10.

LONG-TERM DEBT

Long-term debt consisted of the following:


	June 30,
	2016			2015
Trace RDA Loan	$	7,698		$	8,175
SHPP RDA Loan		1,950			1,992
Carmichael Note		1,508			1,741
Capital lease obligations and other		32			137

Total		11,188			12,045
Less current maturities		(8,012	)		(816	)

	$	3,176		$	11,229

Trace RDA Loan and Trace Working Capital Loan—SunLink and two wholly owned subsidiaries of the Company, closed on a $9,975 Mortgage Loan Agreement (“Trace RDA Loan”) and a Working Capital Loan Agreement, both dated as of July 5, 2012 (“Trace Working Capital Loan”).

The Trace RDA Loan has a term of 15 years with monthly payments of principal and interest. The Trace RDA Loan bears a floating rate of interest equal to the greater of (i) the prime rate (as published in The Wall Street Journal) plus 1.5%, or (ii) 6% (6.0% at June 30, 2016). The Trace RDA Loan is collateralized by real estate and equipment of Trace Regional Hospital in Houston, MS and is partially guaranteed under the U.S. Department of Agriculture, Rural Development Business and Industry Program.

The Trace Working Capital Loan as amended provided for a revolving line of credit to Trace equal to the lesser of (i) a Borrowing Base equal to eighty percent (80%) of Eligible Accounts Receivable (as defined in the Working Capital Loan Agreement dated July 5, 2012) or (ii) $500. The Trace Working Capital Loan expired July 2, 2016 and was not renewed. At June 30, 2016 and 2015, there were no outstanding borrowings under the Trace Working Capital Loan.

The Trace RDA Loan contains various terms and conditions, including financial restrictions and limitations, and affirmative and negative covenants. The covenants include financial covenants measured on a quarterly basis which require Trace to comply with a ratio of current assets to current liabilities, debt service coverage, fixed charge coverage, and funded debt to EBITDA, all as defined in the Trace RDA Loan. At March 31, 2016 and June 30, 2016, Trace was not in compliance with the debt service coverage, fixed charge ratio and funded debt to EBITDA ratios. The Company received a waiver from the lender dated August 10, 2016 of this non-compliance from the lender for March 31, 2016. No modification or waiver for the June 30, 2016 non-compliance has been obtained as of September 28, 2016 and the $7,698 of indebtedness under the Trace RDA Loan is presented in current liabilities in the condensed consolidated balance sheet as of June 30, 2016. The Company continues to discuss a modification or waiver of this non-compliance with the lender. The ability of Trace to continue to make the required debt service payments under the Trace RDA Loan depends on, among other things, its ability to generate sufficient cash flows, including from operating activities. If Trace is unable to generate sufficient cash flow from operations to meet debt service payments on the Trace RDA Loan, including in the event the lender were to declare an event of default and accelerate the maturity of the indebtedness, such failure could have material adverse effects on the Company. The Trace RDA Loan is guaranteed by the Company and one subsidiary.

SHPP RDA Loan—SunLink Healthcare Professional Property, LLC, a subsidiary of the Company which owns a medical office building, closed a $2,100 term loan dated as of October 31, 2012 (the “SHPP RDA Loan”) with a bank. SHPP owns and formerly leased a medical office building to Southern Health Corporation of Ellijay, Inc. (“SHC Ellijay”), but effective July 1, 2016, SHPP entered into a 10 year lease with a third-party lessee.

The SHPP RDA Loan has a term of 25 years with monthly payments of principal and interest until repaid. The SHPP RDA Loan bears interest at a floating rate of interest equal to the greater of (i) the prime rate (as published in The Wall Street Journal) plus 2.0%, or (ii) 5% (5.50% at June 30, 2016). The SHPP RDA Loan is collateralized by SHPP’s real estate, equipment and leases and is partially guaranteed under the U.S. Department of Agriculture, Rural Development Business and Industry Program. The SHPP RDA Loan contains certain financial covenants with respect to the ratio of current assets to current liabilities and debt service coverage, all as defined in the SHPP RDA Loan Agreement, which SHPP must maintain and that are measured at the end of each fiscal year. The SHPP RDA Loan is guaranteed by the Company and one subsidiary. As of June 30, 2016, the Company was in compliance with all financial covenants under the SHPP RDA Loan.

Carmichael Note—On April 22, 2008, SunLink Scripts Rx, LLC issued a $3,000 promissory note with an interest rate of 8% to the former owners of Carmichael as part of the acquisition purchase price (the “Carmichael Note”). Under amendments and modifications to the Carmichael Note during fiscal 2013 and 2014, the Company made payments of principal and interest with additional notes (which have been paid) and extended the maturity date to October 22, 2017. The Carmichael Note currently was payable in semi-annual installments of $185 of principal and accrued interest, with the remaining balance of $1,255 due October 22, 2017. The Carmichael Note was guaranteed by the Company. The Carmichael note was paid off on September 9, 2016.

Debt Commitments—Annual required payments of debt and contractual commitments for interest on long-term debt are shown in the following table. The interest rate on variable interest debt is calculated at the interest rate at June 30, 2016.


	Debt		Interest
2017	$	8,012	$	685
2018		1,310		136
2019		46		101
2020		49		99
2021		51		96
2022 and thereafter		1,720		1,015

Total	$	11,188	$	2,132