CREDIT AGREEMENTS | 9 Months Ended |
Sep. 30, 2014 |
Debt Disclosure [Abstract] | ' |
CREDIT AGREEMENTS | ' |
CREDIT AGREEMENTS |
Credit Agreement with RBS Citizens Business Capital |
The Company and certain of its North American and U.K. subsidiaries ("Loan Parties") had a senior secured revolving credit facility (as amended, the “Revolver Agreement”) with RBS Citizens Business Capital, a division of RBS Asset Finance, Inc. (“RBS”). The maturity date of the Revolver Agreement was August 5, 2014. On August 1, 2014, the Company entered into two credit facilities with Lloyds Bank PLC and Lloyds Bank Commercial Finance Ltd and Siena Lending Group, LLC to replace the Revolver Agreement. |
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Receivables Finance Agreement with Lloyds Bank Commercial Finance Limited and Lloyds Bank PLC |
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On August 1, 2014, the Company’s U.K. subsidiary (“U.K. Borrower”) entered into a receivables finance agreement for an asset-based lending funding facility (the “Lloyds Agreement”) with Lloyds Bank PLC and Lloyds Bank Commercial Finance Limited (together, “Lloyds”). The Lloyds Agreement provides the U.K. Borrower with the ability to borrow up to $24,320 (£15,000). Extensions of credit are based on a percentage of the eligible accounts receivable less required reserves from the Company's U.K. operations. The initial term is two years with renewal periods every three months thereafter. Borrowings under this facility are secured by substantially all of the assets of the U.K. Borrower. |
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The credit facility under the Lloyds Agreement contains two tranches. The first tranche is a revolving facility based on the billed temporary contracting and permanent recruitment activities in the U.K. operation ("Lloyds Tranche A"). The borrowing limit of Lloyds Tranche A is $19,456 (£12,000) based on 83% of eligible billed temporary contracting and permanent recruitment receivables. The second tranche is a revolving facility that is based on the unbilled work-in-progress (as defined under the receivables finance agreement) activities in the U.K. operation ("Lloyds Tranche B"). The borrowing limit of Lloyds Tranche B is $4,864 (£3,000) based on 75% of eligible work-in-progress from temporary contracting and 25% of eligible work-in-progress from the permanent recruitment. For both tranches, borrowings may be made with an interest rate based on a base rate as determined by Lloyds Bank PLC, based on the Bank of England base rate, plus 1.75%. |
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The Lloyds Agreement contains various restrictions and covenants including (1) that true credit note dilution may not exceed 5%, measured at audit on a regular basis; (2) debt turn may not exceed 55 days over a three month rolling period; (3) dividends by the U.K. Borrower to the Company are restricted to the value of post tax profits; and (4) at the end of each month, there must be a minimum excess availability of $3,243 (£2,000). |
The details of the Lloyds Agreement as of September 30, 2014 were as follows: |
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| | September 30, |
2014 |
Borrowing capacity | | $ | 14,548 | |
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Less: outstanding borrowing | | (6,016 | ) |
Additional borrowing availability | | $ | 8,532 | |
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Interest rates on outstanding borrowing | | 2.25 | % |
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Loan and Security Agreement with Siena Lending Group, LLC |
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On August 1, 2014, the Company and its U.S. subsidiary (“U.S. Borrower”) entered into a loan and security agreement for a credit facility (the “Siena Agreement”) with Siena Lending Group LLC. ("Siena"). The Siena Agreement provides the U.S. Borrower with the ability to borrow up to $10,000 (subject to a borrowing base and an availability block), including up to $1,000 for the issuance of letters of credit. In the event of a sale of the Company’s Legal eDiscovery business, the aforementioned borrowing limit will be reduced to $5,000 (subject to a borrowing base and an availability block). The availability block currently is $2,000 but will be decreased to $1,000 in the event of a sale of the Company’s Legal eDiscovery business. The availability block will be eliminated on the later of (a) the date on which the U.S. Borrower notifies Siena that the U.S. Borrower’s Fixed Charge Coverage Ratio is equal to or greater than 1.1x on a trailing six month basis and (b) January 31, 2015. Extensions of credit are based on borrowing base calculated on a percentage of the eligible accounts receivable less required reserves related to the U.S. operations. The term of the Siena Agreement is three years expiring on August 1, 2017. Borrowings may be made with an interest rate based on a base rate (with a floor of 3.25%) plus 1.75%. The interest rate for letters of credit is 4.5% on face amount of each letter of credit issued and outstanding. Borrowings under the Siena Agreement are secured by substantially all of the assets of the U.S. Borrower. |
