Debt Financing

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt Financing

NIL COUPON NON-REDEEMABLE CONVERTIBLE UNSECURED LOAN NOTES

At December 31, 2018 and 2017, respectively, we had a principal amount of $76 of nil coupon non-redeemable convertible unsecured perpetual loan notes (the “Loan Notes”) outstanding. The Loan Notes are convertible at any time into Common Shares at rates of $6.50 and $11.43 per share, depending on the note. As of December 31, 2018, the nil coupon loan notes were convertible into 6,715 common shares. Based on our closing stock price of $1.19 at December 31, 2018, the aggregate fair value of the common shares that the holders would receive if all the loan notes were converted would be approximately $8, which is less than the principal amount of the loans outstanding as of that date. The Loan Notes bear no interest and have no maturity date. They are repayable in the event of our dissolution and the holders do not have the option to cash-settle the notes. Accordingly, they have been classified within stockholders’ equity in the accompanying balance sheet. The notes do not hold distribution or voting rights unless and until converted into common shares.

In 2018, 2017 and 2016, there were no Loan Notes repurchased by the Company.

DEBT FINANCING

The Company is obligated under a U.S. Domestic credit facility with (the Facility) with JPMorgan Chase Bank, N.A. (JPM Chase) which provides for maximum revolving credit borrowings of $5,500 and matures on June 28, 2019. Fuel Tech can use this Facility for cash advances and standby letters of credit. The Facility is secured by $5,500 in cash held by the Company in a separate restricted use designated JPM Chase deposit account and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Outstanding borrowings under the Facility bear interest at a rate of LIBOR plus 300 basis points. There are no financial covenants set forth in this amendment to the Facility. The Facility was amended on three occasions during 2018, most recently October 19, 2018, in order to amend the maximum availability under the Facility. The Company is actively pursuing the renewal of its U.S. Domestic credit facility and intends to renew the U.S. Domestic credit facility at its maturity. As of December 31, 2018 and 2017, there were no outstanding borrowings under the Facility.

The existing U.S. Domestic credit Agreement will expire on June 28, 2019. The Company is actively pursuing the renewal of its U.S. Domestic credit facility and intends to renew the U.S. Domestic credit facility at its maturity.

At December 31, 2018 and 2017, we had outstanding standby letters of credit and bank guarantees totaling approximately $5,028 and $3,004, respectively, on our domestic credit facility in connection with contracts in process. We are committed to reimbursing the issuing bank for any payments made by the bank under these instruments. At December 31, 2018 and 2017, there were no cash borrowings under the domestic revolving credit facility and approximately $443 and $1,996, was available for future borrowings under the Facility. We pay a commitment fee of 0.25% per year on the unused portion of the revolving credit facility.

Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), is obligated under a revolving credit facility (the China Facility) agreement, as most recently amended on October 19, 2018, with JPM Chase which provides which provides for maximum revolving credit borrowings of RMB 2.625 million (approximately $382) and matures on June 30, 2019. The Facility is secured by $520 in cash held by the Company in a separate restricted use designated JPM Chase deposit account. The China Facility bears interest at a rate of 140% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by the Company. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of December 31, 2018 and 2017, Beijing Fuel Tech had no cash borrowings under the China Facility. At December 31, 2018 and 2017, we had outstanding standby letters of credit and bank guarantees totaling approximately $0 and $246, respectively, on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At December 31, 2018 and 2017, approximately $382 and $753 was available for future borrowings. As a result of the announcement of the suspension of the Air Pollution Control business in Beijing, the Company intends to not renew the China Facility upon its expiration on June 30, 2019.

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 we 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 our cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require us to obtain alternate financing to satisfy the accelerated payment.