Note 8 - Revolving Line of Credit and Long-term Debt

12 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 8 — REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

In  March 2021, the Company amended its secured line of credit to a $100 million facility from a $75 million facility that expires in the third quarter of fiscal 2026. Interest on the revolving line of credit is charged based upon an increment over the LIBOR rate or a base rate, at the Company’s option. The base rate is calculated as the highest of (a) the Prime rate, (b) the sum of the Overnight Funding Rate plus 50 basis points and (c) the sum of the Daily LIBOR Rate plus 100 basis points as long as a Daily LIBOR rate is offered, ascertainable and not unlawful. The increment over the LIBOR borrowing rate fluctuates between 100 and 200 basis points, and the increment over the Base Rate fluctuates between 0 and 100 basis points, both of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing for the first quarter of fiscal 2022 has not been determined pending the outcome of a further amendment to the line of credit (See below). The fee on the unused balance of the $100 million committed line of credit fluctuates between 15 and 22.5 basis points. Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum interest coverage ratio. As of  June 30, 2021, there were $68.2 borrowings against the line of credit, and $31.8 million was available as of that date. Based on the terms of the line of credit and the maturity date, the debt has been classified as long term.

The Company is in the process of amending its secured line of credit as a result of the acquisition of JSI. One of the changes to the line of credit will allow for the historical EBITDA results of JSI in the computation of the debt covenants. The Company expects to be in compliance with its debt covenants once the amendments are in place. For the period ending June 30, 2021, the Company has obtained a waiver from its bank in relation to its loan covenants until the amended line of credit has been finalized.