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Debt
9 Months Ended
Sep. 30, 2015
Debt Disclosure [Abstract]  
Debt
Debt
On June 30, 2015, Fuel Tech amended its existing revolving credit facility (the Facility) with JPMorgan Chase Bank, N.A (JPM Chase) to extend the maturity date through June 30, 2017. The total borrowing base of the facility is $15,000 and contains a provision to increase the facility up to a total principal amount of $25,000 upon approval from JPM Chase. The Facility is unsecured, bears interest at a rate of LIBOR plus 300 basis points, and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Fuel Tech can use this Facility for cash advances and standby letters of credit. As of September 30, 2015 and December 31, 2014, there were no outstanding borrowings on the credit facility.
The Facility contains several debt covenants with which the Company must comply on a quarterly or annual basis, including a minimum EBITDA of $500 for the twelve-month period ending December 31, 2015, and beginning with the fiscal quarter ended June 30, 2016 a minimum EBITDA for the trailing twelve-month period then ended of not less than $1,000. EBITDA includes after tax earnings with add backs for interest expense, income taxes, depreciation and amortization, stock-based compensation expense, and other non-cash items. In addition, the Facility covenants include a minimum shareholder equity requirement of $69,000 at any measurement period from December 31, 2015 until December 30, 2016, and beginning December 31, 2016 the minimum is $70,000. Lastly, the amended Facility has an annual capital expenditure limit of $5,000.
At September 30, 2015 and December 31, 2014, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $9,475 and $8,284, respectively, on its domestic credit facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. At September 30, 2015 and December 31, 2014, there were no cash borrowings under the domestic revolving credit facility and approximately $5,525 and $6,716, respectively, was available for future borrowings. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility.
On June 26, 2015, Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), a wholly-owned subsidiary of Fuel Tech, entered into a new revolving credit facility (the China Facility) agreement with JPM Chase for RMB 35 million (approximately $5,509), which expires on June 24, 2016.  This credit facility replaced the previous RMB 35 million facility that expired on June 26, 2015. The facility is unsecured, bears interest at a rate of 125% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by Fuel Tech. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of September 30, 2015, Beijing Fuel Tech had no cash borrowings under the China Facility and as of December 31, 2014 had borrowings outstanding in the amount $1,625. These borrowings were subject to interest rates of approximately 6.7% at September 30, 2015 and 7.0% at December 31, 2014, respectively.
At September 30, 2015 and December 31, 2014, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $87 and $336, respectively, on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At September 30, 2015 and December 31, 2014, approximately $5,422 and $3,727 was available for future borrowings.
In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.
Interest payments in the amount of $30 and $96 were made during the nine-month periods ended September 30, 2015 and 2014, and $0 and $33 for the three-month periods then ended.