Note 5 — Debt

In March, 2011, to finance the acquisition of a majority of the outstanding shares of W.E.T. Automotive Systems AG (“W.E.T.”), we and our subsidiary, Gentherm Europe, entered into a credit agreement with a syndicate of banks led by Bank of America (the “US Bank of America credit facility”). Additionally, W.E.T. and W.E.T. Automotive Systems Ltd., a wholly owned Canadian subsidiary, entered into a credit facility with the same syndicate of banks (the “W.E.T. Bank of America credit facility”). The US Bank of America credit facility provided two term notes (referred to as the “US Term Note” and “Europe Term Note”) and a revolving line of credit note (“US Revolving Note”). The W.E.T. Bank of America credit facility provided a term note (“W.E.T. Term Note”) and a revolving line of credit note (“W.E.T. Revolving Note”). During 2013, an additional draw of $40,400 was made on the Europe Term Note to purchase the remaining shares of W.E.T. held by non-controlling interests.

Interest is payable at least quarterly. The Company has the option to elect interest rates based on either a Eurocurrency (LIBOR or EUIBOR) rate (“Eurocurrency Rate Loans”) (0.16% – 0.48% at December 31, 2013) or a base rate (“Base Rate Loans”) plus a margin (“Applicable Rate”), which varies based on the Consolidated Leverage Ratio of the Company, as defined by the US and W.E.T. Bank of America credit agreements. The base rate is equal to the highest of the Federal Funds Rate (0.07% at December 31, 2013) plus 0.5%, Bank of America’s prime rate (3.25% at December 31, 2013), or a one month Eurocurrency rate plus 1.0%. The Applicable Rate for the current period was 2.25% for Eurocurrency Rate Loans and 1.25% for Base Rate Loans.

No amounts were outstanding under either the US Revolving Note or the W.E.T. Revolving Note as of December 31, 2013 and 2012 and $29,550 and €20,000 were available under each note, respectively. Gentherm also has an outstanding Letter of Credit of $450 as of December 31, 2013 and 2012.

Under the terms of the Bank of America credit facilities, the Company must maintain certain financial ratios, including a minimum Consolidated Fixed Charge Coverage Ratio and a maximum Leverage Ratio as defined by the agreement with Bank of America. These loans are secured by all of the Company’s assets.

During 2013, we borrowed €4,000, or $5,561, from the German Investment Corporation, a subsidiary of KfW banking group, a German government-owned development bank (“DEG Loan”), to fund a plant expansion project in China. The DEG Loan is unsecured, has a fixed interest rate of 4.25% and is subject to semi-annual principal payments beginning March, 2015 and ending September 2019. A minimum Debt-to-Equity Ratio, Current Ratio and Debt Service Coverage Ratio, based on the financial statements of our wholly-owned subsidiary W.E.T. Automotive Systems (China) Limited, is required in order to remain in compliance with the terms of the DEG loan.

Note 5 — Debt (Continued)

A new lease agreement for an enterprise resource planning system commenced June 2013, and will end May, 2015. Under the terms of the lease, the Company must maintain certain financial covenants. Ownership of the system will be transferred to the Company at the end of the agreement. This new capital lease was treated as a non-cash transaction for purposes of the cash flow statement.

As of December 31, 2013, we were in compliance with all terms as outlined in the credit agreements for the US Bank of America credit facility, the W.E.T. Bank of America credit facility and the DEG Loan. The following table summarizes the Company’s debt at December 31, 2013.

	Interest Rate			Principal Balance
US Term Note		2.5	%	$	24,500
Europe Term Note		2.49	%		38,899
W.E.T. Term Note		2.01	%		10,920
DEG Loan		4.25	%		5,561
Capital Leases		4.2	%		2,440
Total debt					82,320
Current portion					(21,439	)
Long-term debt, less current maturities				$	60,881

The following table summarizes the Company’s debt at December 31, 2012.

	Interest Rate			Principal Balance
US Term Note		2.06	%	$	29,312
Europe Term Note		1.8	%		4,476
W.E.T. Term Note		2.0	%		18,852
Bank of China		6.9	%		3,172
Capital Leases		5.5	%		1,140
Total debt					56,952
Current portion					(17,218	)
Long-term debt, less current maturities				$	39,734

The scheduled principal maturities of our debt as of December 31, 2013 are as follows:

Year	US Term Note		Europe Term Note		W.E.T. Term Note		DEG Loan		Capital Leases		Total
2014	$	5,687	$	7,330	$	6,700	$	—	$	1,722	$	21,439
2015		6,563		8,455		2,813		1,102		718		19,651
2016		12,250		23,114		1,407		1,102		—		37,873
2017		—		—		—		1,102		—		1,102
2018		—		—		—		1,103		—		1,103
2019		—		—		—		1,152		—		1,152
Total	$	24,500	$	38,899	$	10,920	$	5,561	$	2,440	$	82,320