NOTE 6 - LONG-TERM DEBT

Long-term debt consists of the following:

	October 31, 2018		October 29, 2017

3.25% convertible senior notes due in April 2019	$	57,453	$	57,337

2.77% capital lease obligation payable through July 2018		-		4,639

		57,453		61,976
Less: current portion		57,453		4,639
	$	-	$	57,337

In April 2016, $57.5 million of our senior convertible notes matured. We repaid $50.1 million to noteholders and issued approximately 0.7 million shares to noteholders that elected to convert their notes to common stock. The notes were exchanged at the rate of approximately 96 shares per $1,000 note principle, equivalent to a conversion rate of $10.37 per share.

In January 2015, we privately exchanged $57.5 million in aggregate principal amount of our 3.25% convertible senior notes with a maturity date of April 1, 2016, for new 3.25% convertible senior notes with an aggregate principal amount of $57.5 million with a maturity date of April 1, 2019. The conversion rate of the new notes is the same as that of the exchanged notes, which were issued in March 2011 with a conversion rate of approximately 96 shares of common stock per $1,000 note principal, equivalent to a conversion price of $10.37 per share of common stock, and is subject to adjustment upon the occurrence of certain events, which are described in the indenture dated January 22, 2015. Note holders may convert each $1,000 principal amount of notes at any time prior to the close of business on the second scheduled trading day immediately preceding April 1, 2019, and we are not required to redeem the notes prior to their maturity date. Interest on the notes accrues in arrears, and is paid semiannually through the notes’ maturity date.

In November FY2019, Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”), an indirect majority owned joint venture subsidiary of Photronics, Inc., entered into a commitment letter for an 8-year term loan agreement under which it can borrow up to approximately $50.0 million (“the Project Loan”). PDMCX will use the Project Loan to finance certain capital expenditures in China. PDMCX will grant a lien on the land, building and equipment owned by PDMCX as collateral for the Project Loan. The interest rate of the Project Loan is based on the benchmark lending rate (as defined in the Project Loan agreement) plus a floating rate spread, of the People’s Bank of China on the date of borrowings. We anticipate that interest incurred on this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, up to a certain cap.

On November 7, 2018, PDMCX entered into a working capital loan agreement with a maximum borrowing limit of approximately $25.0 million, (“the Working Capital Loan”). In November 2018, we borrowed $2.2 million against this loan. PDMCX will use the Working Capital Loan for general financing purposes including for the payment of import and value added taxes. The term of the Working Capital Loan will not exceed three years, and no guarantees were required under the terms of the Working Capital Loan. The interest rate of the Working Capital Loan is based on the benchmark lending rate (as defined in the Working Capital Loan agreement) plus a floating rate spread, of the People’s Bank of China on the date of borrowings. We anticipate that interest incurred on this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, up to a certain cap.

In August 2018, we entered into an amendment to our credit facility which allows us to sell, transfer, lease, or otherwise dispose of our assets to a subsidiary guarantor. In September 2018, we entered into an amended and restated credit agreement (“the new agreement”) that expires in September 2023. The new agreement, which replaced our prior credit facility, has a $50 million borrowing limit, with an expansion capacity to $100 million, and is secured by substantially all of our assets located in the United States and common stock we own in certain of our foreign subsidiaries. The new agreement limits the amount we can pay in cash dividends on Photronics, Inc. stock, and contains the following financial covenants: minimum interest coverage ratio, total leverage ratio and minimum unrestricted cash balance, all of which we were in compliance with at October 31, 2018. We had no outstanding borrowings against the new agreement at October 31, 2018, and $50 million was available for borrowing. The interest rate on the new agreement (2.3% at October 31, 2018) is based on our total leverage ratio at LIBOR plus a spread, as defined in the credit facility.

In August 2013, a $26.4 million principal amount, five year capital lease commenced to fund the purchase of a high-end lithography tool. Payments under the capital lease, which bore interest at 2.77%, were $0.5 million per month through July 2018.

Interest payments were $1.9 million, $2.1 million, and $3.2 million, in fiscal years 2018, 2017 and 2016, respectively.