United States |
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Delaware |
74-2081929 |
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722 Burleson Street, Corpus Christi, Texas 78402 |
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(361) 883-5591 |
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Yes ý |
No o |
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Yes ý |
No o |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. |
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Large accelerated filer o |
Accelerated filer o |
Non-accelerated filer o |
Smaller reporting company ý |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
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Yes o |
No ý |
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Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. |
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Class |
Shares Outstanding as of April 25, 2013 |
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Table of Contents |
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Part I - Financial Information |
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Page No. |
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Item 1. |
Condensed Consolidated Financial Statements |
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Condensed Consolidated
Statements of Operations -- |
3 |
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Condensed Consolidated
Statements of Comprehensive Income (Loss) -- |
4 |
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Condensed Consolidated
Balance Sheets -- |
5 |
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Condensed Consolidated
Statements of Cash Flows -- |
6 |
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Notes to the Condensed Consolidated Financial Statements |
7 |
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Item 2. |
Management's Discussion and
Analysis of Financial Condition |
16 |
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Item 4. |
Controls and Procedures |
27 |
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Part II - Other Information |
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Item 6. |
Exhibits |
28 |
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Signatures |
28 |
Forward Looking Information
Certain portions of this report contain forward-looking statements about the business, financial condition and prospects of TOR Minerals International, Inc. (the “Company”). The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation, changes in demand for the Company’s products, changes in competition, economic conditions, fluctuations in market price for TiO2 pigments, changes in foreign currency exchange rates, increases in the price of energy and raw materials, such as ilmenite, interest rate fluctuations, changes in the capital markets, changes in tax and other laws and governmental rules and regulations applicable to the Company’s business, and other risks indicated in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, and, in many cases, the Company cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws. When used in this report, the words “believes,” “estimates,” “plans,” “expects,” “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.
TOR Minerals International, Inc. and Subsidiaries |
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Condensed Consolidated Statements of Operations |
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(Unaudited) |
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(In thousands, except per share amounts) |
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|
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|
Three Months |
|||
|
|
2013 |
|
2012 |
NET SALES |
$ |
11,427 |
$ |
12,808 |
Cost of sales |
9,933 |
9,618 |
||
GROSS MARGIN |
|
1,494 |
|
3,190 |
Technical services and research and development |
153 |
82 |
||
Selling, general and administrative expenses |
1,278 |
1,224 |
||
Loss on disposal of assets |
10 |
- |
||
OPERATING INCOME |
|
53 |
|
1,884 |
OTHER EXPENSE: |
||||
Interest expense |
(84) |
(142) |
||
(Loss) gain on foreign currency exchange rate |
(87) |
23 |
||
Other, net |
12 |
- |
||
INCOME (LOSS) BEFORE INCOME TAX |
|
(106) |
|
1,765 |
Income tax (benefit) expense |
(31) |
369 |
||
NET INCOME (LOSS) |
$ |
(75) |
$ |
1,396 |
Plus: 6% Convertible Debenture Interest Expense |
- |
22 |
||
Income (Loss) Available to Common Shareholders |
$ |
(75) |
$ |
1,418 |
|
|
|
|
|
Income (loss) per common share: |
||||
Basic |
$ |
(0.03) |
$ |
0.58 |
Diluted |
$ |
(0.03) |
$ |
0.41 |
Weighted average common shares outstanding: |
||||
Basic |
2,987 |
2,402 |
||
Diluted |
2,987 |
3,439 |
||
See accompanying notes. |
TOR Minerals International, Inc. and Subsidiaries |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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(Unaudited) |
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(In thousands) |
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|
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|
Three Months |
|||
|
|
2013 |
|
2012 |
NET INCOME (LOSS) |
$ |
(75) |
$ |
1,396 |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax |
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Currency translation adjustment, net of tax: |
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Net foreign currency translation adjustment (loss) gain |
(409) |
708 |
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Other comprehensive income (loss), net of tax |
(409) |
708 |
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COMPREHENSIVE INCOME (LOSS) |
$ |
(484) |
$ |
2,104 |
See accompanying notes. |
TOR Minerals International, Inc. and Subsidiaries |
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Condensed Consolidated Balance Sheets |
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(In thousands, except per share amounts) |
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|
March 31, |
|
December 31, |
|
|
|
(Unaudited) |
|
|
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
$ |
2,258 |
$ |
2,799 |
Trade accounts receivable, net |
5,376 |
3,972 |
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Inventories, net |
22,998 |
22,895 |
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Other current assets |
1,414 |
1,822 |
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Total current assets |
32,046 |
31,488 |
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PROPERTY, PLANT AND EQUIPMENT, net |
23,057 |
22,933 |
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OTHER ASSETS |
25 |
25 |
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Total Assets |
$ |
55,128 |
$ |
54,446 |
|
|
|
|
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
$ |
3,230 |
$ |
4,608 |
Accrued expenses |
1,934 |
1,864 |
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Notes payable under lines of credit |
4,162 |
2,109 |
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Export credit refinancing facility |
946 |
394 |
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Current deferred tax liability |
135 |
173 |
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Current maturities - capital leases |
19 |
33 |
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Current maturities of long-term debt – financial institutions |
1,192 |
1,202 |
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Total current liabilities |
11,618 |
10,383 |
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LONG-TERM DEBT |
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Capital leases |
7 |
12 |
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Long-term debt – financial institutions |
2,351 |
2,316 |
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DEFERRED TAX LIABILITY |
892 |
1,007 |
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Total liabilities |
14,868 |
13,718 |
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COMMITMENTS AND CONTINGENCIES |
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SHAREHOLDERS' EQUITY: |
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Common
stock $1.25 par value: authorized, 6,000 shares; 2,987 shares issued
|
3,733 |
3,733 |
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Additional paid-in capital |
29,033 |
29,017 |
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Retained earnings |
3,194 |
3,269 |
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Accumulated other comprehensive income: |
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Cumulative translation adjustment |
4,300 |
4,709 |
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Total shareholders' equity |
40,260 |
40,728 |
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Total Liabilities and Shareholders' Equity |
$ |
55,128 |
$ |
54,446 |
See accompanying notes. |
TOR Minerals International, Inc. and Subsidiaries |
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Condensed Consolidated Statements of Cash Flows |
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(Unaudited) |
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(In thousands) |
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|
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Three Months Ended March 31, |
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2013 |
|
2012 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
|
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Net Income (Loss) |
$ |
(75) |
$ |
1,396 |
Adjustments to reconcile net income (loss) to net cash |
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Depreciation |
741 |
540 |
||
Loss on disposal of assets |
10 |
- |
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Share-based compensation |
16 |
6 |
||
Convertible debenture interest expense |
- |
17 |
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Deferred income taxes |
(145) |
5 |
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Changes in working capital: |
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Trade accounts receivables |
(1,390) |
(1,031) |
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Inventories |
(278) |
(1,588) |
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Other current assets |
392 |
(142) |
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Accounts payable and accrued expenses |
(1,226) |
2,043 |
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Net cash (used in) provided by operating activities |
(1,955) |
1,246 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
|
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Additions to property, plant and equipment |
(1,224) |
(1,315) |
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Proceeds from sales of property, plant and equipment |
2 |
- |
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Net cash used in investing activities |
(1,222) |
(1,315) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
|
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Net proceeds from (payments on) lines of credit |
2,095 |
(1,543) |
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Net proceeds from export credit refinancing facility |
557 |
1,159 |
||
Net (payments on) proceeds from capital leases |
(18) |
57 |
||
Proceeds from long-term bank debt |
276 |
- |
||
Payments on long-term bank debt |
(200) |
(204) |
||
Proceeds from the issuance of common stock and exercise of common stock options |
- |
83 |
||
Net cash provided by (used in) financing activities |
2,710 |
(448) |
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Effect of
foreign currency exchange rate fluctuations |
(74) |
22 |
||
Net decrease in cash and cash equivalents |
(541) |
(495) |
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Cash and cash equivalents at beginning of year |
2,799 |
3,381 |
||
Cash and cash equivalents at end of period |
$ |
2,258 |
$ |
2,886 |
Supplemental cash flow disclosures: |
|
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Interest paid |
$ |
84 |
$ |
140 |
Income taxes paid |
$ |
240 |
$ |
- |
See accompanying notes. |
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1. |
Accounting Policies |
Basis of Presentation and Use of Estimates
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of TOR Minerals International, Inc. (“TOR”, “we”, “us”, “our” or the “Company”) and its wholly-owned subsidiaries with all significant intercompany transactions eliminated. In our opinion, all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the consolidated financial position, results of operations and cash flows for the interim periods presented have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2012, in our Annual Report on Form 10-K filed with the SEC on March 7, 2013. Operating results for the three-month period ended March 31, 2013, are not necessarily indicative of the results for the year ending December 31, 2013.
Income Taxes: The Company records income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Income taxes consisted of federal and state income tax expense of approximately $40,000 and $2,000, respectively, and foreign tax benefit of approximately $73,000 for the three month period ended March 31, 2013, compared to federal and state income tax expense of approximately $296,000 and $2,000, respectively, and foreign tax expense of approximately $71,000 for the same three month period in 2012. Taxes are based on an estimated annualized consolidated effective rate of 29.2% for the year ended December 31, 2013.
When accounting for uncertainties in income taxes, we evaluate all tax years still subject to potential audit under the applicable state, federal and foreign income tax laws. We are subject to taxation in the United States, Malaysia and The Netherlands. Our federal income tax returns in the United States are subject to examination for the tax years ended December 31, 2009 through December 31, 2012. Our state returns, which are filed in Texas and Ohio, are subject to examination for the tax years ended December 31, 2008 through December 31, 2012. Our tax returns in various non-U.S. jurisdictions are subject to examination for various tax years ended December 31, 2007 through December 31, 2012.
As of January 1, 2013, we did not have any unrecognized tax benefits and there was no change during the three month period ended March 31, 2013. In addition, we did not recognize any interest and penalties in our consolidated financial statements during the three month period ended March 31, 2013. If any interest or penalties related to any income tax liabilities are imposed in future reporting periods, we expect to record both of these items as components of income tax expense.
Recently Adopted and Recently Issued Accounting Standards
On February 5, 2013, the Financial Accounting Standards Board issued an amendment to the disclosure requirements for reporting reclassifications out of accumulated other comprehensive income (“AOCI”). The new requirements were effective for the first interim or annual period beginning after December 15, 2012. The amendment requires companies to present information about reclassification adjustments from accumulated other comprehensive income to the income statement, including the income statement line items affected by the reclassification. The information must be presented in the financial statements in a single note or on the face of the financial statements. The new accounting guidance also requires the disclosure to be cross referenced to other financial statement disclosures for reclassification items that are not reclassified directly to net income in their entirety in the same reporting period. TOR adopted the new requirements in the first quarter of 2013; however, the adoption of this guidance did not have an effect on its consolidated financial position, results of operations or cash flows.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 2. |
Debt |
Long-term Debt – Financial Institutions
Following is a summary of our long-term debt to financial institutions:
(Unaudited) |
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(In thousands) |
March 31, |
December 31, |
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2013 |
2012 |
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Fixed Rate term note payable to a U.S. bank, with an interest rate of 6.65% at March 31, 2013, due January 1, 2016, secured by real estate, leasehold improvements, property, plant and equipment, inventory and accounts receivable of our U.S. operation. |
$ |
1,212 |
$ |
1,309 |
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 7.8% at March 31, 2013, due July 1, 2029, secured by TPT's land and office building purchased July 2004. (€270) |
346 |
363 |
||
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.3% at March 31, 2013, due January 31, 2030, secured by TPT's land and building purchased January 2005. (€295) |
377 |
395 |
||
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 4.05% at March 31, 2013, due July 31, 2015, secured by TPT's assets. (€96) |
123 |
143 |
||
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 4.25% at March 31, 2013, due July 5, 2014, secured by TPT's assets. (€276) |
353 |
442 |
||
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate of 5.2% at March 31, 2013, due March 1, 2015, secured by TMM's property, plant and equipment. (RM 3,500) |
1,132 |
866 |
||
Total |
3,543 |
3,518 |
||
Less current maturities |
1,192 |
1,202 |
||
Total long-term debt and notes payable - financial institutions |
$ |
2,351 |
$ |
2,316 |
Short-term Debt
U.S. Operation
On December 31, 2010, the Company entered into a U.S. credit agreement (the “Agreement”) with American Bank, N.A. (the “Lender”) which established a $1,000,000 line of credit (the “Line”). On March 1, 2012, the Company entered into the first amendment to the Agreement with the Lender which increased the Line from $1,000,000 to $2,000,000 and extended the maturity date from July 1, 2012 to October 15, 2013. Under the terms of the Agreement, the amount the Company is entitled to borrow under the Line is subject to a borrowing base, which is based on the loan value of the collateral pledged to the Lender to secure the indebtedness owing to the Lender by the Company. Amounts advanced under the line of credit bear interest at a variable rate equal to one percent per annum point above the Wall Street Journal Prime Rate as such prime rate changes from time to time, with a minimum floor rate of 5.50%. At March 31, 2013, the Company was not utilizing the Line.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
European Operation
On March 20, 2007, our subsidiary, TPT, entered into a short-term credit facility (the “Credit Facility”) with Rabobank which increased TPT’s line of credit from €650,000 to €1,100,000. The Credit Facility was renewed on January 1, 2010 and has no stated maturity date. The Credit Facility, which has a variable interest rate of bank prime plus 2.8% (currently at 3.418%), is secured by TPT’s accounts receivable and inventory. At March 31, 2013, TPT had utilized €755,000 ($966,000) of its short-term credit facility.
TPT’s loan agreements covering both the Credit Facility and the term loans include subjective acceleration clauses that allow Rabobank to accelerate payment if, in the judgment of the bank, there are adverse changes in our business. We believe that such subjective acceleration clauses are customary in the Netherlands for such borrowings. However, if demand is made by Rabobank, we may be unable to refinance the demanded indebtedness, in which case the bank could foreclose on the assets of TPT.
Asian Operation
On May 21, 2012, our subsidiary, TMM, amended its banking facility with HSBC Bank Malaysia Berhad (“HSBC”) to extend the maturity date from April 30, 2012 to April 30, 2013. The HSBC facility includes the following in Malaysian Ringgits (“RM”): (1) overdraft of RM 500,000; (2) an import/export line (“ECR”) of RM 6,460,000; (3) a foreign exchange contract limit of RM 5,000,000 ($162,000, $2,089,000 and $1,617,000, respectively).
