(14) Debt

At June 29, 2013 the Company had $81,000 outstanding under a U.K. bank loan entered into in April 2010, with a fixed interest rate of 6.8%. The loan, which was entered into by the U.K. metalized film capacitor subsidiary to purchase an item of capital equipment, is denominated in British Pounds. The loan agreement provides for equal monthly installments of $4,000 comprising interest and principal for a five year period commencing in May 2010. Of the total amount outstanding at June 29, 2013, $43,000 is shown in the current liabilities section of the accompanying consolidated balance sheet under current debt, representing the principal element of the loan installments ending on June 30, 2014. Included in other long term liabilities at June 29, 2013, is $38,000 which represents the principal element of the loan installments payable in fiscal years 2014 and 2015. The fair market value of the debt at June 29, 2013 was $81,000.

The Company’s wholly owned subsidiary, Sevcon USA, Inc., has a $3,500,000 secured revolving credit facility with RBS Citizens, National Association for working capital and general corporate purposes. The loan and security agreement will expire on June 14, 2014 when all outstanding principal and unpaid interest will be due and payable in full. The facility may be paid before maturity in whole or in part at the option of Sevcon USA, Inc., without penalty or premium. Interest on the loan is payable monthly, and in the third quarter of 2013, was calculated at a margin over LIBOR. Under the facility, Sevcon USA, Inc. must maintain, on a quarterly basis, a debt to tangible net worth ratio of no more than 2.40:1 and a debt service coverage ratio of no less than 1.25:1 for each rolling twelve-month period. Upon entering into the revolving credit facility, Sevcon USA, Inc. drew down $1,700,000, which was the total amount outstanding at June 29, 2013. This $1,700,000 is shown in the accompanying consolidated balance sheet under current portion of long term debt. The carrying value of the debt approximated to fair value based on current published interest rates.

In July 2013, the Company’s U.K. bank renewed the multi-currency overdraft facilities of the Company’s U.K. controls and capacitor subsidiaries. The facilities total $1,400,000 and are secured by real estate owned by those companies. In common with bank overdrafts in Europe, the renewal of the facilities is for a twelve month period although in line with normal practice in Europe, they can be withdrawn on demand by the bank. Of the $1,400,000 facilities, $342,000 was drawn down at June 29, 2013. At June 29, 2013, the Company had a positive bank balance of $657,000 with its main bankers, The Royal Bank of Scotland Group, including the $342,000 overdraft facility drawn down in the Company’s U.K. subsidiary.

Annual principal payments on long term debt at June 29, 2013 are as follows:

Fiscal year (in thousands of dollars)

2013	$	10
2014		1,743
2015		28
Total	$	1,781