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Long-Term Debt
3 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
Long-Term Debt

Note 7. –Long-Term Debt

Long-term debt consisted of the following:

 

 

 

September 30,

2019

 

 

June 30,

2019

 

Trace RDA Loan

 

$

2,928

 

 

$

2,999

 

Capital Lease

 

 

148

 

 

 

159

 

Less unamortized debt issuance costs

 

 

(189

)

 

 

(195

)

Less current maturities

 

 

(2,772

)

 

 

(2,836

)

Long-term Debt

 

$

115

 

 

$

127

 

 

Trace RDA Loan— Southern Health Corporation of Houston, Inc. (“Trace”) a wholly owned subsidiary of the Company, closed on a $9,975 Mortgage Loan Agreement (“Trace RDA Loan”) with a bank, dated as of July 5, 2012. The Trace RDA Loan has a term of 15 years with level monthly payments of principal and interest until repaid.  The Trace RDA Loan interest rate is the prime rate (as published in the Wall Street Journal) plus 1% with a floor of 5.5%, (6.0% at September 30, 2019). The Trace RDA Loan is collateralized by real estate and equipment of Trace and is partially guaranteed under the U.S. Department of Agriculture, Rural Development Business and Industry Program.

The Trace RDA Loan contains various covenants, terms and conditions, including financial restrictions and limitations, and affirmative and negative covenants and is guaranteed by SunLink.  The covenants include financial covenants measured on a quarterly basis that require Trace to comply with a ratio of current assets to current liabilities, debt service coverage, fixed charge ratio, and funded debt to EBITDA, all as defined in the Trace RDA Loan. At June 30, 2019, Trace was not in compliance with the debt service coverage, fixed charge coverage and funded debt to EBITDA ratios.  The Company is discussing with the lender a waiver of this non-compliance but a waiver of non-compliance has not been received as of the date of filing this report. Trace was in compliance with the covenants as measured at September 30, 2019, but since the non-compliance for June 30, 2019 has not been waived, the entire amount of the Trace RDA loan is classified as current at September 30, 2019.  No event of default has been declared by the lender as of the date of the filing of this report nor is such a declaration currently anticipated. The ability of Trace to continue to make the required debt service payments under the Trace RDA Loan depends on, among other things, available cash resources and its ability to retain or generate sufficient cash, including from operating activities and asset sales. If available cash resources were at any time insufficient or Trace were unable to retain or generate sufficient cash 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.  

On October 7, 2019, the Company made a $2,500 pre-payment on the Trace RDA loan.  The pre-payment was made with cash on hand.  The Company expects to report in the quarter ended December 31, 2019 a non-cash loss on early extinguishment of debt relating to the pre-payment of approximately $160.