On April 17, 2013, TMM amended its banking facility with RHB Bank Berhad (“RHB”) to extend the maturity date to March 24, 2014 and grant a Multi-Trade Line of RM 5,000,000 ($1,617,000). In addition, the RHB facility includes the following: (1) an overdraft line of credit up to RM 1,000,000; (2) an ECR of RM 9,300,000; (3) a bank guarantee of RM 1,200,000; and (4) a foreign exchange contract limit of RM 25,000,000 ($323,000, $3,008,000, $388,000 and $8,085,000, respectively). At March 31, 2013, the outstanding balance on the line of credit was RM 700,000 ($226,000) at a current interest rate of 4.83% and RM 9,181,000 ($2,970,000) was outstanding on the foreign exchange contract at a current interest rate of 2.80%.
The banking facilities with both HSBC and RHB bear an interest rate on the overdraft facilities at 1.25% over bank prime and the ECR facilities bear interest at 1.0% above the funding rate stipulated by the Export-Import Bank of Malaysia Berhad. The ECR, a government supported financing arrangement specifically for exporters, is used by TMM for short-term financing of up to 180 days against customers’ and inter-company shipments. At March 31, 2013, the outstanding balance on the ECR facilities was RM 2,926,000 ($946,000) at a current interest rate of 5.0%.
The borrowings under both the HSBC and the RHB short term credit facilities are subject to certain subjective acceleration covenants based on the judgment of the banks and a demand provision that provide that the banks may demand repayment at any time. We believe such a demand provision is customary in Malaysia for such facilities. The loan agreements are secured by TMM’s property, plant and equipment. However, if demand is made by HSBC or RHB, we may be unable to refinance the demanded indebtedness, in which case, the lenders could foreclose on the assets of TMM. The credit facilities prohibit TMM from paying dividends and the HSBC facility further prohibits loans to related parties without the prior consent of HSBC.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 3. |
Fair Value Measurements |
The following table presents the Company’s financial assets and financial liabilities that are measured and recognized at fair value on a recurring basis, classified under the appropriate level of fair value hierarchy, as of March 31, 2013 and March 31, 2012. The Company did not hold any non-financial assets and/or non-financial liabilities subject to fair value measurements at March 31, 2013 or March 31, 2012.
|
March 31, 2013 |
|||||||
(In thousands) |
Balance at |
Quoted Prices in Active |
Significant Other Observable Inputs |
Significant |
||||
Asset for foreign currency |
$ |
21 |
$ |
- |
$ |
21 |
$ |
- |
|
|
|
|
|
||||
|
March 31, 2012 |
|||||||
(In thousands) |
Balance at |
Quoted Prices in Active |
Significant Other Observable Inputs |
Significant |
||||
Liability for foreign
currency |
$ |
(7) |
$ |
- |
$ |
(7) |
$ |
- |
Our foreign currency derivative financial instruments mitigate foreign exchange risks and include forward contracts.
The fair value of the Company’s debt is based on estimates using standard pricing models and Level 2 inputs that take into account the present value of future cash flows as of the balance sheet date. The computation of the fair value of these instruments is generally performed by the Company. The carrying amounts and estimated fair values of the Company’s long-term debt, including current maturities, are summarized below:
|
March 31, 2013 |
|
December 31, 2012 |
|||||
(In thousands) |
|
Carrying |
|
Fair |
|
Carrying |
|
Fair |
Long-term debt, including current portion |
$ |
3,543 |
$ |
3,489 |
$ |
3,518 |
$ |
3,455 |
The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, trade receivables, payables and accrued liabilities, accrued income taxes and short-term borrowings approximate fair value due to the short term nature of these instruments. Accordingly, these items have been excluded from the above table.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 4. |
Capital Leases |
On August 1, 2010, the Company entered into a financial lease agreement with Dell Financial Services for new computer servers. The cost of the equipment under the capital lease, in the amount of $19,093, is included in the consolidated balance sheets as property, plant and equipment. Accumulated amortization of the leased equipment at March 31, 2013 was approximately $20,000. The capital lease is in the amount of $20,698 including interest of $1,605 (implicit interest rate 5.3%). The lease term is 36 months with equal monthly installments of $575. The net present value of the lease at March 31, 2013 was $2,000.
On September 4, 2011, TPT entered into a financial lease agreement with Diependael Leasing, BV for equipment related to the production of ALUPREM. The cost of the equipment under the capital lease, in the amount of €38,360 ($49,108), is included in the consolidated balance sheets as property, plant and equipment. Accumulated amortization of the leased equipment at March 31, 2013 was approximately €19,000 ($24,324). The capital lease is in the amount of €41,256 ($52,816) including interest of €2,896 ($3,707) (implicit interest rate 4.786%). The lease term is 36 months with equal monthly installments of €1,146 ($1,529). The net present value of the lease at March 31, 2013 was €18,800 ($24,000).
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 5. |
Calculation of Basic and Diluted Earnings per Share |
The following table sets forth the computation of basic and diluted earnings per share:
(in thousands, except per share amounts) |
Three Months |
|||
2013 |
|
2012 |
||
Numerator: |
||||
Net Income (Loss) |
$ |
(75) |
$ |
1,396 |
Numerator
for basic earnings per share - |
(75) |
1,396 |
||
Effect of dilutive securities: |
||||
6% Convertible Debenture Interest Expense |
- |
22 |
||
Numerator for diluted
income per share - |
$ |
(75) |
$ |
1,418 |
Denominator: |
||||
Denominator for basic income per share - weighted-average shares |
2,987 |
2,402 |
||
Effect of dilutive securities: |
||||
Employee stock options |
- |
36 |
||
Detachable warrants |
- |
454 |
||
6% Convertible Debenture |
- |
547 |
||
Dilutive potential common shares |
- |
1,037 |
||
Denominator
for diluted income per share - |
2,987 |
3,439 |
||
Basic income (loss) per common share |
$ |
(0.03) |
$ |
0.58 |
Diluted income (loss) per common share |
$ |
(0.03) |
$ |
0.41 |
For the three month period ended March 31, 2013, approximately 174,000 stock options and 528,000 warrants were excluded from the calculation of diluted earnings per share as the effect would be antidilutive.
For the three month period ended March 31, 2012, approximately 24,000 stock options were excluded from the calculation of diluted earnings per share as the exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 6. |
Segment Information |
The Company and its subsidiaries operate in the business of pigment manufacturing and related products in three geographic segments. All United States manufacturing is done at the facility located in Corpus Christi, Texas. Foreign manufacturing is done by the Company’s wholly-owned subsidiaries, TMM, located in Malaysia, and TPT, located in the Netherlands. A summary of the Company’s manufacturing operations by geographic area is presented below:
(In thousands) |
United States |
Europe |
Asia |
Inter-Company |
Consolidated |
|||||
As of and for the three months ended: |
||||||||||
March 31, 2013 |
||||||||||
Net Sales: |
||||||||||
Customer sales |
$ |
7,712 |
$ |
2,478 |
$ |
1,237 |
$ |
- |
$ |
11,427 |
Intercompany sales |
56 |
1,675 |
2,333 |
(4,064) |
- |
|||||
Total Net Sales |
$ |
7,768 |
$ |
4,153 |
$ |
3,570 |
$ |
(4,064) |
$ |
11,427 |
Location profit |
$ |
47 |
$ |
219 |
$ |
(398) |
$ |
57 |
$ |
(75) |
Location assets |
$ |
20,690 |
$ |
10,870 |
$ |
23,568 |
$ |
- |
$ |
55,128 |
March 31, 2012 |
||||||||||
Net Sales: |
||||||||||
Customer sales |
$ |
8,539 |
$ |
2,187 |
$ |
2,082 |
$ |
- |
$ |
12,808 |
Intercompany sales |
41 |
1,604 |
4,263 |
(5,908) |
- |
|||||
Total Net Sales |
$ |
8,580 |
$ |
3,791 |
$ |
6,345 |
$ |
(5,908) |
$ |
12,808 |
Location profit |
$ |
885 |
$ |
257 |
$ |
387 |
$ |
(133) |
$ |
1,396 |
Location assets |
$ |
19,729 |
$ |
10,811 |
$ |
21,491 |
$ |
- |
$ |
52,031 |
Product sales of inventory between Corpus Christi, TPT and TMM are based on inter-company pricing, which includes an inter-company profit margin. In the geographic information, the location loss from all locations is reflective of these inter-company prices, as is inventory at the Corpus Christi location prior to elimination adjustments. Such presentation is consistent with the internal reporting reviewed by the Company’s chief operating decision maker. The elimination entries include an adjustment to the cost of sales resulting from the adjustment to ending inventory to eliminate inter-company profit, and the reversal of a similar adjustment from a prior period. To the extent there are net increases/declines period over period in Corpus Christi inventories that include an inter-company component, the net effect of these adjustments can decrease/increase location profit.
Sales from a subsidiary to the U.S. parent company and between subsidiaries are based upon profit margins which represent competitive pricing of similar products. Intercompany sales consisted of SR, HITOX, ALUPREM and TIOPREM.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 7. |
Stock Options and Equity Compensation Plan |
For the three month periods ended March 31, 2013 and 2012, the Company recorded stock-based employee compensation expense of approximately $16,000 and $6,000, respectively. This compensation expense is included in the selling, general and administrative expenses in the accompanying consolidated statements of operations.
No options were granted during the three month periods ended March 31, 2013 and 2012.
As of March 31, 2013, there was approximately $279,000 of stock-based employee compensation expense related to non-vested awards which is expected to be recognized over a weighted average period of 3.4 years.
As most options issued under the Plan are Incentive Stock Options, the Company does not normally receive significant excess tax benefits relating to the compensation expense recognized on vested options.
Note 8. |
Inventories |
A summary of inventory follows:
(In thousands) |
|
|
|
March 31, |
|
December 31, |
||
|
|
|
2013 |
|
2012 |
|||
Raw materials |
$ |
14,180 |
$ |
14,002 |
||||
Work in progress |
2,484 |
2,848 |
||||||
Finished goods |
5,492 |
5,238 |
||||||
Supplies |
915 |
868 |
||||||
Total Inventories |
23,071 |
22,956 |
||||||
Inventory reserve |
(73) |
(61) |
||||||
Net Inventories |
$ |
22,998 |
$ |
22,895 |
|
|
The Company has exposure to certain risks relating to our ongoing business operations, including financial, market, political and economic risks. The following discussion provides information regarding our exposure to the risks of changes in foreign currency exchange rates. The Company has not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. The foreign exchange contracts are used to mitigate uncertainty and volatility, and to cover underlying exposures.
Foreign Currency Forward Contracts
We manage the risk of changes in foreign currency exchange rates, primarily at our Malaysian operation, through the use of foreign currency contracts. Foreign exchange contracts are used to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies, including sales and purchases transacted in a currency other than the functional currency, will be adversely affected by changes in exchange rates. We report the fair value of the derivatives on our consolidated balance sheet and changes in the fair value are recognized in earnings in the period of the change.
TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
At March 31, 2013, we marked these contracts to market, recording a net gain of approximately $21,000, as a component of our year to date net income and as a current asset on the consolidated balance sheet. At March 31, 2012, we marked these contracts to market, recording an expense of approximately $7,000 as a component of our year to date net income and as a current liability on the consolidated balance sheet.
The following table summarizes the gross fair market value of all derivative instruments, which are not designated as hedging instruments and their location in our Condensed Consolidated Balance Sheet:
(In thousands) |
||||||
Asset Derivatives |
||||||
|
|
March 31, |
|
December 31, |
||
Derivative Instrument |
|
Location |
|
2013 |
|
2012 |
Foreign Currency Exchange Contracts |
Other Current Assets |
$ |
21 |
$ |
- |
|
|
|
|
|
|
|
|
Liability Derivatives |
||||||
|
|
March 31, |
|
December 31, |
||
Derivative Instrument |
|
Location |
|
2013 |
|
2012 |
Foreign Currency Exchange Contracts |
Accrued Expenses |
$ |
- |
$ |
1 |
The following
table summarizes the impact of the Company’s derivatives on the condensed
consolidated financial statements of income for the quarters ended March 31, 2013
and 2012:
|
|
|
Amount of Gain (Loss) Recognized in Income |
|||
|
Location of Gain |
|
Three Months Ended |
|||
Derivative |
|
(Loss) on Derivative |
|
March 31, |
||
Instrument |
|
Instrument |
|
2013 |
|
2012 |
Foreign Currency |
Other Expense: |
$ |
21 |
$ |
(7) |
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
Company Overview
We are a global specialty chemical company engaged in the business of manufacturing and marketing mineral products for use as pigments, pigment extenders, engineered fillers and flame retardants used in the manufacture of paints, industrial coatings, plastics, and catalysts applications. We have operations in the United States, Asia and Europe.
Our U.S. operation, located in Corpus Christi, Texas, manufactures HITOX®, BARTEX®, HALTEX®/OPTILOAD® and TIOPREM®. The facility is also the global headquarters for the Company. The Asian operation, located in Ipoh, Malaysia, manufactures SR, HITOX and TIOPREM and our European operation, located in Hattem, Netherlands, manufactures Alumina based products and BARYPREM®.
Operating expenses in the foreign locations are primarily in local currencies. Accordingly, we have exposure to fluctuation in foreign currency exchange rates. These fluctuations impact the translation of sales, earnings, assets and liabilities from local currency to the U.S. Dollar.
Our business is closely correlated with the construction industry and its demand for materials that use pigments, such as paints and plastics. This has generally led to higher sales in our second and third quarters due to increases in construction and maintenance during warmer weather. Also, pigment consumption is closely correlated with general economic conditions. When the economy is in an expansionary state, there is typically an increase in pigment consumption while a slow down typically results in decreased pigment consumption. When the construction industry or the economy is in a period of decline, TOR's sales and profit are likely to be adversely affected.
Following are our results for the three month periods ended March 31, 2013 and 2012.
