6.Term Debt and Line of Credit

ABL Credit Facility

On November 18, 2015, the Company entered into the ABL Credit Facility. The ABL Credit Facility provided for a five-year, $50.0 million senior secured revolving credit facility. Borrowings under the ABL Credit Facility incurred interest, at the Company’s option, at a base rate or the London interbank offered rate (“LIBOR”) plus, in each case, an applicable margin. The ABL Credit Facility was scheduled to mature on November 17, 2020.

Events of default under the ABL Credit Facility included customary events such as a cross-default provision with respect to other material debt. The ABL Credit Facility required us to, among other things, comply with a Fixed Charge Coverage Ratio (as defined in the ABL Credit Facility) if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount and (ii) $6.125 million, subject to certain conditions.

On May 15, 2017, the Company entered into the ABL First Amendment, pursuant to which the Wells Fargo Lenders granted the Company an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017. In addition, the terms of the ABL First Amendment provided for, among other things, (i) an increase in the Company’s Applicable Margin for Base Rate and Libor Rate Loans (as such terms are defined in the ABL Credit Facility) effective May 1, 2017 by 100 basis points, (ii) additional financial and collateral reporting obligations and projection requirements, (iii) the immediate right of the Agent (as defined in the ABL Credit Agreement) or the Wells Fargo Lenders to exercise all rights and remedies under the ABL Credit Facility (in lieu of waiting until the earlier of ten business days after the date on which financial statements are required to be delivered for an applicable fiscal month), and (iv) the elimination of the right to issue curative equity.

On July 17, 2017, the Company entered into the ABL Second Amendment with Wells Fargo and the Wells Fargo Lenders, pursuant to which the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017. In addition, the ABL Second Amendment provided for, among other things, additional reporting obligations, a reduced revolver commitment over a period of time ($49.0 million prior to the effective date of the ABL Second Amendment; $40.0 million from and after the ABL Second Amendment date through August 1, 2017; and $35.0 million from and after August 1, 2017), and adjusted advance rates.

On July 20, 2017, the Company entered into the ABL Third Amendment with Wells Fargo and the Wells Fargo Lenders, pursuant to which the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017.

On August 31, 2017, we entered into the ABL Fourth Amendment with Wells Fargo and the Wells Fargo Lenders. Under the terms of the ABL Fourth Amendment, the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from August 31, 2017 to September 30, 2017.

On September 22, 2017, in connection with the Frozen Fruit Asset Sale, the Company repaid in full the indebtedness under the ABL Credit Facility, as required under such facility. As such, the ABL Credit Facility has been extinguished.

Term debt consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands):


	September 30,		December 31,
	2017		2016
Term loan credit facility through November 2020	$	61,395	$	84,150
Equipment term loan, Goodyear, Arizona, due monthly through April 2021		2,308		2,759
Capital lease obligations, primarily due May 2022		12		21
Long-term debt		63,715		86,930
Less: deferred financing fees, net		(3,107)		(7,047)
Less: current portion of long-term debt		(60,608)		(79,883)
Long-term debt, less current portion	$	—	$	—

Term Loan Credit Facility

On November 18, 2015 and concurrent with the execution of the ABL Credit Facility, the Company entered into the Term Loan Credit Facility. The Term Loan Credit Facility provided for a $85.0 million senior secured term loan that matures on November 17, 2020 The Term Loan Credit Facility also provided that, under certain conditions, we may increase the aggregate principal amount of term loans outstanding thereunder by up to $25.0 million. Borrowings under the Term Loan Credit Facility bear interest, at the Company’s option, at a base rate or LIBOR plus, in each case, an applicable margin.

The Term Loan Credit Facility contains customary negative covenants and also requires the Company, together with its subsidiaries, to comply with a Fixed Charge Coverage Ratio and a Total Leverage Ratio. The first Fixed Charge Coverage Ratio and Total Leverage Ratio measurement period was the end of the first quarter of fiscal 2016. On March 9, 2016, the Company entered into that certain First Amendment to Credit Agreement, with BSP, as administrative agent, and the BSP Lenders (the “Term Loan First Amendment”). The Term Loan First Amendment amended the Term Loan Credit Facility to defer the Company’s obligation to comply with the Total Leverage Ratio until the end of the third quarter of fiscal 2016.

On September 27, 2016, the Company entered into that certain Second Amendment to Credit Agreement with BSP, as administrative agent, and the BSP Lenders (the “Term Loan Second Amendment”). The Term Loan Second Amendment deferred compliance with the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio covenants until the second quarter of fiscal 2017, required the Company to comply with the EBITDA Covenant commencing with the month ended April 30, 2017, and increased the Base Rate Margin and the Libor Rate Margin (each as defined in the Term Loan Credit Facility) thereunder by 100 basis points. The Term Loan Second Amendment also amended the fees payable to the lenders in the event of prepayment and restricts the Company’s ability to raise Curative Equity (as defined in the Term Loan Second Amendment) until the fourth quarter of fiscal 2017.

We did not meet the EBITDA Covenant (the “EBITDA Covenant Default”) for the month ended April 30, 2017. On May 10, 2017, the Company entered into the Term Loan Third Amendment, pursuant to which the lenders granted the Company (i) an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017, and (ii) a temporary waiver of the EBITDA Covenant Default, until July 17, 2017. The Term Loan Third Amendment also required that the Company comply with the EBITDA Covenant commencing with the fiscal month ending June 30, 2017, measured over the 12-months then ended, and increased the Company’s prepayment fees in the event of a payment or prepayment of principal under the Term Loan Credit Facility (excluding regularly scheduled principal payments).

