Note 12 - Long-term Debt

9 Months Ended

Mar. 29, 2015

Disclosure Text Block [Abstract]

Long-term Debt [Text Block]

12.   Long-Term Debt

Debt Obligations

The following table presents the total balances outstanding for the Company’s debt obligations, their scheduled maturity dates and the weighted average interest rates for borrowings as well as the applicable current portion of long-term debt:

		Weighted Average			Principal Amounts as of
	Scheduled Maturity Date	Interest Rate as of March 29, 2015 (1)			March 29, 2015			June 29, 2014
ABL Revolver	March 2020		1.9	%	$	17,100		$	26,000
ABL Term Loan	March 2020		2.5	%		84,375			68,000
Term loan from unconsolidated affiliate	August 2015		3.0	%		1,250			1,250
Capital lease obligations	(2)		(3	)		9,542			4,238
Total debt						112,267			99,488
Current portion of long-term debt						(12,361	)		(7,215	)
Total long-term debt					$	99,906		$	92,273

(1) The weighted average interest rate as of March 29, 2015 for the ABL Term Loan includes the effects of the interest rate swap at a notional balance of $50,000.

(2) Scheduled maturity dates for capital lease obligations range from January 2017 to November 2027.

(3) Interest rates for capital lease obligations range from 2.3% to 4.6%.

On March 26, 2015, the Company and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) for a $200,000 senior secured credit facility (the “ABL Facility”) with a syndicate of lenders. The ABL Facility consists of a $100,000 revolving credit facility (the “ABL Revolver”) and an $84,375 term loan that can be reset up to a maximum amount of $100,000 if certain future conditions are met (the “ABL Term Loan”). The ABL Facility has a maturity date of March 26, 2020. The Company paid $750 to the lenders in connection with the Amended Credit Agreement.

The Amended Credit Agreement replaced a previous senior secured credit facility dated May 24, 2012 with a similar syndicate of lenders, which, after multiple amendments, would have matured on March 28, 2019 and consisted of a $100,000 revolving credit facility and a $90,000 term loan. As used herein, the terms “ABL Facility,” “ABL Revolver” and “ABL Term Loan” shall mean the senior secured credit facility, the revolving credit facility or the term loan, respectively, under the Amended Credit Agreement or the previous senior secured credit facility, as applicable.

ABL Facility

The ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with proceeds and products) of Unifi, Inc., Unifi Manufacturing, Inc. and certain subsidiary guarantors (the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of certain first tier controlled foreign corporations, as required by the lenders) of the stock of (or other ownership interests in) each of the Loan Parties (other than the Company) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof.

The Amended Credit Agreement includes representations and warranties made by the Loan Parties, affirmative and negative covenants and events of default that are usual and customary for financings of this type. If excess availability under the ABL Revolver falls below the defined Trigger Level, a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a monthly basis of at least 1.05 to 1.0 becomes effective. The Trigger Level as of March 29, 2015 was $23,047. In addition, the ABL Facility contains restrictions on certain payments and investments, including restrictions on the payment of dividends and share repurchases. Subject to certain provisions, the ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at the Company’s discretion.

ABL Facility borrowings bear interest at the London Interbank Offer Rate (“LIBOR”) plus an applicable margin of 1.50% to 2.00%, or the Base Rate plus an applicable margin of 0.50% to 1.00%, with interest currently being paid on a monthly basis. The Base Rate means the greater of (i) the prime lending rate as publicly announced from time to time by Wells Fargo, (ii) the Federal Funds Rate plus 0.5%, and (iii) LIBOR plus 1.0%. The Company’s ability to borrow under the ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventory and is subject to certain conditions and limitations. There is also a monthly unused line fee under the ABL Revolver of 0.25%.

The ABL Term Loan is subject to (i) quarterly amortizing payments of $2,250 beginning April 1, 2015 and (ii) principal increases, at the Company’s discretion, resetting the loan balance up to a maximum amount of $100,000, once per fiscal year upon satisfaction of certain conditions, beginning October 1, 2015.

As of March 29, 2015, the Company was in compliance with all financial covenants; the excess availability under the ABL Revolver was $67,767; the fixed charge coverage ratio was 3.0 to 1.0; and the Company had $235 of standby letters of credit, none of which have been drawn upon.

Term Loan from Unconsolidated Affiliate

On August 30, 2012, a foreign subsidiary of the Company entered into an unsecured loan agreement under which it borrowed $1,250 from the Company’s unconsolidated affiliate, U.N.F. Industries Ltd. The loan does not amortize and bears interest at 3%, payable semi-annually. The entire principal balance is due August 30, 2015, the maturity date.

Capital Lease Obligations

During the nine months ended March 29, 2015, the Company entered into three capital leases for machinery and transportation equipment with an aggregate present value of $6,065. Interest rates and maturity dates for these capital leases range from 3.1% to 3.3% and August 2019 to March 2020, respectively.

Scheduled Debt Maturities

The following table presents the scheduled maturities of the Company’s outstanding debt obligations for the remainder of fiscal year 2015 and the fiscal years thereafter:

	Scheduled Maturities on a Fiscal Year Basis
	2015		2016		2017		2018		2019		Thereafter
ABL Revolver	$	—	$	—	$	—	$	—	$	—	$	17,100
ABL Term Loan		2,250		9,000		9,000		9,000		9,000		46,125
Capital lease obligations		524		2,124		2,106		1,896		1,747		1,145
Term loan from unconsolidated affiliate		—		1,250		—		—		—		—
Total	$	2,774	$	12,374	$	11,106	$	10,896	$	10,747	$	64,370

Debt Financing Fees

Debt financing fees are classified within other non-current assets and consist of the following:

Balance at June 29, 2014	$	2,093
Additions		1,059
Loss on extinguishment of debt		(1,040	)
Amortization charged to interest expense		(402	)
Balance at March 29, 2015	$	1,710

Interest Expense

Interest expense consists of the following:

	For the Three Months Ended						For the Nine Months Ended
	March 29, 2015			March 30, 2014			March 29, 2015			March 30, 2014
Interest on ABL Facility	$	866		$	785		$	2,651		$	2,450
Other		43			77			134			146
Subtotal		909			862			2,785			2,596
Reclassification adjustment for cash flow hedge		19			133			212			433
Amortization of debt financing fees		144			105			402			317
Mark-to-market adjustment for interest rate swap		227			(99	)		(19	)		(107	)
Interest capitalized to property, plant and equipment, net		(90	)		(39	)		(143	)		(122	)
Subtotal		300			100			452			521
Total interest expense	$	1,209		$	962		$	3,237		$	3,117

Loss on Extinguishment of Debt

Entering into the Amended Credit Agreement generated substantially different terms for the ABL Term Loan and resulted in the replacement of an existing lender. Accordingly, the Company recorded a loss on extinguishment of debt of $1,040 for the write-off of certain debt financing fees related to the previous credit agreement.