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EX-32.1 - EXHIBIT 32.1 - CHROMCRAFT REVINGTON INCex32_1.htm
EX-10.1 - EXHIBIT 10.1 - CHROMCRAFT REVINGTON INCex10_1.htm
EX-31.1 - EXHIBIT 31.1 - CHROMCRAFT REVINGTON INCex31_1.htm
EX-31.2 - EXHIBIT 31.2 - CHROMCRAFT REVINGTON INCex31_2.htm
EX-10.91 - EXHIBIT 10.91 - CHROMCRAFT REVINGTON INCex10_91.htm
EX-10.58 - EXHIBIT 10.58 - CHROMCRAFT REVINGTON INCex10_58.htm
EX-10.92 - EXHIBIT 10.92 - CHROMCRAFT REVINGTON INCex10_92.htm
EXCEL - IDEA: XBRL DOCUMENT - CHROMCRAFT REVINGTON INCFinancial_Report.xls
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10-Q - CHROMCRAFT REVINGTON, INC 10-Q 9-29-2012 - CHROMCRAFT REVINGTON INCform10q.htm
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EX-10.97 - EXHIBIT 10.97 - CHROMCRAFT REVINGTON INCex10_97.htm
v2.4.0.6
Debt
9 Months Ended
Sep. 29, 2012
Debt [Abstract]  
Debt
Note 7.  Debt
 
Note Payable

  The Company acquired all of the outstanding stock of EOC on March 20, 2012 for a purchase price of $509, of which $200 was paid at closing and $309 is payable under a promissory note issued by the Company ("Note").  The Note has been discounted by the Company in the amount of $19 to reflect fair value of the Note.  The Note has a term of three years, bears interest at 5.0% per annum and provides for equal quarterly payments of principal and interest of $28 with the first payment made in July 2012 and thereafter at the beginning of each quarter until April 2015.  The outstanding balance of the Note at September 29, 2012 was $266, of which $99 is included in current liabilities and $167 in non-current liabilities.

Revolving Credit Facility

  On April 20, 2012, the Company replaced its former credit facility with First Business Capital Corp. ("FBCC") by entering into a new loan and security agreement with Gibraltar according to which Gibraltar currently provides the Company with a two-year secured revolving credit facility up to a maximum amount of $5,000 (including letters of credit) based upon eligible accounts receivable of the Company (the "Credit Facility").

  The Company had net borrowings on its revolving credit facilities of $1,524 in the first nine months of 2012 and an outstanding loan balance of $2,425 at September 29, 2012.  The Company had approximately $2,535 of availability under the Credit Facility at September 29, 2012, which reflects a $40 reduction for reserves.  The Company had approximately $1,908 of availability under the Credit Facility at November 9, 2012.  Availability under the Credit Facility is calculated using a borrowing base equal to 85%, or such lesser percentage as determined by Gibraltar, of the net amount of the Company's eligible accounts receivable.  Availability fluctuates from time to time based on the amount of the Company's eligible accounts receivable, lockbox receipts and outstanding advances under the Credit Facility.

  The Credit Facility will expire on April 20, 2014 and will automatically be extended one time for one year, unless either the Company or Gibraltar provides the other with timely written notice of its intent not to extend the Credit Facility.  All advances under the Credit Facility must be used for general working capital needs of the Company and capital expenditures up to $300 in a calendar year, except that the initial advance under the Credit Facility was used to pay outstanding borrowings and other obligations owed to FBCC under the former credit facility and certain fees and expenses owed to Gibraltar upon entering into the new Credit Facility.

  Advances under the Credit Facility currently bear interest at the greater of (i) prime rate (the prime rate at September 29, 2012 was 3.25%) plus 6.25%, or (ii) 9.50% per annum.  In addition, the Credit Facility requires the Company to pay a monthly collateral management fee and certain other fees and expenses to Gibraltar.  The Company's obligations under the Credit Facility are secured by all of the Company's assets, including, but not limited to, accounts receivable, inventory, machinery, equipment, deposit accounts, real estate and general intangibles.  The Credit Facility also includes a lockbox arrangement whereby all payments received by the Company to the lockbox are applied to any outstanding loan balance the Company has with Gibraltar.

  Interest on advances under the Credit Facility formerly accrued at the greater of (i) prime rate plus 3.0%, or (ii) 6.25% per annum.  However, effective August 14, 2012, the loan and security agreement for the Credit Facility was amended to provide that interest on advances was increased as provided above.  This increase to the interest rate was a condition to Gibraltar agreeing to waive our noncompliance with the net income (loss) financial covenant under the Credit Facility.  This financial covenant required that we have a net loss for the six month period ended June 30, 2012 of not more than $1,750.  Our actual net loss for the six month period ended June 30, 2012 was $2,720.  The net income (loss) financial covenant under the Credit Facility for the nine months ended September 29, 2012 was also amended on August 14, 2012 to provide for not more than a $3.5 million net loss.