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The Siena Agreement contains various restrictions and covenants including (1) a requirement that the U.S. Borrower maintain a Fixed Charge Coverage Ratio of equal to or greater than 1.1x after the later of (a) the date on which the U.S. Borrower notifies Siena that the U.S. Borrower’s Fixed Charge Coverage Ratio is equal to or greater than 1.1x on a trailing six month basis and (b) January 31, 2015; (2) a limit on the payment of dividends by the U.S. Borrower; (3) restrictions on the ability of the U.S. Borrower to incur additional debt, acquire, merge or otherwise change the ownership of the U.S. Borrower; (4) restrictions on investments and acquisitions; and (5) restrictions on dispositions of assets. |
The details of the Siena Agreement as of September 30, 2014 were as follows: |
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| | September 30, |
2014 |
Borrowing base | | $ | 4,493 | |
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Less: adjustments to the borrowing base | | |
Minimum availability | | (2,000 | ) |
Outstanding letters of credits | | (537 | ) |
Adjusted borrowing base | | 1,956 | |
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Less: outstanding borrowing | | (1,623 | ) |
Additional borrowing availability | | $ | 333 | |
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Interest rates on outstanding borrowing | | 5 | % |
Credit Agreement with Westpac Banking Corporation |
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Certain Australian and New Zealand subsidiaries of the Company have a facility agreement with Westpac Banking Corporation and Westpac New Zealand Limited (collectively, “Westpac”). On September 30, 2013, the Company and certain of its Australian and New Zealand subsidiaries entered into a waiver letter to waive compliance with a financial covenant contained in the facility agreement at the September 30, 2013 and December 31, 2013 testing dates, and on December 19, 2013, the Company and certain of its Australian and New Zealand subsidiaries entered into a Deed of Variation to the facility agreement (as amended, the “Facility Agreement”) to amend certain terms and conditions of the Facility Agreement. |
The Facility Agreement provides three tranches: (1) an invoice discounting facility of up to $13,122 (AUD15,000) (“Tranche A”) for an Australian subsidiary of the Company, the availability under which facility is based on an agreed percentage of eligible accounts receivable; (2) an overdraft facility of up to $2,733 (NZD3,500) (“Tranche B”) for a New Zealand subsidiary of the Company; and (3) a financial guarantee facility of up to $4,374 (AUD5,000) (“Tranche C”) for the Australian subsidiary. |
The Facility Agreement does not have a stated maturity date and can be terminated by Westpac upon ninety days written notice. Borrowings under Tranche A may be made with an interest rate based on the Invoice Finance thirty-day Bank Bill Rate (as defined in the Facility Agreement) plus a margin of 0.90%. Borrowings under Tranche B may be made with an interest rate based on the Commercial Lending Rate (as defined in the Facility Agreement) plus a margin of 0.83%. Each of Tranche A and Tranche B bears a fee, payable monthly, equal to 0.90% and 0.65%, respectively, of the size of Westpac’s commitment under such tranche. Borrowings under Tranche C may be made incurring a fee equal to 1.80% of the face value of the financial guarantee requested. Amounts owing under the Facility Agreement are secured by substantially all of the assets of the Australian subsidiary, its Australian parent company and the New Zealand subsidiary (collectively, the “Obligors”) and certain of their subsidiaries. |
The details of the Facility Agreement as of September 30, 2014 were as follows: |
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| September 30, | |
