Credit Facility

12 Months Ended

Mar. 31, 2012

Notes to Financial Statements [Abstract]

5. Credit Facility

Mexco has a revolving credit agreement with Bank of America, N.A. (the “Agreement”), which provides for a credit facility of $4,900,000 with no monthly commitment reductions and a borrowing base evaluated annually, currently set at $4,900,000.  Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.  Availability of this line of credit at March 31, 2012 was $3,200,000.  No principal payments are anticipated to be required through November 30, 2013.

The Agreement was renewed five times with the fifth amendment on December 28, 2011, which revised the maturity date to November 30, 2013.  Under the original and renewed agreements, interest on the facility accrues at an annual rate equal to the British Bankers Association London Interbank Offered Rate ("BBA LIBOR") daily floating rate, plus 2.50 percentage points, which was 2.74% on March 31, 2012.  Interest on the outstanding amount under the credit agreement is payable monthly.  In addition, we will pay an unused commitment fee in an amount equal to ½ of 1 percent (.5%) times the daily average of the unadvanced amount of the commitment.  The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter.

The Agreement contains customary covenants for credit facilities of this type including limitations on disposition of assets, mergers and reorganizations.  We are also obligated to meet certain financial covenants under the Agreement.  Mexco is in compliance with all covenants as of March 31, 2012.  In addition, this Agreement prohibits us from paying cash dividends on our common stock.

At the end of fiscal 2012, a letter of credit for $50,000, in lieu of a plugging bond with the Texas Railroad Commission covering the properties the Company operates is also outstanding under the facility.  This letter of credit renews annually.

The balance outstanding on the line of credit was $1,700,000 as of March 31, 2012 and $1,475,000 as of June 29, 2012.

The following table is a summary of activity on the Bank of America, N.A. line of credit for the year ended March 31, 2012:

	Principal
Balance at April 1, 2011:	$	1,800,000
Borrowings		1,100,000
Repayments		(1,200,000	)
Balance at March 31, 2012:	$	1,700,000