(Unaudited) |
||||
(In thousands, except per share amounts) |
|
Three Months |
||
|
|
2013 |
|
2012 |
NET SALES |
$ |
11,427 |
$ |
12,808 |
Cost of sales |
9,933 |
9,618 |
||
GROSS MARGIN |
|
1,494 |
|
3,190 |
Technical services and research and development |
153 |
82 |
||
Selling, general and administrative expenses |
1,278 |
1,224 |
||
Loss on disposal of assets |
10 |
- |
||
OPERATING INCOME |
|
53 |
|
1,884 |
OTHER EXPENSE: |
||||
Interest expense |
(84) |
(142) |
||
(Loss) gain on foreign currency exchange rate |
(87) |
23 |
||
Other, net |
12 |
- |
||
INCOME (LOSS) BEFORE INCOME TAX |
|
(106) |
|
1,765 |
Income tax (benefit) expense |
(31) |
369 |
||
NET INCOME (LOSS) |
$ |
(75) |
$ |
1,396 |
|
|
|
|
|
Income (loss) per common share: |
||||
Basic |
$ |
(0.03) |
$ |
0.58 |
Diluted |
$ |
(0.03) |
$ |
0.41 |
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net Sales: Consolidated net sales for the quarter ended March 31, 2013 decreased approximately $1,381,000 or 11% as compared to the first quarter 2012. The quarterly decrease consists of a decrease in volume and selling price of 10% and 1%, respectively. This compares to an increase of approximately $3,223,000 or 34% during the first quarter 2012 consisting of an increase in volume and selling price of 13% and 21%, respectively.
Following is a summary of our consolidated products sales for the three month periods ended March 31, 2013 and 2012 (in thousands). In the following table, BARYPREM sales have been separated from ALUPREM. As a result, the 2012 ALUPREM sales have been reduced by the sales of BARYPREM to make the comparisons more meaningful. All inter-company sales have been eliminated.
(Unaudited) |
|||||||||
Three Months Ended March 31, |
|||||||||
Product |
2013 |
2012 |
Variance |
||||||
HITOX |
$ |
4,039 |
35% |
$ |
5,368 |
42% |
$ |
(1,329) |
-25% |
ALUPREM |
3,887 |
34% |
3,864 |
30% |
23 |
1% |
|||
BARTEX / BARYPREM |
1,885 |
17% |
1,743 |
14% |
142 |
8% |
|||
HALTEX / OPTILOAD |
847 |
7% |
878 |
7% |
(31) |
-4% |
|||
TIOPREM |
580 |
5% |
336 |
3% |
244 |
73% |
|||
SYNTHETIC RUTILE |
- |
0% |
431 |
3% |
(431) |
-100% |
|||
OTHER |
189 |
2% |
188 |
1% |
1 |
1% |
|||
Total |
$ |
11,427 |
100% |
$ |
12,808 |
100% |
$ |
(1,381) |
-11% |
HITOX sales decreased 25% for the three month period ended March 31, 2013 primarily related to a worldwide decrease in volume. Volume and pricing of HITOX continue to be affected by weakness in the broader market for TiO2 as both producers and consumers continued to reduce their inventories. We believe this de-stocking activity will continue to affect our volumes for the next several quarters. This compares to an increase in HITOX sales of 33% during the three month period ended March 31, 2012, which was primarily related to a global increase in the average selling price of approximately 43%. During the first quarter of 2012, increased selling prices were partially offset by a reduction in volume of approximately 10% primarily related to a reduction in Asia.
ALUPREM sales increased 1% during the first quarter of 2013 primarily due to an increase in volume for European sales which was partially offset by a decrease in European selling price and a decrease in volume of U.S. ALUPREM sales resulting in an overall increase in volume of 10% and a decrease in selling price of 9%. This compares to an increase of 23% during the first three months of 2012 which was primarily due to an increase in volume of a significant U.S. customer and partially offset by a decrease in volume in European sales as this business is being affected by the slowdown in the European economy.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
BARTEX/BARYPREM sales increased approximately 8% during the first three months of 2013 primarily due to an increase in selling price of 9% which was partially offset by a decrease in volume of 1%. European product sales increased in both volume and selling price and sales in the U.S. experienced an increase in selling price which was partially offset by a decrease in volume. During the first quarter of 2012, BARTEX/BARYPREM sales increased approximately 61% primarily due to an increase in volume and selling price of approximately 52% and 9%, respectively.
HALTEX / OPTILOAD sales decreased 4% primarily due to the mix of products sold resulting in a lower selling price of 4%. For the first three months of 2012, HALTEX sales increased 15%.
TIOPREM sales increased 73% during the three month period ended March 31, 2013 primarily due to an increase in volume and selling price of 61% and 12%, respectively. During the three month period ended March 31, 2012, TIOPREM sales increased 17% primarily due to a decrease in volume which was partially offset by an increase in selling price.
Synthetic Rutile (“SR”) sales represented 3% of the overall sales for the three month period ended March 31, 2012 as favorable market trends during 2012 allowed us to sell a significant quantity of SR to new customers; whereas, during the first quarter of 2013, we did not sell any SR to third parties as a result of weak market conditions.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Corpus Christi Operation
Our Corpus Christi operation manufactures and sells HITOX, BARTEX, HALTEX/OPTILOAD and TIOPREM to third party customers. In addition, we purchase ALUPREM and HITOX from our subsidiaries, TPT and TMM, for distribution in the Americas. Following is a summary of net sales for our Corpus Christi operation for the three month periods ended March 31, 2013 and 2012 (in thousands), as well as a summary of the material changes. All inter-company sales have been eliminated.
(Unaudited) |
|||||||||
Three Months Ended March 31, |
|||||||||
Product |
2013 |
2012 |
Variance |
||||||
HITOX |
$ |
2,600 |
34% |
$ |
3,396 |
40% |
$ |
(796) |
-23% |
ALUPREM |
2,189 |
28% |
2,431 |
29% |
(242) |
-10% |
|||
BARTEX |
1,479 |
19% |
1,439 |
17% |
40 |
3% |
|||
HALTEX / OPTILOAD |
847 |
11% |
878 |
10% |
(31) |
-4% |
|||
TIOPREM |
439 |
6% |
211 |
2% |
228 |
108% |
|||
OTHER |
158 |
2% |
184 |
2% |
(26) |
-14% |
|||
Total |
$ |
7,712 |
100% |
$ |
8,539 |
100% |
$ |
(827) |
-10% |
HITOX sales in decreased 23% for the three month period ended March 31, 2013 primarily due to a decrease in volume and selling price of 22% and 1%, respectively. HITOX sales volume continues to be affected by a weakness in the broader market for TiO2 products as both producers and consumers continued to reduce their inventories. We believe this de-stocking activity will continue to affect our volumes for the next several quarters. During the first quarter 2012, HITOX sales increased 51% primarily due to an increase in selling price and volume of 48% and 3%, respectively.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Netherlands Operation
Our subsidiary in the Netherlands, TPT, manufactures and sells ALUPREM to third party customers, as well as to our Corpus Christi operation for distribution to our U.S. customers. In addition, TPT purchases HITOX from TMM for distribution in Europe. The following table represents TPT’s ALUPREM and HITOX sales (in thousands) for the three month periods ended March 31, 2013 and 2012 to third party customers. All inter-company sales have been eliminated.
In the following table, BARYPREM sales have been separated from ALUPREM. As a result, the 2012 ALUPREM sales have been reduced by the sales of BARYPREM to make the comparison more meaningful.
(Unaudited) |
|||||||||
Three Months Ended March 31, |
|||||||||
Product |
2013 |
2012 |
Variance |
||||||
ALUPREM |
$ |
1,698 |
69% |
$ |
1,433 |
65% |
$ |
265 |
18% |
HITOX |
350 |
14% |
437 |
20% |
(87) |
-20% |
|||
BARYPREM |
406 |
16% |
304 |
14% |
102 |
34% |
|||
TIOPREM |
24 |
1% |
13 |
1% |
11 |
85% |
|||
Total |
$ |
2,478 |
100% |
$ |
2,187 |
100% |
$ |
291 |
13% |
ALUPREM sales in Europe increased 18% during the first three months of 2013 primarily due to an increase in volume of approximately 43% as market conditions appear to have stabilized. This increase in volume was partially offset by a decrease in selling price of approximately 26% and the positive impact of the foreign currency exchange fluctuations of 1%. This compares to a decreased 21% during the first quarter of 2012 which was related to a reduction in volume of approximately 24% and was partially offset by an increase in selling price of approximately 2% and the positive impact of the foreign currency exchange fluctuations of 1%
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Malaysian Operation
Our subsidiary in Malaysia, TMM, manufactures and sells HITOX and SR to third party customers, as well as to our Corpus Christi operation and TPT. The following table represents TMM’s sales (in thousands) for the three month periods ended March 31, 2013 and 2012 to third party customers. All inter-company sales have been eliminated.
(Unaudited) |
|||||||||
Three Months Ended March 31, |
|||||||||
Product |
2013 |
2012 |
Variance |
||||||
HITOX |
$ |
1,089 |
88% |
$ |
1,535 |
74% |
$ |
(446) |
-29% |
TIOPREM |
117 |
10% |
112 |
5% |
5 |
4% |
|||
SYNTHETIC RUTILE |
- |
0% |
431 |
21% |
(431) |
-100% |
|||
OTHER |
31 |
2% |
4 |
<1% |
27 |
675% |
|||
Total |
$ |
1,237 |
100% |
$ |
2,082 |
100% |
$ |
(845) |
-41% |
HITOX sales in Asia decreased 29% during the three month period ended March 31, 2013 primarily related to a decrease in volume. HITOX sales volume continues to be affected by a weakness in the broader market for TiO2 products as both producers and consumers continued to reduce their inventories. We believe this de-stocking activity will continue to affect our volumes for the next several quarters. For the first three months of 2012, sales in Asia increased 7% primarily due to an increase in selling price of 38% which was partially offset by a decrease in volume of 31%.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Other Consolidated Results
Gross Margin: The following table represents our net sales, cost of sales and gross margin for the three month periods ended March 31, 2013 and 2012.
(Unaudited) |
||||
(In thousands) |
|
Three Months |
||
|
|
2013 |
|
2012 |
NET SALES |
$ |
11,427 |
$ |
12,808 |
Cost of sales |
9,933 |
9,618 |
||
GROSS MARGIN |
$ |
1,494 |
$ |
3,190 |
GROSS MARGIN % |
13.1 % |
24.9 % |
For the three month period ended March 31, 2013, gross margin decreased 11.8% from 24.9% in 2012 to 13.1% in 2013 primarily due to the timing of the plant shutdown at TMM. TMM’s SR plant was shut-down for the entire first quarter to perform necessary maintenance and plant upgrades. The unabsorbed costs associated with the plant shutdown reduced the gross margin by 5.3%. Further impacting the gross margin for the first quarter 2013 was an increase in the cost raw materials of approximately 5.7%. This compares to an increase in the gross margin or 3.1% for the first quarter 2012. The primary factors affecting the first quarter 2012 gross margin include an increase in selling price of 15.7% which was partially offset by an increase in raw material and energy costs of 6.4% and maintenance/production costs of 4.9%.
Selling, General, Administrative and Expenses (“SG&A”): SG&A expenses increased 9.6% for the three month period ended March 31, 2013 primarily due to an increase in staff and salaries; as compared to an increase of 6.6% the same quarter of 2012 primarily due to an increase in selling expenses of 39.3% and professional fees and services of 51.4% which were partially offset by a decrease in salaries of 7.4%.
Interest Expense: Net interest expense decreased $58,000 in the first quarter of 2013 primarily due to a decrease in long-term debt. This follows an increase of approximately $46,000 during the same three month period of 2012 primarily due to an increase in short-term financing.
Income Taxes: Income taxes consisted of federal and state income tax expense of approximately $40,000 and $2,000, respectively, and foreign tax benefit of approximately $73,000 for the three month period ended March 31, 2013, compared to federal and state income tax expense of approximately $296,000 and $2,000, respectively, and foreign tax expense of approximately $71,000 for the same three month period in 2012. Taxes are based on an estimated annualized consolidated effective rate of 29.2% for the year ended December 31, 2013.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity, Capital Resources and Other Financial Information
Long-term Debt – Financial Institutions
Following is a summary of our long-term debt to financial institutions:
(Unaudited) |
||||
(In thousands) |
March 31, |
December 31, |
||
2013 |
2012 |
|||
Fixed Rate term note payable to a U.S. bank, with an interest rate of 6.65% at March 31, 2013, due January 1, 2016, secured by real estate, leasehold improvements, property, plant and equipment, inventory and accounts receivable of our U.S. operation. |
$ |
1,212 |
$ |
1,309 |
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 7.8% at March 31, 2013, due July 1, 2029, secured by TPT's land and office building purchased July 2004. (€270) |
346 |
363 |
||
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.3% at March 31, 2013, due January 31, 2030, secured by TPT's land and building purchased January 2005. (€295) |
377 |
395 |
||
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 4.05% at March 31, 2013, due July 31, 2015, secured by TPT's assets. (€96) |
123 |
143 |
||
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 4.25% at March 31, 2013, due July 5, 2014, secured by TPT's assets. (€276) |
353 |
442 |
||
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate of 5.2% at March 31, 2013, due March 1, 2015, secured by TMM's property, plant and equipment. (RM 3,500) |
1,132 |
866 |
||
Total |
3,543 |
3,518 |
||
Less current maturities |
1,192 |
1,202 |
||
Total long-term debt and notes payable - financial institutions |
$ |
2,351 |
$ |
2,316 |
Short-term Debt
U.S. Operation
On December 31, 2010, the Company entered into a U.S. credit agreement (the “Agreement”) with American Bank, N.A. (the “Lender”) which established a $1,000,000 line of credit (the “Line”). On March 1, 2012, the Company entered into the first amendment to the Agreement with the Lender which increased the Line from $1,000,000 to $2,000,000 and extended the maturity date from July 1, 2012 to October 15, 2013. Under the terms of the Agreement, the amount the Company is entitled to borrow under the Line is subject to a borrowing base, which is based on the loan value of the collateral pledged to the Lender to secure the indebtedness owing to the Lender by the Company. Amounts advanced under the line of credit bear interest at a variable rate equal to one percent per annum point above the Wall Street Journal Prime Rate as such prime rate changes from time to time, with a minimum floor rate of 5.50%. At March 31, 2013, the Company was not utilizing the Line.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
European Operation
On March 20, 2007, our subsidiary, TPT, entered into a short-term credit facility (the “Credit Facility”) with Rabobank which increased TPT’s line of credit from €650,000 to €1,100,000. The Credit Facility was renewed on January 1, 2010 and has no stated maturity date. The Credit Facility, which has a variable interest rate of bank prime plus 2.8% (currently at 3.418%), is secured by TPT’s accounts receivable and inventory. At March 31, 2013, TPT had utilized €755,000 ($966,000) of its short-term credit facility.
