XML 58 R32.htm IDEA: XBRL DOCUMENT v3.19.3
Subsequent Event
9 Months Ended
Sep. 28, 2019
Subsequent Event [Abstract]  
Subsequent Events
SUBSEQUENT EVENT

Subsequent to the end of the quarter, the Company amended its credit agreement with Wells Fargo Capital Finance to reduce the size of the Senior Credit Facility from $150,000 to $120,000 and adjust the availability limitation related to the fixed coverage ratio (see note 10) from $16,500 to $15,000 upon closing of the sale lease back of the Susan Street property. The changes to the credit facility were implemented by the twelfth and thirteenth amendments to the credit agreement, effective October 3rd and October 22nd respectively. These amendments were intended to permit the sale and leaseback of the Company's Susan Street Facility and, upon completion of the sale, to adjust the credit agreement's borrowing base..

On October 22, 2019, the Company sold its Susan Street facility in Santa Ana, California to CenterPoint Properties Trust. The sale price was $37,195. The estimated gain on the sale transaction is $25,000. The net proceeds applied to reduce the Senior Credit Facility was $36,361.

Concurrent with the sale of the Susan Street facility, the Company (by a wholly-owned subsidiary) leased back the property for a term of 10 years with two 5 year renewal options. The initial annual rental is $2,083 increasing at 2% per year for the term of the lease. The lease requires the landlord to make certain required capital improvements, at no further rental increase or charge to the Company or its subsidiary, including improvements to the roof and roof structure, non-equipment related electrical switchgear, HVAC, the parking lot, the external plumbing including fire loop, parking gates, walls and seismic activity related improvements. The company is responsible for normal maintenance of the building and facilities. The company concurrently executed a lease guaranty, pursuant to which it guaranteed the prompt payment when due of all rent payments to be made under the lease agreement.

As part of Amendment Thirteen to the credit agreement an additional availability block of $5,000 was established to be reduced upon reaching a specially defined fixed charge coverage ratio of 1.10:1.0 for a consecutive period of 3 months or 6 months. Contingent upon reaching the desired fixed coverage ratio, the availability block will reduce to $2,500 when the three-month threshold is reached and $0 once reaching the six-month threshold. Amendment Thirteen also adjusted the size of the restricted borrowing availability that is triggered when the fixed charge coverage ratio is less than 1.1 to 1.0. Effective with the thirteenth amendment, and after giving effect to the "availability block", availability under the credit agreement is reduced by $20,000.

As of October 22, 2019, the accessible availability under the Senior Credit Facility was $22,047. Availability under the credit agreement will vary based on seasonal business factors and periodic changes to the qualified asset base, which consists of accounts receivable, inventories and fixed assets.

Subsequent to the end of the quarter, the Company's previously announced stock repurchase authorization became effective upon completion of the sale of the Susan Street facility. Pursuant to the previously announced authorization, the Company is authorized to purchase up to $5,900 of its shares during a period beginning with the date of the completion of the sale and ending in March 2020.

On October 28, 2019 payment was made in the amount of $1,528 previously approved court settlement of the Company's class action lawsuit in the matter of Carlos Garcia v. Fabrica International, Inc. et al Orange County Superior Court Case No. 30-2017-00949461-CU-OE-CXC. See Item 1 - Legal Proceedings for additional details regarding the lawsuit.