2014 | |
Tranche A: | | | |
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Borrowing capacity | $ | 13,122 | | |
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Less: outstanding borrowing | (241 | ) | |
Additional borrowing availability | $ | 12,881 | | |
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Interest rates on outstanding borrowing | 4.57 | % | |
Tranche B: | | | |
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Borrowing capacity | $ | 2,733 | | |
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Less: outstanding borrowing | — | | |
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Additional borrowing availability | $ | 2,733 | | |
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Interest rates on outstanding borrowing | 7.28 | % | |
Tranche C: | | | |
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Financial guarantee capacity | $ | 4,374 | | |
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Less: outstanding financial guarantee requested | (2,688 | ) | |
Additional availability for financial guarantee | $ | 1,686 | | |
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Interest rates on financial guarantee requested | 1.8 | % | |
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The Facility Agreement contains various restrictions and covenants applicable to the Obligors and certain of their subsidiaries, including: (a) a requirement that the Obligors maintain (1) a minimum Tangible Net Worth (as defined in the Facility Agreement) as of the last day of each calendar quarter of not less than the higher of 85% of the Tangible Net Worth as of the last day of the previous calendar year and $15,309 (AUD17,500); (2) a minimum Fixed Charge Coverage Ratio (as defined in the Facility Agreement) of 1.0x for the trailing twelve-month period at March 31, 2014 testing date, 1.1x at the June 30, 2014 testing date and 1.5x at all other testing dates thereafter; and (3) a maximum Borrowing Base Ratio (as defined in the Facility Agreement) as of the last day of each calendar quarter of not more than 0.8; and (b) a limitation on certain intercompany payments with permitted payments outside the Obligor group restricted to a defined amount derived from the net profits of the Obligors and their subsidiaries. The Company was in compliance with all financial covenants under the Facility Agreement as of September 30, 2014. |
Other Credit Agreements |
The Company also has lending arrangements with local banks through its subsidiaries in the Netherlands, Belgium and Singapore. As of September 30, 2014, the Netherlands subsidiary could borrow up to $1,847 (€1,462) based on an agreed percentage of accounts receivable related to its operations. The Belgium subsidiary has a $1,263 (€1,000) overdraft facility. Borrowings under the Belgium and the Netherlands lending arrangements may be made using an interest rate based on the one-month EURIBOR plus a margin, and the interest rate under each of these arrangements was 2.57% as of September 30, 2014. The lending arrangement in the Netherlands expires annually each June, but can be renewed for one-year periods at that time. The lending arrangement in Belgium has no expiration date and can be terminated with a fifteen-day notice period. In Singapore, the Company’s subsidiary can borrow up to $784 (SGD1,000) for working capital purposes. Interest on borrowings under the Singapore overdraft facility is based on the Singapore Prime Rate plus a margin of 1.75%, and it was 6.0% on September 30, 2014. The Singapore overdraft facility expires annually each August, but can be renewed for one-year periods at that time. On October 2, 2014, the borrowing base of the Singapore overdraft facility was reduced to $392 (SGD500). There was an aggregate of $372 in outstanding borrowings under the Belgium, the Netherlands, and Singapore lending agreements as of September 30, 2014. |
The average aggregate monthly outstanding borrowings under the Revolver Agreement, Lloyds Agreement, Siena Agreement, Facility Agreement and the various credit agreements in Belgium, the Netherlands and Singapore was $4,609 for the nine months ended September 30, 2014. The weighted average interest rate on monthly outstanding borrowings as of September 30, 2014 was 4.15%. |
The Company continues to use the aforementioned credit to support its ongoing global working capital requirements, capital expenditures and other corporate purposes and to support letters of credit. Letters of credit and bank guarantees are used primarily to support office leases. |