TPT’s loan agreements covering both the Credit Facility and the term loans include subjective acceleration clauses that allow Rabobank to accelerate payment if, in the judgment of the bank, there are adverse changes in our business. We believe that such subjective acceleration clauses are customary in the Netherlands for such borrowings. However, if demand is made by Rabobank, we may be unable to refinance the demanded indebtedness, in which case the bank could foreclose on the assets of TPT.
Asian Operation
On May 21, 2012, our subsidiary, TMM, amended its banking facility with HSBC Bank Malaysia Berhad (“HSBC”) to extend the maturity date from April 30, 2012 to April 30, 2013. The HSBC facility includes the following in Malaysian Ringgits (“RM”): (1) overdraft of RM 500,000; (2) an import/export line (“ECR”) of RM 6,460,000; (3) a foreign exchange contract limit of RM 5,000,000 ($162,000, $2,089,000 and $1,617,000, respectively).
On April 17, 2013, TMM amended its banking facility with RHB Bank Berhad (“RHB”) to extend the maturity date to March 24, 2014 and grant a Multi-Trade Line of RM 5,000,000 ($1,617,000). In addition, the RHB facility includes the following: (1) an overdraft line of credit up to RM 1,000,000; (2) an ECR of RM 9,300,000; (3) a bank guarantee of RM 1,200,000; and (4) a foreign exchange contract limit of RM 25,000,000 ($323,000, $3,008,000, $388,000 and $8,085,000, respectively). At March 31, 2013, the outstanding balance on the line of credit was RM 700,000 ($226,000) at a current interest rate of 4.83% and RM 9,181,000 ($2,970,000) was outstanding on the foreign exchange contract at a current interest rate of 2.80%.
The banking facilities with both HSBC and RHB bear an interest rate on the overdraft facilities at 1.25% over bank prime and the ECR facilities bear interest at 1.0% above the funding rate stipulated by the Export-Import Bank of Malaysia Berhad. The ECR, a government supported financing arrangement specifically for exporters, is used by TMM for short-term financing of up to 180 days against customers’ and inter-company shipments. At March 31, 2013, the outstanding balance on the ECR facilities was RM 2,926,000 ($946,000) at a current interest rate of 5.0%.
The borrowings under both the HSBC and the RHB short term credit facilities are subject to certain subjective acceleration covenants based on the judgment of the banks and a demand provision that provide that the banks may demand repayment at any time. We believe such a demand provision is customary in Malaysia for such facilities. The loan agreements are secured by TMM’s property, plant and equipment. However, if demand is made by HSBC or RHB, we may be unable to refinance the demanded indebtedness, in which case, the lenders could foreclose on the assets of TMM. The credit facilities prohibit TMM from paying dividends and the HSBC facility further prohibits loans to related parties without the prior consent of HSBC.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Cash and Cash Equivalents
As noted on the following table, cash and cash equivalents decreased $541,000 from December 31, 2012 to March 31, 2013 as compared to a decrease of $495,000 from December 31, 2011 to March 31, 2012.
(Unaudited) |
||||
Three Months Ended March 31, |
||||
(In thousands) |
|
2013 |
|
2012 |
Net cash provided by (used in) |
||||
Operating activities |
$ |
(1,955) |
$ |
1,246 |
Investing activities |
(1,222) |
(1,315) |
||
Financing activities |
2,710 |
(448) |
||
Effect of exchange rate fluctuations |
(74) |
22 |
||
Net decrease in cash and cash equivalents |
$ |
(541) |
$ |
(495) |
Operating Activities
Operating activities used cash of $1,955,000 during the first three months of 2013 as compared cash provided of $1,246,000 during the first three months of 2012. Following are the major changes in working capital affecting cash provided by operating activities for the three month periods ended March 31, 2013 and 2012:
Inventories: Inventories increased $278,000 during the three month period ended March 31, 2013 primarily due to an increase in raw materials at TMM. Inventory at TMM increased $737,000. A decrease in the raw materials and work in progress inventory at the Corpus Christi operation was partially offset by an increase in finished goods resulting in an overall decrease at the Corpus Christi operation of $303,000. Inventory at TPT decreased $156,000. For the same three month period of 2012, inventories increased $1,588,000 during the three month period ended March 31, 2012 primarily due to an increase in raw materials and finished goods at the Corpus Christi operation of approximately $1,824,000. Inventory at TPT increased $226,000 and decreased $462,000 at TMM.
Other Current Assets: Other current assets decreased $392,000 during the first quarter 2013 primarily due to a decrease in deposits paid by TMM resulting in a decrease of $653,000 and a decrease at the Corpus Christi operation of $67,000. TPT’s increased approximately $328,000 primarily relating to insurance. Other current assets increased $142,000 during the first quarter 2012 primarily due to a raw material deposit paid by TMM of $112,000. TPT’s increased approximately $69,000 and the other current assets at the Corpus Christi operation decreased $39,000.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Investing Activities
We used cash of $1,222,000 in investing activities during the first three months of 2013 primarily for the purchase of fixed assets as compared to $1,315,000 during the same period 2012. Net investments for each of our three locations are as follows:
Financing Activities
Financing activities provided cash of $2,710,000 during the three month period ended March 31, 2013 as compared to $448,000 used in financing activities during the three month period ended March 31, 2012. Significant factors relating to financing activities include the following:
Lines of Credit:
· U.S. Operation: We did not utilize the U.S. line of credit during either of the three month periods ended March 31, 2013 or 2012.
· European Operation: Borrowings on TPT’s line of credit decreased $1,000 as compared to an increase of $534,000 for the same three month period in 2012.
· Asian Operation: TMM’s line of credit increased $2,096,000 during the three month period ended March 31, 2013 as compared to a decrease of $2,077,000 during the first three months of 2012.
Export Credit Refinancing Facility (ECR): TMM’s borrowings on the ECR increased $557,000 during the three month period ended March 31, 2013 and increased $1,159,000 during the same three month period of 2012.
Capital Leases: Capital leases decreased $18,000 during the first quarter 2013 due to lease payments made by the Corpus Christi operation and TPT of $2,000 and $16,000, respectively. During the first quarter 2012, capital leases increased $60,000 at TPT and decreased $3,000 at the Corpus Christi operation.
Long-term Debt:
· U.S. Operation: Our U.S. long-term debt decreased $97,000 for each of the three month periods ended March 31, 2013 and 2012.
· European Operation: TPT’s long-term debt decreased $103,000 and $107,000 for the three month periods ended March 31, 2013 and 2012, respectively.
· Asian Operation: TMM’s long-term debt increased $276,000 for the three month period ended March 31, 2013 and was not utilized during the same three month period of 2012.
Proceeds from the Issuance of Common Stock: During the first quarter of 2012, we received $83,000 related to the exercise of stock options. No proceeds were received from the issuance of common stock during the first three months of 2013.
TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Off-Balance Sheet Arrangements and Contractual Obligations
No material changes have been made to the “Off-Balance Sheet Arrangements and Contractual Obligations” noted in the Company’s 2012 Annual Report on Form 10-K except as noted above.
Item 4. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective (i) to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
During the last fiscal quarter, there were no changes in the Company's internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.
Part II - Other Information
Item 6. |
Exhibits |
(a) |
Exhibits |
|
Exhibit 10.1 |
Amendment to Loan Agreement
with RHB Bank, |
|
Exhibit 31.1 |
Certification of Chief
Executive Officer |
|
Exhibit 31.2 |
Certification of Chief
Financial Officer |
|
Exhibit 32.1 |
Certification of Chief
Executive Officer |
|
Exhibit 32.2 |
Certification of Chief
Financial Officer |
|
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly authorized. |
|
|
|||
____________ |
||||
(Registrant) |
||||
Date: |
May 2, 2013 |
OLAF KARASCH |
||
Date: |
May 2, 2013 |
BARBARA RUSSELL |
||
EXHIBIT 10.1
PRIVATE & CONFIDENTIAL
Date: 25th March 2013
TOR Minerals (M) Sdn Bhd|
4½ Mile, Jalan Lahat,
30200 Ipoh,
Perak.
Attn: Miss Loke Cheong Ching - Accounts Manager
Dear Sirs,
RE: BANKING FACILITIES GRANTED TO TOR MINERALS (M) SDN BHD ("BORROWER")
Further to our Letter of Offer dated 17th April 2008 and 01st June 2011 ("Letters of Offer"), we, RHB Bank Berhad ("the Bank") are pleased to inform you that the Bank has agreed to: -
(i) Renew/extend your existing banking facilities to 25th March 2014;
(ii) Grant an additional Multi Trade Lines facilities of RM5,000,000-00
subject to the following terms and conditions: -
1. THE BANKING FACILITIES
The banking facilities granted or to be granted to you are as follows:
Facility |
Limit/Existing Limit (RM) |
|
Additional/ Reduction (RM) |
|
Total/Revised Limit (RM) |
Overdraft / Revolving Credit |
1,000,000-00 |
- |
1,000,000-00 |
||
Multi-Trade
Line comprising Letter of Credit / Trust Receipt / Bankers Acceptance /
Shipping Guarantee / Bills Purchased / Export Credit Refinancing |
9,300,000-00
|
5,000,000-00 |
14,300,000-00
|
||
Bankers Guarantee |
1,200,000-00 |
- |
1,200,000-00 |
||
Foreign Exchange Contract Line |
25,000,000-00 |
- |
25,000,000-00 |
||
Total |
36,500,000-00 |
|
5,000,000-00 |
|
41,500,000-00 |
(hereinafter referred to as "the Banking Facility" and where the Banking Facility comprises more than one banking facilities, the expression "Banking Facility" shall where the context requires refer collectively to all and individually to each of the respective banking facilities comprising the Banking Facility)
2. PURPOSE
The Banking Facility shall be used for the purpose(s) as set out below and if you require to use the Banking Facility or any part thereof for any other purpose, you shall have to first obtain the Bank's prior written consent:
2.1 Overdraft / Revolving Credit: For working capital.
2.2 Letter of Credit / Trust Receipt / Bankers Acceptance / Bills Purchased / Export Credit Refinancing / Foreign Currency Trade Financing / Promissory Notes:
For trade financing.
2.3 Shipping Guarantee: For issuance of shipping guarantees to secure the release of goods imported under the Bank's Letter of Credit / Collections.
2.4 Bankers Guarantee: As security / tender deposit and performance bond favoring government / statutory bodies and private companies acceptable to the Bank.
2.5 Foreign Exchange Contract Line: To hedge against fluctuations in foreign exchange rates for trade related transactions and other transactions as approved by Bank Negara Malaysia. The Foreign Exchange Contracts concluded with the Bank include spot, value today, value tomorrow and forward foreign exchange contract.
3. AVAILABILITY PERIOD
3.1 The granting of the Banking Facility to you is at all times subject to availability of funds.
4. TENOR
4.1 The Banking Facility is subject to periodic review at the sole and absolute discretion of the Bank but notwithstanding such periodic review, the Banking Facility shall be repayable on demand.
5. INTEREST RATE(S) / COMMISSION / BANKING CHARGES / COMMITMENT FEES / OTHER CHARGES
5.1 You shall pay interest, commission, discount charges and any other charges payable in relation to the Banking Facility at the following rates: -
Facility |
Interest Rate |
|
Overdraft |
: |
Interest at one point two five per centum (1.25%) per annum above the Bank's BLR with monthly rests. |
Revolving Credit |
: |
Interest
at one point two five per centum (1.25%) per annum above the Bank's Cost of
Funds. |
Letter of Credit |
: |
Commission at zero point one per centum (0.1%) on the amount of the Letter of Credit for each month (or part of a month) of validity of the credit subject to a minimum charge of RM50-00 for each Letter of Credit issued or at such other rate as may be stipulated by the Association of Banks of Malaysia from time to time. |
Trust Receipt |
: |
Interest at one point two five per centum (1.25%) per annum above the Bank's BLR. |
Bankers Acceptance |
: |
Acceptance commission of one point zero per centum (1.00%) per annum above the Bank's Cost of Funds. |
Export Credit Refinancing (Pre & Post Shipment) |
: |
Interest at one point zero per centum (1.0%) per annum above the Funding Rate stipulated by Export-Import Bank of Malaysia Berhad ("EXIM Bank"). |
Bills Purchased |
: |
Interest at one point two five per centum (1.25%) per annum above the Bank's BLR for local currency bills and at the rate of one point two five per centum (1.25%) per annum above the Bank's Effective Cost of Funds for foreign currency bills. |
Shipping Guarantee |
: |
Commission at zero point one per centum (0.1%) on the amount of each guarantee subject to a minimum charge of RM100-00 for each guarantee issued. If the guarantee is not returned to the Bank within three (3) months from the issue date, an additional commission of zero point six per centum (0.6%) per annum on the amount of the guarantee shall be charged up to the date of return of the guarantee. |
Bankers Guarantee |
: |
Commission at one point zero per centum (1.0%) per annum on the amount of the guarantee for the full liability period (inclusive of the claims period) subject to a minimum charge of RM100-00 for each Bankers Guarantee issued. |
Foreign
Exchange |
: |
Rate as quoted by Treasury. |
["BLR" means the Bank's Base Lending Rate, which is currently at six point six per centum (6.6%) per annum.]
5.2 Interest and commission at the aforesaid rates ("the Prescribed Rate" which expression shall refer to the respective interest rates and commission chargeable on the respective facilities comprised under the Banking Facility) shall be payable by you, as well after as before judgment or demand.
5.3 You shall pay the Bank a commitment fee of one per centum (1%) per annum or such other rate as the Bank may at its sole and absolute discretion stipulate from time to time: -
5.3.1 on the portion of the Overdraft Facility as shall be unutilized by you up to the aggregate approved limit at any time and from time to time, commencing from the date when the Overdraft Facility is made available to you for utilization;
5.3.2 on the portion of the Revolving Credit Facility as shall be unutilized by you up to the aggregate approved limit at any time and from time to time commencing from the date when the Revolving Credit Facility is made available to you for utilization;
and the Bank shall be entitled to debit the commitment fee into your current or overdraft or any other account at the end of each month.