On July 17, 2017, the Company entered into the BSP Letter Agreement, pursuant to which the BSP Lenders granted the Company (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until July 24, 2017.

On July 20, 2017, the Company entered into the Term Loan Fourth Amendment, pursuant to which the BSP Lenders agreed to (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until August 31, 2017. In addition, the BSP Lenders agreed to provide $5.0 million of additional financing to the Company in the form of a term loan, payable in equal monthly installments of $12,500 commencing on September 30, 2017, with the balance due and payable on November 17, 2020, which is the maturity date of the Term Loan Credit Facility. The net proceeds of the $5.0 million loan were used for working capital purposes, subject to certain restrictions in the Term Loan Credit Facility, and is subject to the terms and conditions of the Term Loan Credit Facility.

On August 31, 2017, the Company entered into the Term Loan Fifth Amendment, pursuant to which the BSP Lenders agreed to (i) a further extension of the temporary waiver of the Going Concern Covenant Default from August 31, 2017 to September 30, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until September 30, 2017.

On September 29, 2017, the Company entered into Term Loan Sixth Amendment, pursuant to which the BSP Lenders agreed to (i) a further extension of the temporary waiver of the Going Concern Covenant Default from September 30, 2017 to October 31, 2017, (ii) a temporary waiver of the Term Loan Financial Covenant Default until October 31, 2017, and (iii) amend certain other provisions of the Term loan Credit Facility.

On October 25, 2017, the Company entered into the Term Loan Seventh Amendment, pursuant to which the BSP Lenders (i) agreed to a further extension of the temporary waiver of the Going Concern Covenant Default from October 31, 2017 to the Waiver Deadline (as defined below), , (ii) agreed to a temporary waiver of the Term Loan Financial Covenant Default until the Waiver Deadline, (iii) agreed to amend certain other provisions of the Term Loan Credit Facility, and (iv) consented to the Company’s entering into the Utz Merger Agreement and consummation of the Offer and the Utz Merger, provided that the net proceeds are applied to prepay in full the loans and all other amounts due under the Term Loan Credit Facility. The Waiver Deadline is the earliest to occur of January 15, 2018, the occurrence of an event of default under the Term Loan Credit Facility and the termination of the Utz Merger Agreement. In addition, the BSP Lenders agreed to provide the Company $5 million of additional financing in the form of a term loan, payable in equal monthly installments of $12,500, commencing on December 30, 2017, with the balance due and payable on December 29, 2020. The net proceeds of this new $5 million loan will be used for paying interest on outstanding indebtedness under the Term Loan Credit Facility and payment of trade payables in the ordinary course of business, subject to certain restrictions in the Term Loan Credit Facility,

Absent the Term Loan Seventh Amendment, the Going Concern Covenant Default would have been reinstated, and the Company would have been in default under the Term Loan Credit Facility as of the date this Form 10-Q was filed with the SEC.

Equipment Loans

In August 2015, we entered into an equipment term loan with Banc of America Leasing & Capital LLC for $3.1 million to finance new kettles and related equipment for our Goodyear, Arizona facility. The equipment term loan accrues interest at a rate of 3.07% and will be repaid over 60 recurring monthly payments commencing May 2016.

In August 2014, we entered into two separate equipment term loans with Banc of America Leasing & Capital LLC. One for $2.6 million to finance equipment to be used at the Company’s Rader Farms facility, and the other for $1.9 million to finance equipment to be used at Willamette. Both of these equipment term loans accrue interest at a rate of 2.35% and will be repaid over 60 recurring monthly payments commencing September 15, 2014. In connection with the Frozen Fruit Asset Sale, on September 22, 2017, the Company paid off all the outstanding balance of these two equipment term loans.

Debt Classification

In accordance with FASB Accounting Standard Codification (“ASC”) 470-10-45 on Debt Presentation, all of the Company’s outstanding debt has been reclassified in the accompanying condensed consolidated balance sheet as a current liability as of September 30, 2017 and December 31, 2016. Absent the Term Loan Sixth Amendment, the Company would not have been in compliance with the Total Leverage Ratio and Fixed Charge Ratio covenants as of September 30, 2017. Further, absent the Term Loan Seventh Amendment, the Company would not have been in compliance with the financial covenants under the Term Loan Credit Facility as of the date this Form 10-Q was filed with the SEC. Unless we engage in a strategic transaction that enables us to pay down or refinance our debt, or we secure a waiver from our lenders or a further loan amendment to the Term Loan Credit Facility, we will not be in compliance with our financial covenants as of the Waiver Deadline (as required by the Term Loan Seventh Amendment). As previously announced, the Company commenced a comprehensive strategic and financial review of the Company’s operations and engaged Rothschild Inc. to serve as its financial advisor to assist the Company in this process, including the pursuit of value-enhancing initiatives including, a sale of the Company, a sale of assets of the Company or other strategic business combination, or other capital structure optimization opportunities. Entry into the Utz Merger Agreement on October 25, 2017 is the result of this over 14 month long comprehensive strategic and financial review. There can be no assurances that the transactions contemplated by the Utz Merger Agreement will be completed, or, if it is completed, that it will be on the terms currently contemplated in such Utz Merger Agreement. A default under the Term Loan Credit Facility would trigger a default under certain of our equipment lease financing arrangements, as these facilities each contain cross-default provisions. As such, we classified all of our outstanding debt as a current liability.