Note 16 - Working Capital Line of Credit and Overdraft Facility

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Working Capital, Line of Credit and Overdraft Facility [Text Block]

16.

WORKING CAPITAL LINE OF CREDIT AND OVERDRAFT FACILITY

During the period ended

March 

31,

2018,

the Company’s wholly owned subsidiary, CUI, Inc., maintained a

two

-year revolving Line of Credit (LOC) with Wells Fargo Bank with the following terms:

(in thousands)
Credit Limit		March 31, 2018 Balance			Expiration Date	Interest rate
$	4,000	$	0	(1)	June 1, 2019	Fixed rate at 2.25% above the LIBOR in effect on the first day of the applicable fixed-rate term, or
						Variable rate at 2.25% above the daily one-month LIBOR rate.

(

1

)

As a result of the Company’s cash management system, checks issued but

not

presented to the bank for payment

may

create negative book cash balances. When those checks are presented for payment if there isn't sufficient cash in the bank account, the checks would be honored by the bank with a corresponding increase to CUI's draw on its line of credit. There were

no

negative book cash balances included in the balance on the line of credit as of

March 

31,

2018.

The line of credit is secured by the following collateral via a security agreement with CUI Inc. and CUI-Canada at

March 

31,

2018:

(in thousands)

CUI Inc. and CUI-Canada General intangibles, net	$	8,906
CUI Inc. and CUI-Canada Accounts receivable, net	$	6,903
CUI Inc. and CUI-Canada Inventory, net	$	7,646
CUI Inc. and CUI-Canada Equipment, net	$	1,589

The borrowing base for the line of credit is based on a percent of CUI Inc. and CUI-Canada's inventory plus a percent of CUI Inc.'s accounts receivable.

CUI Global, Inc., the parent company, is a payment guarantor of the LOC. Other terms included in this revolving line of credit for CUI limit capital expenditures by CUI Inc. and CUI-Canada to

$1.75

million in any fiscal year. The LOC is supported by a single long-term note that does

not

require repayment until maturity although the Company at its option can repay and re-borrow amounts up to the LOC limit. Since the maturity date is

June 1, 2019,

which is more than

one

year in the future, the LOC is classified as long-term. The LOC contains certain financial covenants. The Company was in compliance with the financial covenants as of

March 

31,

2018.

At

March 

31,

2018,

there was a

$0

million balance outstanding on the LOC and

$4.0

million of credit was available.

On

October 5, 2016,

Orbital Gas Systems Ltd. signed a

five

-year agreement with the London branch of Wells Fargo Bank N.A. for a multi-currency variable rate overdraft facility with the following terms:

(in thousands)
Credit Limit	March 31, 2018 Balance		Expiration Date	Interest rate
£1,500 pounds sterling ($2,100 at March 31, 2018)	$	837	October 5, 2021.	Base rate plus a 2.25% margin (2.5% as of March 31, 2018)

The London branch of Wells Fargo Bank N.A. can demand repayment of amounts on overdraft at any time. The overdraft facility is primarily secured by land, equipment, intellectual property rights, and rights to potential future insurance proceeds held by Orbital Gas Systems Ltd.