5.4 You shall pay the Bank an extension fee of RM1,000.00 within thirty (30) days, which fee shall be automatically debited from your current account upon acceptance of this Letter of Offer and will not be reimbursed even in the event that you cancel the Banking Facility.
6. INCREASED RATE OF INTEREST ON DEFAULT/EXCESS AMOUNT
In addition and without prejudice to the rights and remedies of the Bank, if you shall default in the payment of any sums on their respective due dates you shall pay interest on such overdue sums at the rate of 3.5% per annum above the Bank's Base Lending Rate or such other rate or rates as the Bank may, at its sole absolute discretion, at any time and from time to time, impose without notice to you, and such rate or rates of interest ("the Default Rate") shall be payable by you, as well after as before judgment or demand, from the due date up to the date of actual repayment.
7. REPAYMENT
Notwithstanding any provisions to the contrary, the Banking Facility shall be payable on demand. Until a demand for repayment is made, you shall repay the Banking Facility as follows: -
Facility |
Repayment Terms |
|
Overdraft |
: |
Upon demand or expiry of tenor. |
Revolving Credit |
: |
On the last day of each Interest Period. |
Letters of Credit |
: |
Upon maturity of term of the respective Letters of Credit. |
Trust Receipt |
: |
Upon maturity of term of the respective Trust Receipts. |
Bankers Acceptance |
: |
Upon maturity of term of the respective Bankers Acceptances. |
Bills Purchased |
Upon maturity of term of each drawing |
|
Export Credit Refinancing |
: |
Upon maturity of term of each drawing. |
Foreign Currency Trade Financing |
: |
On demand |
Promissory Notes |
On demand |
|
Shipping Guarantee |
: |
On demand. |
Bankers Guarantee |
: |
On demand. |
Foreign Currency Contract Line |
: |
On demand. |
8. SECURITY
The Banking Facility interest commissions and banking and/or other charges and expenses payable thereon or in connection therewith are to be secured by: -
8.1 Against the existing first legal charge for RM15,000,000-00 over industrial property held under H.S. (D) Ka 1376/75, Lot 70808 and H.S. (D) Ka 1377/75. Lot 70809, both in Mukim of Ulu Kinta, District of Kinta, Perak.
8.2 Against the existing debenture over the fixed and floating assets of the company, both present and future dated 23rd February 1991.
8.3 Against the existing Letter of Support from Hitox Corporation of America, USA (presently known as TOR Minerals International Inc., USA) dated 25th April 2000.
8.4 Against a new second legal charge for RM5,000,000-00 over industrial property held under H.S. (D) Ka 1376/75, Lot 70808 and H.S. (D) Ka 1377/75. Lot 70809, both in Mukim of Ulu Kinta, District of Kinta, Perak
9. CONDITIONS FOR DRAWDOWN/UTILIZATION
9.1 Borrower is to submit to the Bank a full valuation report done by the Bank's panel valuer on the property charged to the Bank confirming the Open Market Value of the property is to be at lease RM8,000,000-00 or higher
9.2 In addition to the conditions precedent for drawdown as stipulated in the General Terms and Conditions annexed hereto, you shall also fulfill the following conditions precedent before you are allowed to drawdown on the Banking Facility:
NIL
9.3 If,
9.3.1 you shall fail to comply with any of the conditions precedent referred to in paragraph 9.1 above and/or in the General Terms and Conditions annexed hereto and/or any warranty or representation made by you to the Bank is incorrect, misleading or untrue; and/or
9.3.2 there has been a material adverse change in your condition, financial or otherwise after the date of this Letter of Offer;
you will not be entitled to utilize the Banking Facility and the Bank shall be entitled to cancel the Banking Facility hereby granted without any prior notice to you and you shall be liable to reimburse and/or indemnify the Bank for all costs and expenses (including legal costs and expenses) incurred by the Bank in connection with the approval and/or grant of the Banking Facility to you.
10. OTHER TERMS AND CONDITIONS
10.1 You are to submit to the Bank a copy of your Audited Accounts for financial year ended 31st December 2012 latest by 31st May 2013.
10.2 The Banking Facility available to you at our Ipoh Branch is to be actively utilized. In addition, you are to maintain a satisfactory current account with us.
10.3 Utilization of Multi Trade Lines facilities is allowed to finance sales to your related companies as approved by the Bank as follows: -
(a) TOR Minerals International, Inc. USA
(b) TOR Processing & Trade B.V., Netherlands
10.4 The Bank reserves the right to disallow the continued utilization of the Banking Facility in the event that there are overdue payments.
10.5 If any of the provisions of this letter becomes invalid, illegal or unenforceable in respect of any law, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.
10.6 Reference made to the Standby Letter of Credit in Annexure VI is not applicable to the Banking Facility.
11. INFORMATION DISCLOSURE
The Bank shall have the right to provide any information on you and the Banking Facility to: -
11.1 Bank Negara Malaysia, and such other authorities as may be authorized by law to obtain such information;
11.2 companies within the RHB Capital Berhad Group of Companies;
11.3 any Security Party;
11.4 solicitors and/or other agents in connection with the preparation of any facility or security documents hereunder or any action or proceeding for the recovery of monies due and payable hereunder;
11.5 any potential assignee or other person proposing to enter into any contractual arrangement which requires the disclosure of such information; and
11.6 companies which are or which in the future may be subsidiaries of the Bank PROVIDED that the Bank shall take all reasonable care to ensure that such information shall remain confidential within the Bank's group of subsidiaries.
12. AMENDMENT AND/OR ADDITIONAL TERMS AND CONDITIONS
12.1 The Bank may at any time hereafter at your request or at the Bank's absolute discretion grant additional banking facilities to you and/or convert and/or vary and/or substitute all or any of the Banking Facility hereby granted into another banking facility or facilities and, in any such event, the securities liabilities and/or obligations created pursuant to and by this Letter of Offer shall continue to be valid and binding for all purpose whatsoever up to the limit of the total banking facilities advanced to you notwithstanding such addition or change before-mentioned but subject to such variations as shall be made known by the Bank to you and or implied by law or trade usage governing or applicable to the addition and/or changes as aforesaid.
12.2 Notwithstanding any provisions to the contrary, the terms of this Letter of Offer may, at any time and from time to time, be varied or amended by the Bank at its absolute discretion with notice to you and thereupon such amendments and variations shall be deemed to become effective and the relevant provisions of this Letter of Offer shall be deemed to have been amended or varied accordingly and shall be read and construed as if such amendments and variations had been incorporated in and had formed part of this instrument at the time of execution hereof.
13. ANNEXURES
The terms and conditions set out in the Annexures I, IA, II, III, IV, V, VI, VII, VIII, IX, X and XI hereto form an integral part of this Letter of Offer and in the event of any conflict or discrepancy between the terms and conditions in this Letter of Offer and the terms and conditions in the Annexures, the terms and conditions in this Letter of Offer shall prevail.
Except as specifically amended or varied hereby, all terms and condition in our previous Letter of Offer and Facility Agreement(s), and in the security documents to secure the existing facilities shall remain in full force and effect and the Letter of Offer and Facility Agreement(s) and security documents as amended or varied by this Letter shall from and after the date hereof be read as a single integrated document incorporating the amendment(s) or variation(s) effected hereby.
Please indicate your acceptance of the Banking Facility upon the terms and conditions herein by signing the duplicate of this letter and returning the same to the Bank within fourteen (14) days from the date hereof. In addition, you are required to execute such loan/security documents, which the Bank's solicitors shall advise are necessary for the protection of the Bank's interest.
We thank you for giving us the opportunity to be of service to you.
Yours faithfully |
||
|
|
|
Fazlina Othman |
Wan Amiruddin Wan Ahmad |
cc. Mr. Lee Kee Wooi, Corporate Banking (Ipoh Region)
I/We, the undersigned hereby confirm that I/We have read the terms and conditions set out above and in the Annexures hereto and taken note of the same. I/We hereby accept the Banking Facility upon the terms and conditions mentioned above and in the Annexures. And, I/we hereby declare that I/we am/are not and none of our directors or managers are directly related as a spouse or child or parent to any of the directors officers or employees of the RHB Capital Berhad Group of Companies.
Signed for and on behalf
of |
||
|
|
|
(Name:
) |
(Name:
) |
|
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE I
THE GENERAL TERMS AND CONDITIONS
1. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank that: -
1.1 all acts, conditions, things, approvals, consents, authorizations and licenses required to be done, fulfilled, performed or obtained to enable the Borrower to lawfully enter into and exercise its rights under and perform its obligations hereunder and any related documents executed by it have been done, fulfilled, performed or obtained and are in full force and effect;
1.2 the Borrower's acceptance of this Letter of Offer and the performance of the terms herein will not contravene any law, regulation, order or decree of any governmental authority, agency or court to which the Borrower is subject; and
1.3 the Borrower is not in default under any agreement to which the Borrower is a party or by which the Borrower may be bound and no litigation arbitration or administrative proceedings are presently current or pending or threatened against the Borrower.
2. CONDITIONS PRECEDENT
2.1 The Banking Facility will be made available for the Borrower's utilization upon the fulfillment of the following conditions precedent: -
2.1.1 all loan/security documents which are required herein and/or such other documents as may be required by the Bank and/or its solicitors shall have been executed by the Borrower and/or the relevant security parties, duly stamped and registered at such registries as the Bank may deem necessary or expedient within thirty (30) days from the date of the acceptance of the Letter of Offer or such other time as may be stipulated by the Bank;
2.1.2 the Bank shall have received copies of the following documents certified as true and correct by the Borrower's secretary or director: -
(a) all authorizations, licenses, approvals and consents which are necessary for the financing by the Bank hereunder, the carrying on of the Borrower's business and the execution of the security documents (if any);
(b) the Borrower's Board of Directors' Resolution authorizing the acceptance and the borrowing of the Banking Facility and/or the execution of the loan/security documents (if any);
(c) a copy each of the Borrower's (if applicable) certificate of incorporation and the Memorandum and Articles of Association and the Forms 24, 44, and 49 of the Companies Act 1965; and
(d) specimen signatures, authenticated in such manner as the Bank may require, of the persons authorized to act on the Borrower's behalf in respect of the transactions hereunder.
2.1.3 the Borrower shall have paid all fees or charges payable or agreed to be paid by the Borrower to the Bank for or in connection with the Banking Facility including the preparation and perfection of the loan/security documents;
2.1.4 no Event of Default (as hereinafter stated) or no event which with the giving of notice or lapse of time or both would constitute an Event of Default shall have occurred or be continuing;
2.1.5 no extraordinary circumstances or change of law or other governmental action shall have occurred which makes it improbable that the Borrower will be able to observe or perform the covenants and obligations herein; and
2.1.6 the Bank's solicitors shall have made a search on the Borrower at the Companies Commission of Malaysia and the Director-General of Insolvency's Office and the results thereof shall have been satisfactory to the Bank.
2.2 In the case where guarantee(s) and/or other security ("the Security Document") is/are required by the Bank from third party(ies) ("the Security Party), the utilization of the Banking Facility shall also be subject to the fulfillment of the following additional conditions precedent: -
2.2.1 the Security Document shall have been duly perfected and forwarded to the Bank;
2.2.2 where the Security Party is a body corporate, such Security Party shall have forwarded to the Bank copies of the following documents: -
(a) its Board of Directors' Resolution authorizing the execution of the Security Document;
(b) a certified copy of its Certificate of Incorporation, Memorandum and Articles of Association and the Forms 24, 44, and 49 of the Companies Act 1965.
2.2.3 the Bank's solicitors shall have made a search on the Security Party at the Companies Commission of Malaysia and/or the Director-General of Insolvency's Office and the results thereof shall have been satisfactory to the Bank; and
2.2.4 all authorizations, approvals and consents which are necessary for the creation and delivery of the Security Document to the Bank hereunder, shall have been obtained and delivered to the Bank.
3. AFFIRMATIVE COVENANTS
During the tenor of the Banking Facility the Borrower shall: -
3.1 furnish to the Bank all information reasonably required by the Bank in relation to the Borrower's business and financial position;
3.2 keep full, proper and up-to-date accounts and furnish to the Bank within one hundred and eighty (180) days from the end of each of the Borrower's financial year copies of the Borrower's annual report together with the balance sheet and profit and loss account duly audited and certified by a qualified independent auditor; and
3.3 notify the Bank of the occurrence of an Event of Default stipulated hereunder or of any event which would constitute an event of default in relation to any of the Borrower's other indebtedness.
4. RESTRICTIVE COVENANTS
During the tenor of the Banking Facility the Borrower shall not, without the prior written consent of the Bank: -
4.1 add to, delete, vary or amend the Borrower's Memorandum and Articles of Association in any manner which would be inconsistent with the terms of this Letter of Offer;
4.2 change the nature of the Borrower's business;
4.3 sell, transfer, lease or otherwise dispose of a substantial part of the Borrower's capital assets or undertake or permit any merger, consolidation or reorganization;
4.4 enter into any transaction with any person firm or company except in the ordinary course of business and at arm's length commercial terms; and
4.5 decrease the Borrower's authorized or issued capital or alter the structure thereof or the rights attached thereto.
5. VARIATION OF INTEREST RATES
5.1 The Bank shall be entitled at its sole and absolute discretion, without notice to the Borrower, vary at any time and from time to time the Base Lending Rate of the Bank and/or the margin of interest imposed above the Base Lending Rate and/or Cost of Funds of the Bank and/or commissions or other rates of interest chargeable PROVIDED THAT the Bank will endeavor to provide notice of such variation(s) in the following manner:
5.1.1 in respect of the Base Lending Rate of the Bank by displaying at the premises of the Bank a general notice of the change of the Base Lending Rate of the Bank addressed to the public generally and such display shall be deemed sufficient notice to the Borrower or by including a notice in the periodic statement of accounts sent to the Borrower or by any other modes deemed fit and proper by the Bank; and
5.1.2 in respect of the margin of interest imposed above the Base Lending Rate and/or Cost of Funds of the Bank and/or commissions by serving a notice in writing (which notice may be included in the periodic statements of account sent to the Borrower) on the Borrower of such change and such notice shall be deemed to have been sufficiently served on the Borrower if sent by ordinary mail to the Borrower's usual or last known place of residence/business or to the address above stated;
PROVIDED ALWAYS that the effective date of the change of the Base Lending Rate and/or margin of interest imposed above the Base Lending Rate and/or Cost of Funds and/or in the commissions or the other rates of interest chargeable shall be the date stipulated by the Bank at its sole absolute discretion. And notwithstanding anything hereinbefore contained, any delay or failure on the part of the Bank to give notice in accordance with the provisions herein contained shall not absolve the Borrower from its obligation to pay the rate of interest and/or commissions determined by the Bank and such rate of interest so determined by the Bank shall be payable from such date as the Bank shall in its sole and absolute discretion stipulate.