  The loan and security agreement for the Credit Facility contains representations and warranties as well as affirmative, negative and financial covenants of the Company.  The covenants include, but are not limited to, minimum net income (loss) requirements as well as restrictions or limitations on other indebtedness, other liens on Company assets, capital expenditures, sales of assets (other than sales of inventory in the ordinary course of business), mergers with or acquisitions of other businesses and certain amendments to the Company's Certificate of Incorporation and By-Laws.

  The Credit Facility also contains events of default.  The events of default include, but are not limited to, nonpayment of any of the Company's obligations to Gibraltar, a failure by the Company to perform any of its covenants under the loan and security agreement for the Credit Facility or other related loan documents, a breach by the Company of any of its representations and warranties set forth in the loan and security agreement or other related loan documents, the occurrence of a condition or event that has a material adverse effect on the Company or if the Company's current Chief Executive Officer or Chief Financial Officer is no longer employed in a senior management position at the Company.  Certain events of default (for example, certain payment obligations and a change in the current Chief Executive Officer or Chief Financial Officer of the Company) have cure or grace periods.

  Upon the occurrence of an event of default, Gibraltar may terminate the Credit Facility and not extend further credit to the Company, declare upon notice to the Company all amounts then outstanding under the Credit Facility to be immediately due and payable, charge a default rate of interest, take possession of and sell assets of the Company that constitute collateral for the Credit Facility and exercise any other rights and remedies that Gibraltar may have.

In order for the Company to be in compliance with its net income (loss) financial covenants under the Credit Facility, our net loss for the nine months ended September 29, 2012 and for the year ended December 31, 2012 must not exceed $3.5 million.  The Company was in compliance with this financial covenant for the nine months ended September 29, 2012.  However, management believes it is probable that the Company will not be in compliance with this financial covenant for the year ended December 31, 2012.  As such, we will need to seek a waiver of this likely noncompliance from Gibraltar.

In addition, based upon management's current financial projections, management believes it is probable that the Company will not be in compliance with the net income (loss) financial covenants under the Credit Facility in 2013.  The financial covenants for 2013 were established in 2012 and at a time when management's operating plan for 2013 had not yet been prepared.  Although management is still in the process of finalizing our 2013 operating plan, management believes that the current net income (loss) financial covenant for the first three quarters in 2013 and for the year ending December 31, 2013, as set forth in the Waiver and Loan Modification Agreement attached as Exhibit 10.1 to this Form 10-Q, will need to be amended.

In this regard, we have initiated discussions with Gibraltar regarding obtaining a waiver of our probable noncompliance with our net income (loss) financial covenant for the year ended December 31, 2012 as well as an amendment to our financial covenants for 2013.  If Gibraltar grants such a waiver and amends the covenants for 2013, it is possible that Gibraltar may impose additional conditions and require other concessions from the Company beyond what Gibraltar required as a condition to providing its previous waiver of the Company's noncompliance with the net income (loss) financial covenant under the Credit Facility for the six months ended June 30, 2012.  We also are discussing with Gibraltar the possibility of including eligible inventory to our borrowing base as a means to assure that we have adequate credit availability under our Credit Facility.

There is no assurance that Gibraltar will grant such a waiver or agree to such an amendment.  In the event that Gibraltar is unwilling to agree to the waiver and amend the net income (loss) financial covenants for 2013 to levels that the Company believes it can achieve, then Gibraltar could declare an event of default, terminate the Credit Facility and not extend further credit to the Company, declare upon notice to the Company all amounts then outstanding under the Credit Facility to be immediately due and payable, charge a default rate of interest, take possession and sell assets of the Company that constitute collateral for the Credit Facility and exercise any other rights and remedies that Gibraltar may have.  Any of these actions would adversely affect our liquidity, business and ability to continue to operate.

Further, if our trade creditors were to impose unfavorable terms on us, this could negatively impact our ability to obtain raw materials, products and services on acceptable terms.  We have implemented expense controls and limitations on capital expenditures to conserve cash at the present time.

Because we presently are incurring losses, the continued availability of credit under our Credit Facility is critical to meeting our short term liquidity needs and to our ability to continue to operate.  Assuming that Gibraltar grants the waiver and agrees to the amendment discussed above, the Company expects additional borrowings under the Credit Facility in the fourth quarter of 2012 and throughout 2013.