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Subsequent Events
12 Months Ended
Dec. 31, 2013
Subsequent Events [Abstract]  
Subsequent Events

Note 18.  Subsequent Events

 

On January 9, 2014, the Company entered into a loan agreement with RES, whereby the Company may borrow up to $2,000,000 from time to time in revolving loans, subject to the conditions therein.  In the event the Company does not complete a rights offering of common stock on or before April 15, 2014, RES has the option until July 9, 2015, the maturity date of the loan agreement, subject to any ownership limitations RES may then be subject to, to convert up to $2,000,000 of the loan into a number of shares of common stock of the Company (the “Loan Conversion”) determined at the rate per share equal to the greater of (a) the average weighted price of the common stock of the Company for the five trading days preceding the day RES exercises the Loan Conversion, or (b) the greater of book or market value of the common stock at the time, and as determined, with respect to Nasdaq Marketplace Rule 5635(d).

 

Our loan facilities with GE require us to maintain certain financial covenants.  As of December 31, 2013, our before dividend fixed charge coverage ratio (FCCR) with respect to our GE-encumbered properties (as defined in the loan agreement) was 1.30:1 (with a requirement of 1.30:1), our before dividend consolidated FCCR (as defined in the loan agreement) was 1.01:1 (versus a requirement of 1.20:1) and our after dividend consolidated FCCR (as defined in the loan agreement) was 0.78:1 (versus a requirement of 1.00:1). Further, the Company does not currently project that it will be able to satisfy these covenants as of March 31, 2014.  On March 14, 2014, the Company received a waiver for non-compliance with these covenants as of December 31, 2013 and March 31, 2014.

 

In connection with the waiver, our loan facilities with GE were also amended to require that, through the term of the loans, we maintain: (a) a minimum before dividend FCCR with respect to our GE-encumbered properties (based on a rolling 12-month period) of 1.10:1 as of June 30, 2014, which requirement increases periodically thereafter to 1.20:1 as of December 31, 2014; (b) a maximum loan to value ratio with respect to our GE-encumbered properties of 70% as of June 30, 2014, which requirement decreases periodically thereafter to 60% as of December 31, 2014; (c) a minimum before dividend consolidated FCCR (based on a rolling 12-month period) of 0.70:1 as of June 30, 2014, which requirement increases periodically thereafter to 1.00:1 as of December 31, 2014; and (d) a minimum after dividend consolidated FCCR (based on a rolling 12-month period) of 0.75:1 as of June 30, 2014, which requirement increases periodically thereafter to 1.00:1 as of December 31, 2014.

The GE amendment, among other things, also: (a) provides that the consolidated FCCRs are not required to be tested as of the end of any fiscal quarter if the loan to value ratio with respect to our GE-encumbered properties is 60% or less; (b) implements changes beneficial to the Company regarding release of collateral, prepayment fees and loan reamortizations; (c) requires that any variable rate loans remaining outstanding as of December 31, 2014 be converted to fixed rate loans bearing interest at 4.75%; and (d) requires payment of a $380,000 modification fee.

 

On March 10, 2014 the Company sold a Super 8 in Shawano, Wisconsin (55 rooms) for $1.1 million. Proceeds were used to reduce the balance of the revolving credit facility with Great Western Bank.

 

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