5.2 The Bank shall be entitled at any time at its sole and absolute discretion with or without notice to the Borrower and without assigning any reason to change the fundamental basis of calculation of the Prescribed Rate (whether it be the Base Lending Rate, Cost of Funds or any other basis by whatsoever name called).
6. CAPITALISATION OF INTEREST
Interest commission and fees remaining unpaid at the time when it shall become due and payable and all costs charges expenses and other moneys due and payable shall be added to the principal amount advanced under the Banking Facility and thereafter be treated as principal and be chargeable with interest at such rate at which interest shall from time to time and at any time be payable under this Letter of Offer. For the purpose of ascertaining whether the limit of the Banking Facility intended to be advanced or secured has been exceeded or not, all accumulated and capitalized interest shall be deemed to be interest and not principal.
7. EVENTS OF DEFAULT
All monies outstanding under the Banking Facility together with interest thereon and all other monies relating thereto shall become immediately repayable by the Borrower upon demand being made by the Bank or upon the occurrence of any of the following events: -
7.1 the Borrower defaults in the payment of any money payable to the Bank after the same shall have become due whether formally demanded or not;
7.2 the Borrower defaults under any other provision herein which is not capable of remedy or which, being capable of remedy, is not remedied within fourteen (14) days after being required to do so by the Bank;
7.3 any representation, warranty or condition made or implied by the Borrower herein is incorrect or misleading in any material respect;
7.4 any license, authorization, approval, consent or permit which is required for the Borrower's business or the performance of the Borrower's obligations hereunder is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect;
7.5 any of the Borrower's indebtedness or the indebtedness of any of the Security Party becomes capable, in accordance with the relevant terms thereof, of being declared due prematurely by reason of a default by the Borrower or such Security Party of their respective obligations in respect of the same or the Borrower or any of the Security Party fail to make payment in respect thereof on the due date for such payment or if due on demand when demanded or the security for any such indebtedness becomes enforceable;
7.6 a petition be presented or an order be made or a resolution be passed for the Borrower's winding-up or the winding up of any of the Security Party which is a body corporate;
7.7 a receiver and/or manager or liquidator is appointed to take possession of the Borrower's properties or undertaking or the properties or undertaking of any of the Security Party which is a body corporate;
7.8 the Borrower or any of the Security Party which is a body corporate ceases or threatens to cease to carry on all or a substantial part of the Borrower's business or the Security Party's business;
7.9 any judgment is obtained against the Borrower or any of the Security Party and no appeal against such judgment has been made to the appropriate appellate court within the time prescribed by law;
7.10 the Borrower or any of the Security Party who is an individual person commits any act of bankruptcy or becomes bankrupt or shall die or become insane;
7.11 if the Bank shall in its sole discretion consider that the Banking Facility or any of its security or its security position in relation to the repayment of the Banking Facility to be in jeopardy; and
7.12 any other event or series of events whether related or not has or have occurred which in the opinion of the Bank (after discussion with the Borrower) could or might affect or prejudice the ability or willingness of the Borrower to comply with all or any of the Borrower's obligations hereunder.
8. ILLEGALITY
If the Bank determines that the introduction or variation of any law, regulation or official directive (whether or not having the force of law) or any change in the interpretation or application thereof makes it unlawful for the Bank to maintain, fund or give effect to its obligations hereunder, the Bank shall forthwith give notice of such determination to the Borrower whereupon the Banking Facility to such extent shall be cancelled and the Borrower will forthwith upon notice from the Bank repay all monies outstanding under the Banking Facility together with interest thereon and all other monies agreed to be paid by the Borrower hereunder.
9. INCREASED COSTS
Where the Bank determines that, as a result of the introduction or variation of any law, order, regulation or official directive (whether or not having the force of law), or any change in the interpretation or application thereof by any competent authority, or compliance with any request (whether or not having the force of law) from Bank Negara Malaysia or other fiscal, monetary or other authority, the cost to the Bank of making available or continuing to make available the Banking Facility is increased or the amount of any sum received or receivable by the Bank in respect of the Bank making or continuing to make available the Banking Facility or the effective return to the Bank under the Banking Facility is reduced or the Bank is obliged to make any payment (except in respect of tax on the Bank's overall net income) or forego any interest or other return on, or calculated by reference to, the amount of any sum received or receivable by the Bank from the Borrower under the Banking Facility, then the Bank shall notify the Borrower of the circumstances leading to the Bank's determination and: -
9.1 the Borrower shall on demand pay to the Bank such reasonable amounts as the Bank may from time to time and at any time notify the Borrower to be necessary to compensate the Bank for such additional cost, reduction, payment or foregone interest or return provided that nothing herein contained shall prevent the Borrower from taking all necessary steps to mitigate the effect of such increased cost; and
9.2 at any time thereafter, so long as the circumstances giving rise to the obligation to make the compensating payment continue, the Borrower may upon giving the Bank not less than thirty (30) days' notice, cancel the Banking Facility.
10. MARKET DISRUPTION
If in the opinion of the Bank, there has, since the date of this offer, been a change in national or international monetary, financial, economic or political conditions or currency exchange rates or exchange control which would render the Banking Facility temporarily or permanently commercially impracticable or impossible, the Bank shall notify the Borrower thereof, and: -
10.1 whilst such circumstances exist, no utilization of the Banking Facility will be allowed;
10.2 the Bank shall negotiate in good faith for an alternative basis acceptable to the Bank for continuing the Banking Facility; and
10.3 unless within thirty (30) days after the giving of such notice such circumstances cease to exist or an alternative basis acceptable to the Bank is arrived at, the Banking Facility shall be cancelled.
11. LEGAL AND INCIDENTAL EXPENSES
The Borrower shall pay all legal fees and incidental expenses in connection with the preparation, stamping and registration of any security documents required by the Bank hereunder even though the said documents are not executed by the Borrower for any reason whatsoever. If any money payable under the Banking Facility is required to be recovered through any process of law, the Borrower shall be liable to pay the Bank's solicitors' fees (on a solicitor and client basis) and any other fees and expenses incurred in respect of such recovery.
12. WAIVER AND INDULGENCE
The terms and conditions herein may be waived by the Bank in whole or in part with or without conditions at the discretion of the Bank without prejudicing the rights of the Bank hereunder and any failure by the Bank to enforce any of the provisions hereunder or any forbearance delay or indulgence granted by the Bank to the Borrower shall not be construed as a waiver of the Bank's rights hereunder.
13. BANKING AND FINANCIAL INSTITUTIONS ACT, 1989
The approval of the Banking Facility to the Borrower shall be upon the condition that the Bank will not breach or contravene any law legislation or regulation including, without limiting the generality of the foregoing, the provisions of Section 62 of the Banking And Financial Institutions Act, 1989 or any other provisions thereof. In the event any such relationship is established or discovered now or in the future the Bank reserves the right forthwith to terminate and recall the Banking Facility.
14. DUTY TO VERIFY STATEMENTS OF ACCOUNTS/CERTIFICATE OF BANK
The Borrower shall verify all statements of accounts sent to the Borrower by the Bank and immediately revert to the Bank in the event of any discrepancy in such statements of accounts failing which they shall be deemed to be conclusive and binding against the Borrower. A statement by the Bank and signed by any of its officers as to what at any time is the amount outstanding and rate of interest chargeable shall, save for manifest errors be final and conclusive and shall not be questioned by the Borrower on any account whatsoever.
15. SET OFF/COMBINATION OR CONSOLIDATION OF ACCOUNTS
15.1 The Bank shall be entitled (but shall not be obliged) at any time and without notice to the Borrower to combine, consolidate or merge all or any of the Borrower's accounts and liabilities with and to the Bank anywhere whether in or outside Malaysia, alone or jointly with any other person and may transfer or set off any sums in credit in such accounts in or towards satisfaction of any of the Borrower's liabilities whether actual or contingent, primary or collateral notwithstanding that the credit balances on such accounts and the liabilities on any other accounts may not be expressed in the same currency and the Bank is hereby authorized to effect any necessary conversions at the Bank's own rate of exchange then prevailing.
15.2 Without prejudice to the generality of the above, the Bank further reserves the right at any time and without notice to the Borrower to debit any of the Borrower's accounts (whether in credit or debit) with the Bank for all payments due and payable by the Borrower howsoever to the Bank.
16. SUSPENSE ACCOUNT
Any money received by the Bank in respect of the Banking Facility may be kept to the credit of a suspense account for so long as the Bank thinks fit without any obligation in the meantime to apply the same or any part thereof in or towards settlement of any liabilities due by the Borrower to the Bank.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE IA
ADDITIONAL GENERAL TERMS AND CONDITIONS
1. During the tenor of the Banking Facility the Borrower shall: -
(i) permit at all times the Bank, its officers, servants and/or agents to inspect all records of the Borrower at any office, branch or place of business of the Borrower or elsewhere and all records kept by any other authorities or persons in so far as such records relate to or affect the businesses and the properties of the Borrower and for the purpose of such inspection, give to or procure for the Bank and any officer, servant and/or agent of the Bank such written authorizations as may be required by the Bank;
(ii) notify the Bank in the event the Borrower creates any form of charge, mortgage, debenture, pledge, lien, encumbrances or security interest of whatever nature or permit to exist any caveat or prohibitory order or both in respect of any of the Borrower's properties;
(iii) ensure that all loans or advances from its directors, shareholders and Related Corporation are subordinated to the Indebtedness;
(iv) in the event the Borrower or any of its subsidiaries or related companies (present and future) ("the Borrower Group of Companies) requires any banking, financial, investment and/or advisory products or services (collectively "the Products") which is offered by the RHB Capital Berhad Group of Companies in its normal course of business, the Borrower shall offer or cause the Borrower Group of Companies to offer the relevant RHB Capital Berhad Group of Companies the right of first refusal to provide the Products to the Borrower or the Borrower Group of Companies; and
(v) notify the Bank of any change in the Borrower's Board of Directors or its management.
2. During the tenor of the Banking Facility the Borrower will not, without the prior written consent of the Bank:-
(i) enter into any partnership, profit-sharing or royalty agreement whereby the Borrower's income or profits are, or might be, shared with any other person, firm or company;
(ii) enter into any management contract or similar arrangement whereby the Borrower's business or operations are managed by any other person, firm or company;
(iii) lend or make advances to any person other than in the normal course of business;
(iv) lend or make advances to any person other than to its subsidiaries or related companies (both as defined in the Companies Act, 1965);
(v) create any form of charge, mortgage, debenture, pledge, lien, encumbrances or security interest of whatever nature or permit to exist any caveat or prohibitory order or both in respect of any of the Borrower's properties;
(vi) declare and pay any dividend or other distribution whether of an income or capital nature (but such consent of the Bank will not be unreasonably withheld); and
(vii) change the Borrower's major or controlling shareholding or partnership structure.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE II
TERMS AND CONDITIONS RELATING TO OVERDRAFT FACILITY ("OD FACILITY")
(i) Utilization of the OD Facility shall be in such manner as the Bank may from time to time prescribe and in accordance with the normal usages and practices of banking in Malaysia.
(ii) The Borrower's overdraft account must be operated actively and within the approved limit at all times and the Bank reserves the right to close the said account and to recall the OD Facility in the event the Borrower's account is blacklisted under the Biro Maklumat Cek (BMC) guidelines.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE III
TERMS AND CONDITIONS RELATING TO REVOLVING CREDIT FACILITY ("RC FACILITY")
(i) Subject to the availability of funds, each Drawing shall be made upon receipt by the Bank of a Drawdown Notice substantially in the form prescribed by the Bank in Schedule 1 below and shall be for one of the Interest Periods stated in the Letter of Offer. The Drawdown Notice must be received at least three (3) business days before the intended drawdown date.
(ii) During the tenor of the RC Facility the Borrower may, by giving to the Bank a Rollover Notice in the form prescribed by the Bank in Schedule 2 below, request a rollover of a Drawing for the duration of a further Interest Period as provided in the Letter of Offer and the Bank may upon receipt of the Rollover Notice and subject to the availability of funds rollover such Drawing for the further Interest Period selected by the Borrower PROVIDED THAT: -
(a) the Rollover Notice shall have been received by the Bank at least three (3) business days before the last day of the Interest Period for the Drawing requested to be rolled over;
(b) all accrued interest on the said Drawing shall have been paid.
(iii) Notwithstanding anything herein or in the Letter of Offer contained, the Bank reserves the right to limit the Interest Period of a Drawing or a rollover of a Drawing to such period as the Bank may determine and further in addition thereto the Bank shall be at liberty at its sole and absolute discretion without having to give any reasons therefore refuse to rollover a Drawing despite having received a Rollover Notice from the Borrower.
(iv) The Borrower shall execute and furnish to the Bank an "Indemnity For Taking Instructions" for execution of RC Facility through facsimile instruction as per Schedule 2.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
SCHEDULE 1
[To be typed onto the letter head of the Borrower]
To : RHB Bank Bhd
[Date : ]
We refer to the RC Facility constituted
by a *facility agreement/your Letter of Offer dated
(the "Facility Agreement") between (1) ourselves and (2) RHB Bank Berhad (as
Lender). Terms defined or used in the Facility Agreement have the same
meanings herein.
