Notes Payable

9 Months Ended

Jan. 31, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

(7) Notes Payable

Notes payable consist of the following (in thousands):

	January 31, 2013		April 30, 2012
Credit facilities:
Media Services operations	$	5,961	$	-
Real estate operations		16,083		16,839
Other notes payable		4,386		4,486
	$	26,430	$	21,325

Media Services - Media Services has a Revolving Credit and Security Agreement with a bank (the “Media Services Credit Facility”) that provides for a revolving credit loan and letter of credit facility, with availability within the facility’s limit based upon the lesser of (i) a percentage of the borrowers’ eligible accounts receivable or (ii) the recent level of collections of accounts receivable.  The facility’s original maturity date was May 12, 2013, but the lender and the borrowers entered into the First Amendment dated October 1, 2012 (the “First Amendment”) to the Media Services Credit Facility extending the term of the facility by one year to May 12, 2014.  In addition, the First Amendment revised certain covenants and reduced the facility’s borrowing limit from the original $20,000,000 to $15,000,000, in accordance with Media Services’ request.  Among the borrowers’ covenants in the Media Services Credit Facility is one requiring the borrowers to maintain a minimum fixed charge coverage ratio (as defined).  Subject to certain terms, funds may be borrowed, repaid and re-borrowed at any time.  Borrowings under the Media Services Credit Facility are being used for Media Services working capital needs and general business purposes and, subject to the Media Services minimum fixed charge coverage ratio, as defined, being at least at a stated level, may also be used to provide payments on certain indebtedness due the borrowing group’s parent that is not a party to the Media Services Credit Facility.  At January 31, 2013, the borrowing availability under the Media Services Credit Facility was $11,374,000, and there was $5,961,000 outstanding against this availability.  The highest amount borrowed during the quarter and nine months ended January 31, 2013 was $6,770,000.

On December 31, 2012, the borrowers entered into the Second Amendment and Joinder (the “Second Amendment”) to the Media Services Credit Facility which, among other things, added as a borrower (the “New Borrower”) a newly organized Media Services company, FulCircle Media, LLC, that on that date acquired the business and certain assets of a privately owned company (see Note 12).  The Second Amendment contained the lender’s consent to the acquisition of the assets, along with a number of new terms, including specifying an interim ceiling on the collateral value of the New Borrower’s accounts receivable and the treatment for borrowing availability and fixed charge coverage ratio calculation purposes of a contingent additional purchase price payment.

The borrowers' obligations under the Media Services Credit Facility are secured by substantially all of their assets other than real property.  The revolving loans under the Media Services Credit Facility may be fluctuating rate borrowings or Eurodollar fixed rate based borrowings or a combination of the two as the borrowers may select.  Fluctuating rate borrowings bear interest at a rate which is, at the borrowers’ option, either (i) the reserve adjusted daily published rate for one month LIBOR loans plus a margin of 3%, or (ii) the highest of two daily published market rates and the bank lender’s base commercial lending rate in effect from time to time, but in any case not less than 3% plus a margin of 2% (that is, not less than 5%).  Eurodollar fixed rate based borrowings may be for one, two or six months and bear interest at the reserve adjusted Eurodollar interest rates for borrowings of such durations, plus a margin of 3%, which may be reduced to 2.75% depending on the borrowers’ financial condition.  The interest rate on outstanding borrowings at January 31, 2013 was 3.20%.

Real Estate - AMREP Southwest had a bank loan scheduled to mature on September 1, 2012 that, at August 13, 2012, had an outstanding principal balance of $16,214,000.  The loan bore fluctuating interest at the annual rate of reserve adjusted LIBOR plus 3.5%, but not less than 5%, and required that a cash reserve of at least $500,000 be maintained with the lender to fund interest.  The loan was secured by a mortgage on certain real property of AMREP Southwest in Rio Rancho, New Mexico having a book value of approximately $54,987,000 and required that the appraised value of the collateral be at least 2.5 times the outstanding principal.  The loan was subject to a number of restrictive covenants including a requirement that AMREP Southwest maintain a minimum tangible net worth and a restriction on AMREP Southwest making distributions and other payments to its parent or the Company beyond a stated management fee.

On August 13, 2012, a company (the “New Lender”) owned by Nicholas G. Karabots, a significant shareholder of the Company who was then Vice Chairman of its Board of Directors, purchased the bank loan and agreed to extend its maturity to December 1, 2012 on substantially its existing terms to accord the parties time to negotiate a longer extension or for AMREP Southwest to identify a possible alternate financing source.  In August 2012, another director of the Company purchased a 20% participation in the loan from the New Lender.

AMREP Southwest and the New Lender entered into an agreement effective December 1, 2012 amending the terms of the loan.  At January 31, 2013, the outstanding principal of the loan was $16,083,000.  Under the terms of the loan as now in effect, it matures on December 1, 2017, bears interest at 8.5% per annum and is secured by its original collateral and by additional collateral comprised of the balance of the real property owned by AMREP Southwest in Rio Rancho and by a pledge of the stock of its subsidiary, Outer Rim Investments, Inc., which owns approximately 12,000 acres, for the most part scattered lots, in Sandoval County, New Mexico and which are not currently being offered for sale.  The total book value of the real property collateralizing the loan is approximately $73,212,000.  The loan may be prepaid in whole or in part, generally without penalty, and 25% of the net proceeds, as defined, from any sales of real property by AMREP Southwest are

required to be applied to the payment of the loan.  No new borrowings are permitted under this facility.  The requirement to maintain the reserve for interest and the restrictive covenants that applied prior to the amendment for the most part continue to apply, except that there is no longer a requirement regarding the ratio of the appraised value of the collateral to the amount of the loan.

Other notes payable consist of a $4,347,000 mortgage note payable on a warehouse with a maturity date of February 2018 and an interest rate of 6.35%, and $39,000 of equipment financing loans with maturity dates through April 2014 and an average interest rate of 7.54%.  The amount of Other notes payable due within one year totals $142,000.