Debt and Notes Payable

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt and Notes Payable

Note 2. Debt and Notes Payable

Long-term Debt – Financial Institutions

Following is a summary of our long-term debt to financial institutions as of March 31, 2015 and December 31, 2014, in thousands:

	March 31,
	2015		December 31,
	(Unaudited)		2014
Fixed rate term note payable to a U.S. bank, with an interest rate of 5.5% at March 31, 2015, due January 1, 2016, secured by real estate, leasehold improvements, property, plant and equipment, inventory and accounts receivable of the Company’s U.S. Operation.	$	377	$	486
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.85% at March 31, 2015, due July 1, 2029, secured by TPT’s land and office building.  (Balance in Euro at March 31, 2015, €236)		248		286
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.3% at March 31, 2015, due January 31, 2030, secured by TPT’s land and building.  (Balance in Euro at March 31, 2015, €262)		276		316
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate 2% above the bank base lending rate, 5.2% at March 31, 2015, due March 1, 2016, secured by TMM’s property, plant and equipment. (Balance in Ringgit at March 31, 2015, RM 1,458)		315		417
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate 2% above the bank base lending rate, 5.2% at March 31, 2015, due October 25, 2018, secured by TMM’s property, plant and equipment. (Balance in Ringgit at March 31, 2015, RM 4,250)		1,102		1,215
Total		2,318		2,720
Less current maturities		1,002		1,113
Total long-term debt - financial institutions	$	1,316	$	1,607

Short-term Debt

U.S. Operations

On December 31, 2010, the Company’s U.S. Operation, located in Corpus Christi, Texas entered into a credit agreement, (the “Agreement”) with American Bank, N.A. (the “Lender”) which established a $1,000,000 line of credit (the “Line”), and on March 1, 2012, the Line was increased from $1,000,000 to $2,000,000.  On May 15, 2013, the Company and the Lender entered into the second amendment which reduced the minimum interest rate floor on the Line from 5.5% to 4.5%.

On January 17, 2014, the Company entered into the third amendment (the “Third Amendment”) to the Agreement, with the Lender.  Under the terms of the Third Amendment, the Company is required to maintain a ratio of cash flow to debt service of 1.0 to 1.0 for the four month period ended April 30, 2014, six month period ended June 30, 2014, nine month period ended September 30, 2014, and twelve month period ended December 31, 2014.  Thereafter, the required ratio of cash flow to debt service shall be 1.25 to 1.0 measured on a rolling four quarter basis as originally detailed in the Agreement.  The Company was in compliance with all financial and non-financial covenants for the twelve month period ended March 31, 2015.

On August 1, 2014, the Company and the Lender entered into the fourth amendment to the Agreement which extended the Line from October 15, 2014 to October 15, 2015.  Under the terms of the Agreement, as amended, 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 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 4.5%.  At March 31, 2015, no funds were outstanding on the Line.

European Operations

On March 20, 2007, 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 3.29%), is secured by TPT’s accounts receivable and inventory.  At March 31, 2015, TPT had utilized €698,000 ($750,000) of its short-term Credit Facility.

TPT’s loan agreements covering the Credit Facility and term loans, included in long-term debt – financial institutions,  include subjective acceleration clauses that allow Rabobank to accelerate payment if, in the judgment of the bank, there are adverse changes in our business.  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 Operations

On August 31, 2014, TMM amended its short-term banking facility with HSBC to extend the maturity date from April 30, 2014 to June 30, 2015.  The HSBC facility includes the following in RM:  (1) overdraft of RM 500,000 ($135,000); (2) an import/export line (“ECR”) of RM 10,460,000 ($2,822,000); and (3) a foreign exchange contract limit of RM 5,000,000 ($1,349,000).   At March 31, 2015, the outstanding balance on the foreign exchange contract was RM 332,000 ($89,000) at a current interest rate of 2.465%.

On August 15, 2014, TMM amended its short term banking facility with RHB Bank Berhad (“RHB”) to extend the maturity date from March 24, 2014 to April 1, 2015.  TMM is currently negotiating with RHB to extend the maturity date to April 21, 2016.  The RHB facility includes the following:  (1) an overdraft line of credit up to RM 1,000,000 ($269,000); (2) an ECR of RM 7,300,000 ($1,969,000); (3) a bank guarantee of RM 1,200,000 ($324,000); and (4) a foreign exchange contract limit of RM 25,000,000 ($6,745,000).  At March 31, 2015, the outstanding balance on the foreign exchange contract was RM 1,668,000 ($450,000) at a current interest rate of 2.65%.

The banking facilities with both HSBC and RHB bear an interest rate on the respective overdraft facilities at 1.25% over bank prime and the respective ECR facilities bear interest at 1.0% above the funding rate stipulated by the Export-Import Bank of Malaysia Berhad.  The ECR facilities, which are 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, 2015, the outstanding balance on the ECR facilities was RM 7,481,000 ($2,018,000) at a current interest rate of 4.85%.

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.  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.  While repatriation is allowed in the form of dividends, the credit facilities prohibit TMM from paying dividends, and the HSBC facility further prohibits loans to related parties without the prior consent of HSBC.