We hereby:
(1) give notice that we wish to make a RC Drawing of RM on the RC Facility on having a maturity date [ insert the Interest Period] months after the date of the RC Drawing (the "Maturity Date");
(2) request you to remit the RC Drawing to [ insert details of the relevant account of Borrower];
(3) confirm that no Event of Default or any potential Event of Default has occurred and no Event of Default or potential Event of Default would occur if this RC Drawing is made;
(4) confirm that there has been no material adverse change in our financial conditions since the date referred to in the Facility Agreement; and
(5) confirm that each of the warranties set out in the Facility Agreement remains accurate at the date of this RC Drawing as if given on that date by reference to the facts and circumstances then existing.
Yours faithfully
for and on behalf of
[Name of the Borrower]
By its Authorized Signatory
Name:
SCHEDULE 2
[To be typed onto the letter head of the Borrower]
To : RHB Bank Bhd
[Date : ]
We refer to the RC Facility
constituted by *a facility agreement/your Letter of Offer dated
(the "Facility Agreement") between (1) ourselves and (2) RHB Bank Berhad (as
Lender). Terms defined or used in the Facility Agreement have the same
meanings herein.
We hereby:
(1) give notice that we wish to rollover a RC Drawing of Ringgit Malaysia ____________ (RM _______) on _____________, the Rollover is to have a maturity date [ insert the Interest Period] months after the date of the Rollover;
(2) confirm that no Event of Default or any potential Event of Default has occurred and no Event of Default or potential Event of Default would occur if this Rollover is made;
(3) confirm that there has been no material adverse change in our financial conditions since the date referred to in the Facility Agreement; and
(4) confirm that each of the warranties set out in the Facility Agreement remains accurate at the date of this RC Drawing as if given on that date by reference to the facts and circumstances then existing.
Yours faithfully
for and on behalf of
[Name of the Borrower]
By its Authorized Signatory
Name:
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
19
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE IV
LETTER OF CREDIT FACILITY ("LC FACILITY") AND TRUST RECEIPT FACILITY ("TR FACILITY")
(i) The LC and/or TR Facility may be utilized by signing the Bank's application form.
(ii) No utilization of the LC and/or TR Facility will be permitted if, following such utilization, the aggregate of all the sums outstanding in respect of the LC and/or TR Facility and other trade facilities of which the LC and/or TR Facility forms a part would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the LC and/or TR Facility unless the Bank shall agree to the contrary.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE V
BANKERS ACCEPTANCE FACILITY ("BA FACILITY")
(i) No Bankers Acceptance shall have a tenor of less than twenty-one (21) days or such other period as the Bank may specify from time to time or exceed the period as stated in the Letter of Offer.
(ii) The acceptance by the Bank of the Bankers Acceptance drawn by the Borrower is at the sole discretion of the Bank.
(iii) No Bankers Acceptance shall be issued by the Bank if, following such issue, the aggregate of all the sums outstanding in respect of the BA Facility and other trade facilities of which the BA Facility forms a part thereof would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the BA Facility unless the Bank shall agree otherwise.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
21
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE VI
BANKERS GUARANTEE ("BG") / SHIPPING GUARANTEE ("SG") / STANDBY LETTER OF CREDIT ("SBLC") FACILITY
(i) Any shipping or bankers guarantee to be issued by the Bank shall be in such form and shall contain such terms as the Bank may at its sole and absolute discretion deem fit.
(ii) There shall be no refund by the Bank of any commission paid by the Borrower to the Bank upon any early cancellation or release or premature return of any shipping or bankers guarantee.
(iii) No shipping or bankers guarantee shall be issued by the Bank if, following such issue, the aggregate of all the sums outstanding in respect of the SG Facility and/or the BG Facility and other trade facilities of which the SG Facility and/or the BG Facility forms a part thereof would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the SG Facility and the BG Facility unless the Bank shall agree otherwise.
(iv) In the event that the Bank shall be required to make any payment under or pursuant to or arising from any shipping or bankers guarantee issued by the Bank pursuant to the SG Facility or the BG Facility, the Borrower shall pay interest to the Bank at the applicable Default Rate (both before as well as after judgment or demand) on all moneys paid by the Bank commencing from the date such moneys are first paid out by the Bank up to the date of the Bank's actual receipt of the full amount thereof from the Borrower.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE VII
(i) The Borrower may present foreign/domestic bills to the Bank for purchase and the Bank may as its sole and absolute discretion purchase such bills offered by the Borrower under the BP Facility.
(ii) Without prejudice and in addition to any rights or remedies which the Bank may be entitled to, the Bank may, at its sole and absolute discretion debit the Borrower's current or overdraft account maintained with the Bank with the face value of the bills purchased by the Bank under the BP Facility which has been returned to the Bank unpaid and the Borrower hereby irrevocably and unconditionally consents to the Bank so doing and such amounts debited shall become immediately due and payable and failing payment, interest at the applicable Default Rate, shall be charged from the due date until the date the Bank receives full payment (both before as well as after judgment or demand).
(iii) The Borrower acknowledges and accepts that notwithstanding any other provision to the contrary, the Bank reserves the right not to accept any bill drawn or issued by the Borrower for payment under the BP Facility at the Bank's sole and absolute discretion.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE VIII
EXPORT CREDIT REFINANCING FACILITY ("ECR FACILITY")
(i) The Borrower may, subject to the provisions of this Letter of Offer, utilize the ECR Facility (Pre-Shipment/Post-Shipment) in such manner and upon such conditions as the Bank may from time to time prescribe.
(ii) Notwithstanding the aforesaid utilization of the ECR Facility is subject to EXIM Bank's guidelines as amended from time to time.
(iii) The Borrower shall not utilize the ECR Facility (Pre-Shipment/Post-Shipment) if upon such utilization, the aggregate of all the sums outstanding in respect of the ECR Facility (Pre-Shipment/Post-Shipment) and other trade facilities of which the ECR Facility (Pre-Shipment/Post-Shipment) forms a part thereof would exceed the aggregate limit prescribed by the Bank or any sub-limit specifically imposed by the Bank for the ECR Facility (Pre-Shipment/Post-Shipment) unless the Bank shall agree otherwise.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE IX
1.0 DEFINITIONS
1.1 In these Terms and Conditions the following terms shall have the meaning assigned thereto as follows:-
1.1.1 "Acceptable Currency" means any currency at any relevant time acceptable to the Bank.
1.1.2 "Account" means that account or accounts opened by the Customer with the Bank, whether current or otherwise, and into which all amounts payable or receivable in respect of any Foreign Exchange Contract shall be credited or debited respectively.
1.1.3 "Contract Loss" means all losses, including but not limited to funding costs and loss of bargain suffered by the Bank, upon termination of any Foreign Exchange Contract.
1.1.4 "Cost of Funds" means the cost to the Bank of obtaining deposits from whatever sources to fund the Foreign Exchange Contract Line, plus the cost of maintaining statutory reserves and complying with liquidity and other requirements imposed from time to time and at any time by Bank Negara Malaysia or other appropriate authorities.
1.1.5 "Foreign Exchange Contract" means value today, value tomorrow, spot and forward foreign exchange contracts.
1.1.6 "Foreign Exchange Contract Line (FXCL)" is defined as a limit established by the Bank for a Customer to govern the outstanding amount of Spot and/or Forward Foreign Exchange contracts concluded with the Bank.
1.1.7 "Forward Foreign Exchange Contract" is defined as a contract for the purchase or sale of foreign currency for delivery after two (2) business days but not exceeding twelve (12) months delivery from the date of the deal, including outright forward contracts, swaps, futures, options, financial derivatives and any other arrangement to obtain a foreign currency, whether settlement is to be made in full or on a net basis. Notwithstanding the aforementioned, the term "Forward Foreign Exchange Contract" shall also include foreign exchange contracts where the tenure exceeds twelve (12) months and is in compliance with ECM 2 of the Foreign Exchange Administration Rules of Malaysia ("ECM") Notices.
1.1.8 "Maturity Date" means the date on which a Customer is contractually obliged to settle its obligations under a Foreign Exchange Contract.
1.1.9 "Historical Rate" means the buying/selling spot or forward rate then applicable for a sale/purchase contract quoted by the Bank as at the date of concluding such contract.
1.1.10 "Prevailing Market Rate" means, on any day, the prevailing buying/selling spot or forward rate for a sale/purchase contract quoted by the Bank on such day.
1.1.11 "Rollover" means an extension of a Forward Foreign Exchange Contract to mature at another future date.
1.1.12 "Same Day Settlement" refers to the simultaneous settlement of Foreign Exchange Contract transactions on value date at different locations without taking into account of time zone differences.
1.1.13 "Settlement Limit" refers to the daily maximum Foreign Exchange Contract amount that the Bank is willing to settle with a Customer on any one business day.
1.1.14 "Spot Foreign Exchange Contract" is defined as a contract for the purchase or sale of foreign currency where delivery is two (2) business days from the date of the deal.
1.1.15 "Threshold Amount" means when a maturing Forward Foreign Exchange Contract is closed out on the relevant Maturity Date by using the Prevailing Market Rate, the difference between the amount which would have been payable for the Forward Foreign Exchange Contract had the same been closed out by using the Historical Rate and the amount payable for the Forward Foreign Exchange Contract calculated at the Prevailing Market Rate.
1.2 In these Terms and Conditions, unless there is something in the subject or context inconsistent with such construction or unless it is otherwise expressly provided, any reference to the singular shall include the plural and vice versa.
2.0 DOCUMENTARY REQUIREMENTS
2.1 To deal in Foreign Exchange Contracts, Customer must provide the Bank with its Directors' Resolution confirming: -
2.1.1 that all verbal, fax or written instructions to the Bank on Foreign Exchange Contracts shall be valid and binding instructions to the Bank; and
2.1.2 the appointment of personnel (to be named therein) whose specimen signatures are to be provided therein, and who are thereby authorized to give instructions on Foreign Exchange Contracts, money market transactions, funds transfer and settlement (Note : The Bank must be notified immediately, in writing, of any changes to this list).
3.0 BUSINESS HOURS
3.1 Customer may deal in Foreign Exchange Contracts with the Bank within the Bank's business hours in Kuala Lumpur (i.e. from 9.00 a.m. to 5.00 p.m.) on any day other than Saturdays, Sundays and public holidays in Kuala Lumpur ("Business Hours"). The Bank reserves the right to vary the Business Hours at its absolute discretion without prior notice to the Customer.
4.0 COMPLIANCE WITH FOREIGN EXCHANGE ADMINISTRATION RULES OF MALAYSIA (ECM) NOTICES
4.1 Customer shall comply with requirements stipulated in the ECM Notices issued by Bank Negara Malaysia ("BNM") from time to time, particularly ECM 2 as well as the ECM Notices pertaining to Rollover of Forward Foreign Exchange Contracts, and shall bear the consequence(s) arising thereof if there is a contravention.
4.2 Prior to entering into a Foreign Exchange Contract and unless the Bank agrees otherwise, the Customer shall be required to furnish the Bank with evidence of its compliance with the ECM requirements and such documents shall include, but not be limited to, documents as shall be necessary to evidence a firm underlying commitment to transact in foreign currency funds, for any Foreign Exchange Contract that has been established.
4.3 If Customer is exempted from the requirements specified in ECM Notices, Customer shall provide the Bank proof of such exemption from Bank Negara Malaysia prior to any dealing.
5.0 DEALING
5.1 Procedures
5.1.1 All Foreign Exchange Contract dealings between the Bank's authorized dealer or officer and the Customer shall be conducted by telephone or such other mode as may be stipulated by the Bank. An irrevocable and binding contract shall be deemed concluded once the terms of the Foreign Exchange Contract have been verbally agreed upon by the Customer or in the case of Foreign Exchange orders, once the Bank verbally confirms the status of fulfilled Foreign Exchange orders, and the Customer shall honor the deal on the relevant Maturity Date.
5.1.2 Pursuant to Clause 5.1.1 above, the Customer hereby acknowledges confirms and agrees that all verbal exchanges and confirmations with the Bank shall be recorded by the Bank and that such recordings shall be admissible in court as evidence of the Foreign Exchange order placed and/or Foreign Exchange Contract concluded in the manner set out above. In the event of any dispute, the Bank shall be entitled to rely on the use of recorded conversation between the Customer and the Bank as evidence to substantiate its stand on the dispute.
5.1.3 The Bank will send a confirmation advice to the Customer ("Confirmation Advice") by facsimile transmission or by post, on the Forward Foreign Exchange Contract concluded or upon the confirmation of fulfilled Foreign Exchange orders, in the manner set out in Clause 5.1.1 above, for the Customer's acknowledgement. The Customer's acknowledgement of the Confirmation Advice on the copy thereof or any notification of any discrepancy in the Confirmation Advice (which shall be conveyed to the Bank in writing) must be faxed or sent by the Customer to the Bank's Treasury Operations Department not later than 5 p.m. of the following day on which the Bank is open for business, failing which all the information contained in the Confirmation Advice shall be deemed to be correct and binding on the Customer.
5.1.4 It is hereby agreed between the parties that the Customer's execution of the fax copy of the Confirmation Advice which is faxed back to the Bank shall be admissible in court as evidence of the acceptance of the same and shall be considered an original and primary document. It is further agreed that a good transmission report generated by the facsimile of either party shall be deemed good service and simultaneous receipt thereof.
5.1.5 Any omission, failure and/or delay by the Bank or the Customer to follow the procedures set out in this Clause 5.1 shall not affect or prejudice the rights and remedies of the Bank under the contract concluded in the manner set out in Clause 5.1.1 above.
5.2 Independent Judgment
5.2.1 The Customer hereby acknowledges and confirms that each Foreign Exchange Contract has been or will be entered into in reliance only upon its own independent judgment
5.2.2 The Customer further agrees that it shall be solely and fully responsible for monitoring its position(s) at all times and the Bank shall not be held liable to the Customer for any loss, damage, expense or liability incurred by the Customer if the Bank does not notify the Customer of its current position(s) and/or of any loss or potential loss or reduction in value in any security or of any matter or thing whatsoever.
5.3 Liability For Loss
The Bank shall not be held liable or responsible for any loss or damages (including without limitation loss of income, profits, direct or indirect, consequential or special damages), expenses or liabilities whatsoever and howsoever incurred or sustained by the Customer arising out of or in connection with the Customer's dealing in Foreign Exchange Contract with the Bank.
6.0 ROLLOVER
6.1 Conditions
6.1.1 Any request for Rollover of a Forward Foreign Exchange Contract upon maturity must be received by the Bank's authorized dealer or officer not later than 2.00 p.m. on the relevant Maturity Date, together with valid reasons to support such request for an extension. The Bank reserves the absolute right to refuse a Rollover without assigning any reason therefore.
