XML 27 R11.htm IDEA: XBRL DOCUMENT v2.4.0.8
Debt
9 Months Ended
Sep. 30, 2013
Debt [Abstract]  
Debt

Note 6: Debt

 

On October 3, 2012, the Company and its operating subsidiary, The Tile Shop, LLC, entered into a credit agreement with Bank of America, N.A. (the "Credit Agreement"). The Credit Agreement, as amended, provides the Company with a $110 million senior secured credit facility, comprised of a five-year $25 million term loan and a $85 million revolving line of credit. Borrowings pursuant to the Credit Agreement bear interest at either a base rate or a LIBOR-based rate, at the option of the Company. The LIBOR-based rate will range from LIBOR plus 1.75% to 2.25%, depending on The Tile Shop's leverage ratio. The base rate is equal to the greatest of: (a) the Federal funds rate plus 0.50%, (b) the Bank of America "prime rate," and (c) the Eurodollar rate plus 1.00%, in each case plus 0.75% to 1.25% depending on The Tile Shop's leverage ratio. At both September 30, 2013 and December 31, 2012 the base interest rate was 4.25%. At September 30, 2013 and December 31, 2012 the LIBOR-based interest rate was 2.408% and 2.615%, respectively. At September 30, 2013, the outstanding balance on the term loan was $21.5 million and the outstanding balance on the revolving line of credit was $67.5 million. The term loan requires quarterly principal payments of $0.875 million. The Credit Agreement contains customary events of default, conditions to borrowings, and restrictive covenants, including restrictions on the Company's and The Tile Shop's ability to dispose of assets, make acquisitions, incur additional debt, incur liens, make investments, or enter into certain types of related party transactions. The credit facility also includes financial and other covenants including covenants to maintain certain fixed charge coverage ratios and rent adjusted leverage ratios. The Company was in compliance with the covenants during nine months ended September 30, 2013, based on an amendment dated April 30, 2013 which excluded the impact of the repurchase of warrants and the repurchase of capital stock, up to the amount of cash proceeds received from warrant exercises, from the calculation of certain financial covenants and an amendment dated July 8, 2013 which excluded the liabilities related to the New Market Tax Credit transaction (Note 11) in our leverage ratio.