Debt and Notes Payable

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt and Notes Payable

2. Debt and Notes Payable

Long-term Debt – Financial Institutions

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

(In thousands)		December 31,
		2015		2014
Fixed rate term note payable to a U.S. bank, with an interest rate of 5.5%, 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.  Paid in full November 4, 2015.	$	-	$	486
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.85% at December 31, 2015, due July 1, 2029, secured by TPT's land and buildings.  (Balance in Euro at December 31, 2015, €217)		235		286
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.3% at December 31, 2015, due January 31, 2030, secured by TPT's land and buildings.  (Balance in Euro at December 31, 2015, €243)		264		316
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.0% per annum, due December 31, 2025, is secured by TPT's land and buildings. (Balance in Euro at December 31, 2015, €1,000)		1,087		-
Variable rate Euro term note payable to a Netherlands bank, with a EURIBOR interest rate plus bank margin of 2.3% per annum, due December 31, 2020, is secured by TPT's assets.  (Balance in Euro at December 31, 2015, €2,350)		2,554		-
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate 2% above the bank base lending rate, which was 5.2% at December 31, 2015, due March 1, 2016, secured by TMM's property, plant and equipment. (Balance in Ringgit ("RM") at December 31, 2015, RM 292)		68		417
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate 2% above the bank base lending rate, which was 5.2% at December 31, 2015, due October 25, 2018, secured by TMM's property, plant and equipment. (Balance in Ringgit at December 31, 2015, RM 3,250)		756		1,215
Total		4,964		2,720
Less current maturities		1,485		1,113
Total long-term debt - financial institutions	$	3,479	$	1,607

United States Operations

U.S. Credit Agreement and Term Loan

On December 31, 2010, the Company’s U.S. operation entered into a credit agreement (the “Agreement”) with American Bank, N.A. (the “Lender”). The Agreement consisted of a $2 million term loan and a $2 million line of credit. The term loan, which was scheduled to mature on January 1, 2016, was paid in full on November 4, 2015.

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.

On December 30, 2015, the Company entered into the sixth amendment (the “Sixth Amendment”) to the Agreement with the Lender. As a result of the Company paying off the term loan owed to the Lender, the Company no longer has regularly-scheduled principal and interest payments owed under its debt service obligations. Therefore, the Lender replaced the cash flow coverage ratio requirement comparing cash flow to debt service obligations with a new financial covenant designed to monitor the Company’s cash-flow and net earnings. Under the terms of the Sixth Amendment, the Company is required to maintain positive net earnings before taxes, interest, depreciation, amortization and all other non-cash charges on a rolling four-quarter basis. All other terms of the Agreement remained unchanged. The Company was in compliance with all covenants at December 31, 2015.

The Agreement is secured by certain assets of the Company which are located in the United States or which arise from the Company’s operations in the United States. Collateral under the Agreement does not include the Company’s ownership or other interests in TMM and TPT, any assets or operations of either TMM or TPT or any proceeds thereof.

European Operations

On July 7, 2004, TPT entered into a mortgage loan (the “First Mortgage”) with Rabobank. The First Mortgage, in the amount of €485,000 ($527,000 at 12/31/2015), is to be repaid over 25 years and the interest rate is to be adjusted every five years. Under the terms of the First Mortgage, the interest was adjusted to a fixed rate of 3.85%, effective August 1, 2013, for a period of five years. Thereafter, the rate will change to Rabobank prime plus 1.75%. TPT utilized €325,000 ($353,000 at 12/31/2015) of the loan to finance the July 14, 2004, purchase of land and an office building, as well as to remodel the office building. The balance of the loan proceeds, €160,000 ($174,000 at 12/31/2015), was used for the expansion of TPT’s existing building. Monthly principal and interest payments commenced on September 1, 2004, and will continue through July 1, 2029. The monthly principal payment is €1,616 ($1,756 at 12/31/2015). The loan balance at December 31, 2015 was €217,000 ($235,000 at 12/31/2015). The First Mortgage is secured by the land and office building purchased on July 7, 2004.

On January 3, 2005, TPT entered into a second mortgage loan (the “Second Mortgage”) with Rabobank to fund the acquisition of a 10,000 square foot warehouse with a loading dock that is located adjacent to TPT’s existing production facility. The Second Mortgage, in the amount of €470,000 ($511,000 at 12/31/2015), is to be repaid over 25 years and the interest rate is to be adjusted every five years. Under the terms of the Second Mortgage, the interest was adjusted to a fixed rate of 3.3%, effective January 3, 2013, for a period of five years. Thereafter, the rate will change to Rabobank prime plus 1.75%. Monthly principal and interest payments commenced on February 28, 2005 and will continue through January 31, 2030. The monthly principal payment is €1,566 ($1,702 at 12/31/2015). The Second Mortgage is secured by the land and building purchased by TPT on January 3, 2005. The loan balance at December 31, 2015 was €243,000 ($264,000 at 12/31/2015).

On July 13, 2015, TPT entered into a third mortgage loan (the “Third Mortgage”) with Rabobank to fund the completion of its plant expansion. The Third Mortgage, in the amount of €1,000,000 ($1,087,000 at 12/31/2015), will be repaid over 10 years and the interest rate, currently fixed at 3% is to be adjusted every five years. Thereafter, the rate will change to Rabobank prime plus 1.75%. Monthly principal payments of €8,333 ($9,056 at 12/31/2015) commenced on January 31, 2016 and continue through December 31, 2025. The Third Mortgage is secured by TPT’s real estate. The loan balance at December 31, 2015 was €1,000,000 ($1,087,000 at 12/31/2015).

