Note 9 - Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Text Block]

9.    Debt:

The Company’s debt is comprised of the following components:

(in thousands)	Total
Asset-based revolving credit facility expiring June 30, 2016	$	177,575
Term loan due June 30, 2016		57,604
Industrial revenue bonds due April 1, 2018		5,125
Capital lease		1,407
Total debt		241,711
Less current amount		(10,942	)
Total long-term debt	$	230,769

The Company’s principal payments over the next five years and thereafter are detailed in the table below:

(in thousands)	2013		2014		2015		2016		2017		Thereafter		Total
Revolver	$	-	$	-	$	-	$	177,575	$	-	$	-	$	177,575
Term loan		8,750		8,750		8,750		31,354		-		-		57,604
Industrial revenue bond		785		810		840		865		895		930		5,125
Capital lease		1,407		-		-		-		-		-		1,407
Total principal payments	$	10,942	$	9,560	$	9,590	$	209,794	$	895	$	930	$	241,711

On March 16, 2012, the Company amended its existing asset-based credit facility (the ABL Credit Facility).  The amendment provided, among other things: (i) a reduction in the applicable margin for loans under the Company’s Loan and Security Agreement; (ii) additional revolving commitments to the borrowers in an aggregate principal amount of $50,000, which additional revolving commitments do not impact the borrowers’ incremental facilities; and (iii) permits certain transactions among the borrowers and Metales de Olympic, S. de R.L. de C.V., an indirect subsidiary of the Company.  The amended ABL Credit Facility consists of a revolving credit line of $315,000 and a $64,167 term loan, with monthly principal payments.  At December 31, 2012, the term loan balance was $57,604.  Revolver borrowings are limited to the lesser of a borrowing base, comprised of eligible receivables and inventories, or $315,000 in the aggregate.  The ABL Credit Facility matures on June 30, 2016.

The ABL Credit Facility requires the Company to comply with various covenants, the most significant of which include: (i) until maturity of the ABL Credit Facility, if any commitments or obligations are outstanding and the Company’s availability is less than the greater of $20,000, 12.5% of the aggregate amount of revolver commitments ($39,375 at December 31, 2012), or 60% of the principal balance of the term loan then outstanding ($34,562 at December 31, 2012), then the Company must maintain a ratio of EBITDA minus certain capital expenditures and cash taxes paid to fixed charges of at least 1.10 to 1.00 for the most recent twelve fiscal month period; (ii) limitations on dividend payments; (iii) restrictions on additional indebtedness; and (iv) limitations on investments and joint ventures.  Effective with the March 16, 2012 amendment, the Company has the option to borrow under its revolver based on the agent’s base rate plus a premium ranging from 0.00% to 0.50% or the London Interbank Offered Rate (LIBOR) plus a premium ranging from 1.50% to 2.00%.  The interest rate under the term loan is based on the agent’s base rate plus a premium ranging from 0.25% to 0.75% or LIBOR plus a premium ranging from 1.75% to 2.25%.

As of December 31, 2012, the Company was in compliance with its covenants and had approximately $62,925 of availability under the ABL Credit Facility.

In June 2012, the Company entered into a forward starting fixed rate interest rate hedge commencing July 2013 in order to eliminate the variability of cash interest payments on $53,229 of the outstanding LIBOR based borrowings under the ABL Credit Facility.  The hedge matures on June 1, 2016 and is reduced monthly by the principal payments on the term loan.  The interest rate hedge fixed the rate at 1.21% plus a premium ranging from 1.75% to 2.25%.  Although the Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate hedge agreement, the Company anticipates performance by the counterparties.

As of December 31, 2012, $4,690 of bank financing fees were included in “Prepaid expenses and other” and “Other long-term assets” on the accompanying Consolidated Balance Sheet.  This includes $1,212 of financing fees paid for the March 16, 2012 amendment.  The financing fees are being amortized over the remaining term of the ABL Credit Facility.  The amortization of $1,296, $684 and $569 for 2012, 2011 and 2010 respectively, is included in “Interest and other expense on debt” on the accompanying Consolidated Statements of Comprehensive Income.

As part of the CTI acquisition, the Company assumed approximately $5,880 of Industrial Revenue Bond (IRB) indebtedness issued through the Stanly County, North Carolina Industrial Revenue and Pollution Control Authority.  As of December 31, 2012 $5,125 million was outstanding on the IRB.  The bond matures in April 2018, with the option to provide principal payments annually on April 1st.  Interest is payable monthly, with a variable rate that resets weekly.   The IRB has a remarketing feature and is remarketed every six months..  As security for payment of the bonds, the Company obtained a direct pay letter of credit issued by JPMorgan Chase Bank, N.A.  The letter of credit reduces annually by the optional principal repayment amount.  The interest rate at December 31, 2012 was 0.25% for the IRB debt.

The Company entered into an interest rate swap agreement to reduce the impact of changes in interest rates on the above IRB.  At December 31, 2012, the effect of the swap agreement on the bond was to fix the rate at 3.46%.  The swap agreement matures April 2018, but is reduced annually by the amount of the optional principal payments on the bond.  Although the Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap agreement, the Company anticipates performance by the counterparties.

Scheduled Debt Maturities, Interest, Debt Carrying Values

The ABL Credit Facility includes a $70,000 term loan that is collateralized by the Company’s real estate.  The term loan matures on June 30, 2016.  Under the ABL Credit Facility the Company is required to make monthly term loan payments of $729.   The interest rate under the term loan is based on the agent’s base rate plus a premium ranging from 0.25% to 0.75% or LIBOR plus a premium ranging from 1.75% to 2.25%.

The overall effective interest rate for all debt, exclusive of deferred financing fees and deferred commitment fees, amounted to 2.7%, 3.1% and 3.9% in 2012, 2011 and 2010, respectively.  Interest paid totaled $7,295, $5,081 and $1,672 for the years ended December 31, 2012, 2011 and 2010, respectively.  Average total debt outstanding was $254,162, $165,021 and $29,660 in 2012, 2011 and 2010, respectively.