2. Debt and Notes Payable

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt and Notes Payable

Long-term Debt – Financial Institutions

Following is a summary of our long-term debt to financial institutions as of September 30, 2016 and December 31, 2015, in thousands:

		September 30, 2016		December 31, 2015
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.85% at September 30, 2016, due July 1, 2029, secured by TPT's land and buildings. (Balance in Euro at September 30, 2016, €202)	$	227	$	235
Fixed rate Euro term note payable to a Netherlands bank, with an interest rate of 3.3% at September 30, 2016, due January 31, 2030, secured by TPT's land and buildings. (Balance in Euro at September 30, 2016, €229)		257		264
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 September 30, 2016, €925)		1,039		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 substantially all of TPT's assets. (Balance in Euro at September 30, 2016, €1,997)		2,244		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 September 30, 2016, due October 25, 2018, secured by TMM's property, plant and equipment. (Balance in Ringgit at September 30, 2016, RM 2,500)		605		756
Malaysian Ringgit term note payable to a Malaysian bank, with an interest rate 2% above the bank base lending rate, secured by TMM's property, plant and equipment. Paid in full at maturity, March 31, 2016.		-		68
Total		4,372		4,964
Less current maturities		1,288		1,485
Total long-term debt - financial institutions	$	3,084	$	3,479

Short-term Debt

U.S. Operations

On December 31, 2010, the Company entered into a credit 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 to the credit 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 credit agreement which extended the Line from October 15, 2015 to October 15, 2016. 

On June 23, 2016, the Company and the Lender amended and restated the credit agreement (the “Agreement”).  Under the terms of the Agreement, the Lender extended the maturity date on the Line from October 15, 2016 to October 15, 2017.  In addition, the Company requested that the Lender reduce the Line from $2,000,000 to $1,000,000.  Under the terms of the Agreement, 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.  The Company was in compliance with all covenants at September 30, 2016.

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 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 September 30, 2016, no funds were outstanding on the Line.

European Operations

On July 13, 2015, TPT amended the short-term banking facility (the “Amended Agreement”) with Rabobank.  Under the terms of the Amended Agreement, the TPT line of credit was reduced from €1,100,000 to €500,000 ($1,236,000 to $562,000 at September 30, 2016) 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 2.9% at September 30, 2016.  No funds were outstanding on the TPT line of credit at September 30, 2016.

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.  TMM is currently negotiating with HSBC to extend the maturity date to June 30, 2017. The HSBC facility includes the following in RM:  (1) overdraft line of credit of RM 500,000 ($121,000 at September 30, 2016); (2) an import/export line (“ECR”) of RM 10,460,000 ($2,533,000 at September 30, 2016); and (3) a foreign exchange contract limit of RM 5,000,000 ($1,211,000 at September 30, 2016). At September 30, 2016, the outstanding balance on the ECR was RM 3,000,000 ($726,000 at September 30, 2016) at a current interest rate of 5.0%; and the outstanding balance on the overdraft line of credit was RM 330,000 ($80,000 at September 30, 2016) at a current interest rate of 7.85%.

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, 2017.  The RHB facility includes the following:  (1) an overdraft line of credit up to RM 1,000,000 ($242,000 at September 30, 2016); (2) an ECR of RM 7,300,000 ($1,768,000 at September 30, 2016); (3) a bank guarantee of RM 1,200,000 ($291,000 at September 30, 2016); and (4) a foreign exchange contract limit of RM 25,000,000 ($6,054,000 at September 30, 2016).  At September 30, 2016, 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.