On July 13, 2015, TPT entered into a term loan (the “Term Loan”) with Rabobank to fund equipment purchases designed to improve production efficiencies and increase capacity at TPT. The Term Loan, in the amount of €2,350,000 ($2,554,000 at 12/31/2015), will be amortized over a period of 5 years and is secured by TPT’s assets. The interest rate, set for a period of three months, is based on the relevant EURIBOR rate plus the bank margin of 2.3 percentage point per annum, which was 2.184% at December 31, 2015. The monthly principal payment of €39,167 ($42,567 at 12/31/2015) commenced on January 31, 2016 and continues through December 31, 2020. The loan balance at December 31, 2015 was €2,350,000 ($2,554,000 at 12/31/2015).

Asian Operations

On March 2, 2012, our subsidiary, TMM amended their banking facility (the “HSBC Facility”) with HSBC Bank Malaysia Berhad (“HSBC”), a Malaysian Bank, to include a new term loan, funded in Malaysian Ringgits (“RM”), in the amount of RM 3,500,000 ($814,000 at 12/31/2015) for the purpose of upgrading the operation’s SR production process. Under the terms of the HSBC Facility, the loan will be paid in 35 equal monthly installments of RM97,223 (excluding interest) and a final installment of RM97,195 ($22,623 and $22,617, respectively, at 12/31/2015), which commenced March 1, 2013 and will continue through March 1, 2016. The interest rate is 2.0% per annum above the HSBC’s base lending rate, which is currently 5.2% per annum and is payable monthly. The loan balance at December 31, 2015 was RM 292,000 ($68,000 at 12/31/2015).

On October 25, 2013, TMM entered into an agreement (the “HSBC Facility Amendment”) with HSBC to amend the HSBC Facility. Under the terms of the HSBC Facility Amendment, HSBC granted a new term loan to TMM in the amount of RM 5,000,000 ($1,163,000 at 12/31/2015) which was used to finance a portion of the cost of plant improvements to increase efficiency and production capacity. Under the terms of the HSBC Facility Amendment, the term loan is amortized over a period of five (5) years, and the interest rate is 2.0% per annum above the HSBC’s base lending rate, which is currently 5.2% per annum. Monthly principal payments, in the amount of RM 83,333 ($19,391 at 12/31/2015), commenced October 25, 2013 and will continue through October 25, 2018. The loan balance at December 31, 2015 was RM 3,250,000 ($756,000 at 12/31/2015).

The Company was in compliance with all covenants at December 31, 2015.

Short-term Debt

U.S. Operations

On December 31, 2010, the Company entered into the Agreement with 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 to the Agreement which reduced the minimum interest rate floor from 5.5% to 4.5%. On May 15, 2015, the Company and the Lender entered into the Fifth Amendment to the Agreement which extended the Line from October 15, 2015 to October 15, 2016. On December 30, 2015, the Company and the Lender entered into the Sixth Amendment to the Agreement. Under the terms of the Sixth Amendment, the Company is required to maintain positive net earnings before taxes, interest, depreciation, amortization and all other non-cash charges on a rolling four-quarter basis.

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 December 31, 2015, no funds were outstanding on the Line.

European Operations

On July 13, 2015, the TPT Agreement reduced the TPT line from €1,100,000 to €500,000 ($1,195,000 to $543,000 at 12/31/2015) and interest was changed from a variable interest rate of bank prime plus 2.8% to the average 1-month EURIBOR plus the bank margin of 3.3%, which was 3.139% at December 31, 2015. No funds were outstanding on the TPT line at December 31, 2015.

Asian Operations

On August 24, 2015, TMM amended its short-term banking facility with HSBC to extend the maturity date from June 30, 2015 to June 30, 2016. The HSBC facility includes the following in RM: (1) overdraft of RM 500,000 ($116,000 at 12/31/2015); (2) an import/export line (“ECR”) of RM 10,460,000 ($2,434,000 at 12/31/2015); and (3) a foreign exchange contract limit of RM 5,000,000 ($1,163,000 at 12/31/2015). At December 31, 2015, the outstanding balance on the ECR and the foreign exchange contract were RM 4,761,000 ($1,108,000 at 12/31/2015) and RM 769,000 ($179,000 at 12/31/2015), respectively, and at a current interest rates of 4.96% and 2.506% respectively.

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 ($233,000 at 12/31/2015); (2) an ECR of RM 7,300,000 ($1,700,000 at 12/31/2015); (3) a bank guarantee of RM 1,200,000 ($279,000 at 12/31/2015); and (4) a foreign exchange contract limit of RM 25,000,000 ($5,817,000 at 12/31/2015). At December 31, 2015, no funds were outstanding on the RHB facility.

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, are used by TMM for short-term financing of up to 180 days against customers’ and inter-company shipments.

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 provides 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.

The following is a summary of the future maturities of long-term debt to financial institutions as of December 31, 2015:

Years Ending December 31,
(In thousands)
2016	$	1,485
2017	661
2018	661
2019	661
2020	660
Thereafter	836
Total	$	4,964