Debt

12 Months Ended

Sep. 30, 2022

Debt at September 30 consists of:


	2022		2021
Revolving credit agreement	$	11,163	$	8,930
Foreign subsidiary borrowings	7,101		6,632
Finance lease obligations	192		22



Other, net of unamortized debt issuance cost ($20) and $(32)	594		5,581
Total debt	19,050		21,165

Less – current maturities	(15,542)		(18,496)
Total long-term debt	$	3,508	$	2,669

Credit Agreement and Security Agreement

The Company's asset-based Credit Agreement (as amended, the "Credit Agreement"), Security Agreement (“Security Agreement”) and Export Credit Agreement (as amended, the "Export Credit Agreement") are secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 66.67% of the stock of its first-tier non-U.S. subsidiaries. The Credit Agreement (as amended by Fifth Amendment (the "Fifth Amendment") described below), consists of a senior secured revolving credit facility with a maximum borrowing of $28,000. The revolving commitment through the Export Credit Agreement, as amended, which lends amounts to the Company on foreign receivables is $7,000. The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $10,000 upon consent of the Lender (as defined below) or upon additional lenders joining the Credit Agreement. The Credit Agreement and the Export Agreement were amended on February 19, 2021, when the Company and certain of its subsidiaries (collectively, the "borrowers") entered into the Fifth Amendment to the Credit Agreement and the First Amendment (the "First Amendment") to the Export Credit Agreement, in each case, with JPMorgan Chase Bank, N.A., a national banking association, (the "Lender"). The combined maximum borrowings remain unchanged at $35,000; however the maximum borrowing under the Credit Agreement was decreased to $28,000 (from $30,000) and the revolving commitment through the Export Agreement was increased to $7,000 (from $5,000). The Fifth Amendment, among other things, extended the maturity date from August 6, 2021 to February 19, 2024.

The Credit Agreement and the Export Credit Agreement were amended on March 23, 2022, when the Company entered into the Sixth Amendment to the Credit Agreement and the Second Amendment to the Export Agreement with its Lender. The Sixth Amendment, among other things, (i) revised the fixed coverage ratio to exclude the first $1,500 of unfunded capital expenditures through April 20, 2023, (ii) increased the letter of credit sub-limit from $2,000 to $3,000, (iii) modified the reference rate from the London interbank offered rate ("LIBOR") to SOFR and (iv) revised the property, plant and equipment component of the borrowing base under the Credit Agreement. The Second Amendment amends the Export Credit Agreement to replace the reference rate from LIBOR to SOFR.

The Credit Agreement contains affirmative and negative covenants and events of defaults. Prior to the Fifth Amendment, the Credit Agreement required the Company to maintain a fixed charge coverage ratio ("FCCR") of 1.1:1.0 any time the availability is equal to or less than 12.5% of the revolving commitment. However, the Fifth Amendment provides that the Company will not permit the fixed charge coverage ratio to be less than 1.1 to 1.0 as of the last day of any calendar month; provided that the fixed charge coverage ratio will not be tested unless (i) a default has occurred and is continuing, (ii) when the combined availability was less than or equal to the greater of (x) 10% of the lesser of the combined commitments or (y) 10% of the combined borrowing base, and $2,000, for three or more business days in any consecutive 30 day period. In the event of a default, the Company may not be able to access the revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities. The total collateral at September 30, 2022 and September 30, 2021 was $22,711 and $25,370, respectively and the revolving commitment was $35,000 for both periods. Total availability at September 30, 2022 and September 30, 2021 was $9,403 and $14,570, respectively, which exceeds both the collateral and total commitment threshold. Since the availability was greater than the 10.0% of the revolving commitment as of September 30, 2022 and 10.0% of the revolving commitment at September 30, 2021, the FCCR calculation was not required. The Company's letters of credit balance was $1,970 and $1,800 as of September 30, 2022 and 2021, respectively.

Borrowings will bear interest at the Lender's established domestic rate or SOFR, plus the applicable margin as set forth in the Sixth Amendment. The revolver has a rate based on SOFR plus 2.25% spread, which was 4.86% at September 30, 2022 and a rate based on LIBOR plus 1.75% spread, which was 1.84% at September 30, 2021. The Export Credit Agreement has a rate based on SOFR plus 1.75% spread, which was 4.36% at September 30, 2022 and a rate based on LIBOR plus 1.25% spread, which was 1.3% at September 30, 2021, respectively. The Company also has a commitment fee of 0.25% under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Foreign subsidiary borrowings

Foreign debt at September 30 consists of:


	2022		2021
Term loan	$	3,818	$	3,127
Short-term borrowings	2,289		1,867
Factor	994		1,638
Total debt	$	7,101	$	6,632

Less – current maturities	(4,078)		(4,551)
Total long-term debt	$	3,023	$	2,081

Receivables pledged as collateral	$	792	$	485

Interest rates are based on Euribor rates plus spread which range from 1.5% to 5.1%. In September 2020, Maniago entered into a long-term term debt agreement in the amount of $1,465, which was used to repay existing debt and for working capital purposes. The long-term loan repayment schedule is over a 72 month period and has a rate based on Euribor plus 3.20% spread, which was 2.7% at September 30, 2020. To assist with the preservation of liquidity and uncertainty of COVID-19, subsequent to September 30, 2020, Maniago finalized with certain lenders a deferment of payments ranging between 6 to 12 months which has been reflected within the future minimum payment schedule.

The Company factors receivables from one of its customers. The factoring programs are uncommitted, whereby the Company offers receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution. Following the sale and transfer of the receivables to the unaffiliated financial institution, the receivables are not isolated from the Company, and effective control of the receivables is not passed to the unaffiliated financial institution, which does not have the right to pledge or sell the receivables. The Company accounts for the pledge of receivables under this agreement as short-term debt and continues to carry the receivables on its consolidated balance sheets.

The Maniago location obtained borrowings from two separate lenders in fiscal 2022. The first loan agreement was entered into in October 2021, in the amount of $1,200 with a repayment term of six years. The second loan agreement was entered into in September 2022, in the amount of $1,100 with a repayment term of five years. The proceeds from the first loan were used for working capital and the proceeds from the second loan for capital investment.

The Maniago location obtained borrowings from two separate lenders in fiscal 2021. The first loan was for $717 with repayment terms of approximately seven years, of which $287 was forgiven in the same period and was recorded in other income within the consolidated statements of operations and treated as a gain on debt extinguishment. A second loan with a repayment term of five years was obtained in the amount of $303. The proceeds of these loans were used for working capital purposes.

Payments on debt under foreign debt and other debt (excluding finance lease obligations, see Note 10, Leases, of the consolidated financial statements) over the next 5 years are as follows:


	Minimum debt payments

2023	$	4,299
2024	1,215
2025	889
2026	818
2027	450
Thereafter	44
Total Minimum long-term debt payments	$	7,715

Debt issuance costs

The Company had debt issuance costs of $86, which are included in the consolidated balance sheets as a deferred charge in other current assets, net of amortization of $46 and $17 at September 30, 2022 and 2021, respectively.

Other

On April 10, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP Loan”). The PPP Loan had an aggregate principal amount of $5,025. The loan proceeds were used for payroll payments and the SBA granted full forgiveness on January 25, 2022. The Company elected to treat the PPP Loan as debt under FASB Topic 470. As such, the Company derecognized the liability in the second quarter of fiscal 2022 when the loan was forgiven. As of September 30, 2022 and 2021 the PPP loan balance was $0 and $4,764, respectively.