6.1.2 The new Forward Foreign Exchange Contract shall be rolled over at the Prevailing Market Rate except where the Threshold Amount is RM10,000-00 or less, in which event, the Forward Foreign Exchange Contract may be rolled over at the Historical Rate. Cash settlement shall not take place where Rollover is at the Historical Rate and the Customer hereby indemnifies the Bank against any losses (including but not limited to funding cost) arising from the difference in the exchange rates.
6.1.3 Where Rollover is at the Prevailing Market Rate, cash settlement of the Threshold Amount must be effected on the Maturity Date.
6.1.4 The Bank shall mark to market the Forward Foreign Exchange Contract from time to time to monitor the potential losses/gains of the Customer. If on Rollover the Customer incurs a loss, the loss will be debited to the Customer's Account and the Customer agrees that the Bank's determination/calculation in this matter shall be final and binding on the Customer.
7.0 PAYMENTS
7.1 All payments due to the Bank under these Terms and Conditions shall be in cleared funds and must be received by the Bank before the close of business of the Bank in Malaysia on the due date in the currency in which the advances by the Bank is denominated or such currency as specified by the Bank. Payments due must be made in full and without any deduction, counterclaim, set-off or withholding, including but not limited to any taxes, charges, commissions (particularly in the case of outstation remittances) or duties payable, exchange costs/losses in respect thereof and/or any charges passed on to the Bank.
7.2 In the event any amount payable by the Customer under any Foreign Exchange Contract or these Terms and Conditions (including without limitation, any Contract Loss) has not been paid, the Bank shall be entitled on such date to debit the Account in such amount in the Acceptable Currency, at a rate of exchange to be determined by the Bank provided that no debiting shall be deemed to be a payment of the amount due (except to the extent of any amount in credit in the Account) or a waiver of any event of default to pay hereunder. The Customer hereby agrees and undertakes to maintain sufficient funds in the Account for the aforesaid purpose.
7.3 Where such debiting as provided for in Clause 7.2, results in the Account being overdrawn, the Customer shall pay interest on the overdrawn amount(s) at such rate of interest as may be determined by the Bank from time to time with respect to the overdrawn amounts.
8.0 CANCELLATION
8.1 The Bank reserves the right to cancel any Foreign Exchange Contract which in its opinion contravenes the provisions of ECM Notices. The Customer may also cancel a concluded Foreign Exchange Contract by giving written notice with reasons for such cancellation to the Bank. Such notice may be sent to the Bank via facsimile transmission. Any losses arising from such cancellation whether by the Bank or the Customer shall be borne solely by the Customer.
9.0 SETTLEMENT
9.1 The Bank may establish a Settlement Limit for Customer to govern all Foreign Exchange Contract dealings and Same Day Settlement shall be subject to the availability of the Customer's Same Day Settlement Limit (if any).
9.2 Complete settlement instructions in writing and duly signed by an authorized person of the Customer must be given to the Bank before the relevant cut-off time (as shall be notified by the Bank to the Customer). Remittance of funds shall also be subject to prior receipt of cash settlement from the Customer under the relevant Foreign Exchange Contract before 12.00 p.m. on the Maturity Date or such other time as may be notified by the Bank from time to time, failing which the Bank shall not be obliged to effect any remittance in accordance with the settlement instructions.
9.3 If settlement instructions reach the Bank after the stipulated cut-off time, the Bank shall only remit funds on a best effort basis. The Bank shall not be responsible for and the Customer shall keep the Bank fully indemnified against all losses, costs expenses or interest charges (if any) arising out of or in connection with the same.
10.0 COST, EXPENSES AND INDEMNITY
10.1 The Customer shall on demand, pay to the Bank all costs losses and expenses incurred or to be incurred by the Bank in connection with the Foreign Exchange Contract Line and/or any Foreign Exchange Contract (including all legal fees on a solicitor-client basis, stamp, documentary and other duties and taxes and any penalty in respect thereof, where applicable), including the processing, implementation, completion and/or enforcement of the Bank's rights thereunder.
10.2 The Customer hereby agrees to indemnify, defend and hold the Bank harmless against any and all claims demands suits actions judgments damages costs losses expenses (including legal fees and expenses on a solicitor and client basis) and other liabilities whatsoever and howsoever caused that may arise or be incurred by the Bank in connection with: -
10.2.1 the Customer's default negligence failure or omission (including but not limited to the provision of inaccurate misleading erroneous and/or fraudulent information and/or instructions) in performing and observing any of its obligations under these Terms and Conditions and/or any Foreign Exchange Contract, in particular the Customer's obligations to honor the Foreign Exchange Contract on the relevant Maturity Date and/or under Clause 9.3 herein;
11.0 REMEDIES
11.1 If performance by the Bank of any Foreign Exchange Contract shall be delayed beyond the control of the Bank, the time for performance by the Bank shall be extended by a period equal to that during which performance shall be so delayed.
12.0 TIME
12.1 Time wherever mentioned herein is of the essence.
13.0 AMENDMENT TO AND WAIVER OF TERMS AND CONDITIONS
13.1 The Bank reserves the right to amend and/or waive any of these Terms and Conditions in part or in whole at any time and from time to time, at its absolute discretion or arising from new guidelines implemented by The Association of Banks in Malaysia and/or Bank Negara Malaysia. Any waiver by the Bank shall be without prejudice to the right of the Bank to assert such Terms and Conditions in whole or in part at any time or from time to time thereafter.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE X
PROMISSORY NOTE FINANCING FACILITY ("P-Note")
(i) You may request the Bank to provide financing by way of Promissory Note by submitting to the Bank a duly completed application in the Bank's
(ii) Promissory Note may be drawn by you for financing thereof under the P-Note Facility upon your presentation to the Bank the P-Note for financing by the Bank whereupon the Bank will, subject to the availability of funds pay to you the full proceeds less the handling commission and all other costs and expenses, if any, which the Bank may incur.
(iii) Promissory Note drawn by you for financing by the Bank under the P-Note Facility shall be for the purpose as stated in the Letter of Offer.
(iv) The Bank may finance the Promissory Note subject to the following conditions:-
(a) you have not and will not obtain another source of financing for the trade transaction concerned and the Promissory Note is for financing your trade transaction, namely imports to and exports from Malaysia and domestic trade; and
(b) delivery to the Bank of such documentary evidence of the trade transaction as may be required by the Bank.
(iv) If the Bank agrees to finance a Promissory Note then it will do so at the rate as the Bank may determine at the time of financing.
(v) In the event that you have not made early settlement and/or partial settlement prior to maturity, you shall make payment of the full face value of the Promissory Note plus the financing interest to the Bank on the maturity date of the Promissory Note. No days of grace are allowed for settlement of a Promissory Note.
(vi) No Promissory Note shall have a tenor of less than fourteen (14) days or such other period as the Bank may specify from time to time nor exceed the period as stated in the Letter of Offer.
(vii) Promissory Note may be used to finance your usance Letter of Credit for export purposes or sight/usance Letter of Credit for import purposes and the financing by the Bank of the Promissory Note is at the discretion of the Bank.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
|
|
RHB BANK BERHAD |
RHB Bank Berhad Ref. |
: |
IPH 900052 |
Date of Letter of Offer |
: |
25th March 2013 |
Borrower |
: |
TOR Minerals (M) Sdn Bhd |
ANNEXURE XI
TERMS AND CONDITIONS RELATING TO FOREIGN CURRENCY TRADE FINANCING (FCTF)
1. The granting of FCTF facility shall be subject to the following:-
The facility is for the purpose of financing the applicant's trade transactions invoiced in currencies acceptable to the Bank.
In the case where the financing required is of a different currency than that of the invoiced currency (cross currency), the applicant must be a net exporter having receivables in the currency of the loan.
Applicant shall have read and understood the Risks Awareness Statement for FCTF and acknowledge the risks in undertaking FCTF transactions prior to drawdown.
2. The underlying transaction is a bona fide transaction and the goods to which it relates area being sold or purchased pursuant to contracts which are in full force and effect. No other acceptance and/or types of financing are or had been or will be obtained for the same underlying transaction.
3. The drawdown of FCTF by the applicant is always subject to availability of funds to the Bank.
4. Where FCTF is granted to finance cross currency transactions, the applicant shall deem to have understood that the exposure to foreign exchange risks is greater as there is greater room for foreign exchange fluctuation compared to a typical FCTF transaction. The Bank shall earmark 110% of the invoice amount from the applicant's FCTF facility for such drawdown.
5. Drawings under the facility will be paid directly to the beneficiary or supplier of the goods named in the trade documents unless the applicant furnish documentary evidence to the Bank that the applicant had paid for the same in which case the amount will be paid to the applicant.
6. Prepayment of FCTF loan is allowed subject to applicant bearing the break funding costs.
7. Upon maturity of the draft drawn on the applicant by the Bank in relation to the financing of the relevant transaction the applicant shall pay to the Bank the full value of the said draft together with accrued interest and other charges thereon. The Bank shall be entitled to convert into Ringgit at the Bank's counter rate of exchange all foreign currency loans drawn under the facility and not paid on their maturity date.
8. Notwithstanding anything herein contained the Bank shall be entitled without notice to the applicant to debit such amount into the applicant's Multi-Currency Account or current account as may be applicable, maintained by the applicant with the Bank. The applicant shall at all times ensure that there are sufficient funds in such account for the aforesaid purpose.
9. The Bank shall be entitled at its absolute discretion to convert into Ringgit or other foreign currency equivalent for payment by or receipt for the applicant in foreign currency at the Bank's prevailing counter rate of exchange.
10. The Bank assumes no liability or responsibility for the accuracy or authenticity of the trade documents furnished by the applicant to the Bank. The Bank shall not be liable for any loss, damage, expense or liability incurred by it by reason of the Bank relying on any documents believed to be genuine and correct and purportedly signed by an authorized personnel.
11. The applicant indemnify and keep the Bank indemnified against any losses damages costs and expenses (including legal costs) which the Bank may incur suffer or sustain as a consequence of the Bank financing the aforesaid transactions.
xxxxxxxxx END OF ANNEXURE xxxxxxxxxx
Exhibit 31.1
CERTIFICATIONS
I, Olaf Karasch, certify that:
1. I have reviewed this Form 10-Q of TOR Minerals International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 2, 2013
/s/ Olaf Karasch
Olaf Karasch
President and Chief Executive Officer
Exhibit 31.2
CERTIFICATIONS
I, Barbara Russell, certify that:
1. I have reviewed this Form 10-Q of TOR Minerals International, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 2, 2013
/s/ Barbara Russell
Barbara Russell
Chief Financial Officer
Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of TOR Minerals, Inc. ("Registrant") for the quarter ended March 31, 2013 (the "Report") as filed with the Securities and Exchange Commission, the undersigned Chief Executive Officer of the Registrant hereby certifies, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ OLAF KARASCH
Olaf Karasch
President and Chief Executive Officer
(Principal Executive Officer)
May 2, 2013
Exhibit 32.2
Certification of Acting Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of TOR Minerals, Inc. ("Registrant") for the quarter ended March 31, 2013 (the "Report") as filed with the Securities and Exchange Commission, the undersigned Chief Financial Officer of the Registrant hereby certifies, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ BARBARA RUSSELL
Barbara Russell
Chief Financial Officer
(Principal Financial Officer)
May 2, 2013
Derivatives and Other Financial Instruments - Gross fair market value of derivative not designated as hedging instruments and location in Balance Sheet (Details) (Foreign Currency Exchange Contracts, Not designated as hedging instrument, USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Other Current Assets
|
||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, Fair value gross asset | $ 21 | |
Accrued Expenses
|
||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, Fair value gross liability | $ 1 |
Calculation of Basic and Diluted Earnings per Share (Detail Textuals)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Stock options
|
||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 174,000 | 24,000 |
Warrants
|
||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 528,000 |
Debt - Long-term Debt - Financial Institutions (Parentheticals) (Details)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Fixed Rate term note payable to a U.S. bank, with an interest rate of 6.65% due January 1, 2016
|
||
Debt Instrument [Line Items] | ||
Interest rate on note payable | 6.65% | 6.65% |
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 7.8% due July 1, 2029 | TOR Processing and Trade
|
||
Debt Instrument [Line Items] | ||
Interest rate on note payable | 7.80% | 7.80% |
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.3% due January 31, 2030 | TOR Processing and Trade
|
||
Debt Instrument [Line Items] | ||
Interest rate on note payable | 3.30% | 3.30% |
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 4.05% due July 31, 2015 | TOR Processing and Trade
|
||
Debt Instrument [Line Items] | ||
Interest rate on note payable | 4.05% | 4.05% |
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 4.25% due July 5, 2014 | TOR Processing and Trade
|
||
Debt Instrument [Line Items] | ||
Interest rate on note payable | 4.25% | 4.25% |
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate of 5.2% due March 1, 2015 | TOR Minerals Malaysia
|
||
Debt Instrument [Line Items] | ||
Interest rate on note payable | 5.20% | 5.20% |
Stock Options and Equity Compensation Plan (Details Textuals 1) (Stock options, USD $)
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Stock options
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized stock-based employee compensation expense | $ 279,000 |
Unrecognized compensation cost weighted average recognition period | 3 years 4 months 24 days |
Fair Value Measurements
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
The following table presents the Company’s financial assets and financial liabilities that are measured and recognized at fair value on a recurring basis, classified under the appropriate level of fair value hierarchy, as of March 31, 2013 and March 31, 2012. The Company did not hold any non-financial assets and/or non-financial liabilities subject to fair value measurements at March 31, 2013 or March 31, 2012.
Our foreign currency derivative financial instruments mitigate foreign exchange risks and include forward contracts.
The fair value of the Company’s debt is based on estimates using standard pricing models and Level 2 inputs that take into account the present value of future cash flows as of the balance sheet date. The computation of the fair value of these instruments is generally performed by the Company. The carrying amounts and estimated fair values of the Company’s long-term debt, including current maturities, are summarized below:
The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, trade receivables, payables and accrued liabilities, accrued income taxes and short-term borrowings approximate fair value due to the short term nature of these instruments. Accordingly, these items have been excluded from the above table. |