XML 27 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Borrowings
6 Months Ended
Jun. 30, 2016
Debt Disclosure [Abstract]  
Borrowings
Borrowings

The Company has an ABL Facility of up to $54 million with Wells Fargo Bank, N.A ("Wells Fargo"). The maximum amount available for borrowing at any time under such line of credit is determined according to a borrowing base valuation of eligible account receivables, which was $46.9 million at June 30, 2016. The ABL Facility provides for borrowings in the United States, the United Kingdom and Germany and matures on May 7, 2017. As of June 30, 2016, the Company had $40.7 million outstanding under the ABL Facility. The Company expects borrowings to fluctuate based on working capital needs. The Company's obligations under the ABL Facility are guaranteed by the Company and are secured by substantially all of the Company's U.S., the Netherlands, United Kingdom, and German assets. The ABL Facility includes a number of business covenants, including customary limitations on, among other things, indebtedness, liens, investments, guarantees, mergers, dispositions, acquisitions, liquidations, dissolutions, issuances of securities, payments of dividends, loans and advances, and transactions with affiliates.

On June 16, 2016, we amended our ABL Facility with Wells Fargo Bank, N.A. in connection with Wells Fargo's consent to the Netherlands Sale. As a result of this amendment and the sale of assets in the Netherlands Sale, the maximum borrowing base under the ABL Facility was reduced from $60 million to $54 million.

The ABL Facility can be prepaid in whole or in part at any time. The ABL Facility must be repaid to the extent that any borrowings exceed the maximum availability allowed under the ABL Facility.

The Company is required to be in compliance with a minimum trailing 12-month fixed charge coverage ratio of consolidated EBITDA (as defined in the ABL Facility) to consolidated fixed charges of 1.1/1.0 (the "Fixed Charge Coverage Ratio") if (i) an event of default has occurred and is continuing, (ii) Ciber fails to maintain excess availability of at least the greater of (i) $15 million or (ii) an amount equal to 25% of the aggregate amount of the commitments at any time. The Company must then continue to comply with the minimum trailing 12-month fixed charge coverage ratio until (1) no event of default is continuing and (2) excess availability has equaled or exceeded the greater of (a) $15 million or (b) an amount equal to 25% of the aggregate amount of the commitments for 30 consecutive days.  Due to the balance available for borrowing falling below $15 million during the six months ended June 30, 2016, the Company became subject to the Fixed Charge Coverage Ratio and the Company was not in compliance with the Fixed Charge Coverage Ratio during the first quarter of 2016 and subsequently.

Due to the default in the Fixed Charge Coverage Ratio during the first quarter of 2016 and subsequently, the lender has the right to declare all outstanding debt under the ABL Facility immediately due and payable. The amount due under the ABL Facility is classified as a current liability in our balance sheet at June 30, 2016 as a result of this non-compliance. Additionally, the maturity date of the ABL Facility is May 7, 2017, therefore requiring classification as a current liability. The Company's lender has not requested full payment of the facility, but if such action occurred, the Company believes it may not be able to immediately pay the amount due upon request. Further, due to the default, the Company’s ability to draw additional amounts from the ABL Facility could be limited. Management is currently seeking a covenant waiver and actively engaging with Wells Fargo.

Management evaluated its working capital, cash flows, operating, investing and transactional forecasts and currently believes, based on this evaluation that the Company can continue to operate for the foreseeable future, although this cannot be assured. There can be no assurance that we will achieve or be in compliance with these bank covenants until operating cash flow improves.
Additionally, as a normal course of business or as a result of the debt being called, the Company may take further actions that include, but are not limited to, obtaining a covenant waiver or modification, restructuring, divesting certain assets and business units, cost reductions, refinancing, and obtaining new debt or equity financing.
Management believes that other sources of credit or financing might be available to the Company. However, it cannot predict at this time what types of credit or financing might be available in the future, if any. The Company can also not predict whether the costs of such credit or financing, or the terms of any new amended or new facility, would be materially less favorable to the Company.

The ABL Facility also contains certain requirements relating to perfection of security interests of the Loan Parties (as defined in the ABL Facility), as well as an affirmative solvency (as defined in the ABL Facility) representation applicable as of the date of the making of any Revolving Loan (as defined in the ABL Facility) or any other extension of credit. During the six months ended June 30, 2016, Wells Fargo notified us that it had become subject to, and waived an event of default relating to an additional perfection notice requirement that had become applicable to the German borrowers, which we began to comply with in March 2016 and this requirement continues to be applicable to us. In May 2016, Wells Fargo notified us that we were not in compliance with a similar perfection notice requirement applicable to the Dutch borrowers that was applicable to us during the six months ended June 30, 2016. We currently are working with Wells Fargo to cure this non-compliance.

In addition, the ABL Facility includes ongoing representations including solvency of the Company. Based on the ABL Facility definition of solvency, which includes the ability to pay amounts due on the prescribed invoice due dates, the Company may have breached the solvency representation during the six months ended June 30, 2016, and may be in breach of that representation at the time of each subsequent borrowing under the ABL Facility. This may limit future borrowings under the ABL Facility.
The ABL Facility provides that Wells Fargo Bank would take dominion over the Company's U.S. cash and cash receipts and would automatically apply such amounts to the ABL Facility on a daily basis if (a) an event of default has occurred and is continuing or (b) Ciber fails to maintain excess availability of at least the greater of (i) $10 million or (ii) an amount equal to 16 2/3% of the aggregate amount of the commitments at any time.  During such times as was applicable during the six months ended June 30, 2016, and subsequently, Wells Fargo had the ability to exercise dominion over the Company's U.S. cash and cash receipts. During the second quarter of 2016, Wells Fargo began to exercise its right to apply the Company's U.S. cash and cash receipts to the ABL Facility. Wells Fargo will continue to have dominion over the Company's U.S. cash and cash receipts until (a) no event of default is continuing and (b) excess availability has equaled or exceeded the greater of (i) $10 million or (ii) an amount equal to 16 2/3% of the aggregate amount of the commitments under the ABL Facility for 30 consecutive days.

In addition, at all times during the term of the ABL Facility, Wells Fargo would have dominion over the cash of the United Kingdom, Dutch, and German borrowers when a balance is outstanding to those entities and would automatically apply such amounts to the ABL Facility on a daily basis. As a result, if the Company has any outstanding borrowings that are subject to the bank's dominion, such amounts would be classified as a current liability on the Consolidated Balance Sheet. At June 30, 2016, we had $3.5 million and $37.2 million of foreign and US borrowings, respectively, that were subject to the bank's dominion and are classified as a current liability on our balance sheet.