Debt

In January 2017, the Company amended its $160.0 million financing program (“the Financing Program”) with PNC Bank, National Association (“PNC”). The key changes to the agreement were: (1) extend the termination date to January 31, 2018; (2) decrease the requirement under the minimum global liquidity covenant to $20.0 million, which increases to $25.0 million at the earlier of the sale of Maintech or receipt of the federal portion of the Company's IRS refund from the filing of amended tax returns for fiscal years 2004 through 2010, and then to $35.0 million after any time at which the Company pays a dividend or repurchase shares of our stock; (3) reduce the unbilled receivables eligibility from 15% to 10%, (4) permits a $5.0 million basket for supply chain finance receivables and (5) introduce a performance covenant requiring a minimum level of Earnings Before Interest and Taxes (“EBIT”), as defined, which is measured quarterly. The amendment also prohibits distributions until both Maintech is sold and the aforementioned IRS refund is received. When these two transactions occur, up to $0.5 million in distributions can be made per fiscal quarter provided that liquidity is at least $40.0 million after the distribution. All other material terms and conditions remain substantially unchanged, including interest rates.

The Financing Program is secured by receivables from certain Staffing Services businesses in the United States, Europe and Canada that are sold to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary's sole business consists of the purchase of the receivables and subsequent granting of a security interest to PNC under the program, and its assets are available first to satisfy obligations to PNC and are not available to pay creditors of the Company's other legal entities. Borrowing capacity under the Financing Program is directly impacted by the level of accounts receivable. At January 29, 2017, the accounts receivable borrowing base was $142.5 million.

In addition to customary representations, warranties and affirmative and negative covenants, the program is subject to termination under standard events of default including change of control, failure to pay principal or interest, breach of the liquidity or performance covenants, triggering of portfolio ratio limits, or other material adverse events, as defined. At January 29, 2017, the Company was in compliance with all debt covenant requirements.

The Financing Program has an accordion feature under which the facility limit can be increased up to $250.0 million subject to credit approval from PNC. Borrowings are priced based upon a fixed program rate plus the daily adjusted one-month LIBOR index, as defined. The program also contains a revolving credit provision under which proceeds can be drawn for a definitive tranche period of 30, 60, 90 or 180 days priced at the adjusted LIBOR index rate in effect for that period. In addition to United States dollars, drawings can be denominated in Canadian dollars, subject to a Canadian dollar $30.0 million limit, and British Pounds Sterling, subject to a £20.0 million limit. The program also includes a letter of credit sublimit of $50.0 million and minimum borrowing requirements. As of January 29, 2017, there were no foreign currency denominated borrowings, and the letter of credit participation was $31.0 million inclusive of $28.9 million for the Company's casualty insurance program and $2.1 million for the security deposit required under the Orange facility lease agreement.

At both January 29, 2017 and October 30, 2016, the Company had outstanding borrowings under this program of $95.0 million that bore a weighted average annual interest rate of 2.6% and 2.3%, respectively, which is inclusive of certain facility fees. At January 29, 2017, there was $16.4 million additional availability under this program, exclusive of the potential availability under the aforementioned accordion feature.

In February 2016, Maintech, as borrower, entered into a $10.0 million 364-day secured revolving credit agreement with Bank of America, N.A. The credit agreement provides for revolving loans as well as a $0.1 million sub-line for letters of credit and is subject to borrowing base and availability restrictions and requirements. The credit agreement is secured by assets of the borrower, including accounts receivable, and the Company has guaranteed the obligations of the borrower under the agreement not to exceed $3.0 million. The credit agreement contains certain customary representations and warranties, events of default and affirmative and negative covenants, including a minimum interest requirement based on $2.0 million drawn. At both January 29, 2017 and October 30, 2016, the amount outstanding was $2.1 million with $2.7 million and $3.3 million of additional availability, respectively. Upon the sale of Maintech, the then outstanding balance is required to be satisfied.

The borrower may optionally terminate the credit agreement and repay the borrowings prior to the expiration date, without premium or penalty at any time by the delivery of a notice to that effect as provided under the credit agreement. Borrowings will be used for working capital and general corporate purposes. Interest under the credit agreement is one month LIBOR plus 2.75% on drawn amounts and a fixed rate of 0.375% on undrawn amounts.

Long-term debt consists of the following (in thousands):



	January 29, 2017		October 30, 2016
Financing programs	$	97,050	$	97,050
Less: current portion	97,050		2,050
Total long-term debt	$	—	$	95,000