay principal amounts outstanding at any time subject to certain restrictions.

In addition to the customary affirmative and negative covenants, the Company must maintain a consolidated fixed charge coverage ratio of equal to or greater than

1.15

to

1.0,

and a consolidated senior leverage ratio of equal to or less than

2.5

to

1.0,

each as defined in the Amended Credit Agreement. The Company was in full compliance with its covenants as of

March 31, 2020.

Borrowings under the Credit Facilities are secured by substantially all the assets of the Company. Availability under the Revolving Credit Facility is subject to certain borrowing base limits based on receivables and inventories.

Interest will accrue on outstanding indebtedness under the Credit Facilities at the Base Rate or the Overnight LIBOR Rate, as selected by the Company, plus the applicable margin. The Base Rate is the higher of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus

50

basis points, and (c) the Overnight LIBOR Rate plus

one hundred

basis points. The applicable margin ranges from

zero

to negative

50

basis points for the Base Rate and from

185

to

215

basis points for the Overnight LIBOR Rate and are determined based on the Company’s senior leverage ratio.

The Company must pay a fee of

0.1%

to

0.2%

based on the average daily unused availability under the Revolving Credit Facility.

Payments must be made by the Company to the extent borrowings exceed the maximum amount then permitted to be drawn on the Credit Facilities and from the proceeds of certain transactions. Upon the occurrence of an event of default, the outstanding obligations

may

be accelerated and the Bank will have other customary remedies including resort to the security interest the Company provided to the Bank.