Debt | DEBT The following table presents details related to our debt: December 31, 2021 December 31, 2020 Credit lines (international) $ 4.6 $ 4.5 Insurance premiums financing 0.5 1.0 Short-term debt 5.1 5.5 Current installment of Amended Term Loan Agreement (a) 86.2 2.6 Amended ABL Credit Facility (a) 20.6 — Current installment of finance leases 0.4 0.3 Less: Deferred financing costs (a) (1.4) — Current installments of long-term debt 105.8 2.9 Noncurrent portion of Term Loan Agreement (a) — 67.4 Amended ABL Credit Facility (a) — 10.0 Other financing payable (including finance leases) 0.7 0.7 Total principal balance outstanding, long-term debt 0.7 78.1 Less: Deferred financing costs (a) — (6.7) Long-term debt, net of unamortized debt issuance costs 0.7 71.4 Total $ 111.6 $ 79.8 The maturities of debt for the five years following December 31, 2021 are as follows: Year of Maturity 2022 (a) $ 110.9 2023 0.4 2024 0.2 2025 0.1 (a) Substantial doubt about the Company’s ability to continue as a going concern has been raised. As a result, the Company has classified amounts outstanding under the Amended ABL Credit Facility and the Amended Term Loan Agreement as Current installments of long-term debt at December 31, 2021 on the Consolidated Balance Sheets. See Note 1, Business and Basis of Presentation, for additional details. During the fourth quarter of 2021, the Company entered into multiple amendments to its Credit Agreements, which further amended the ABL Credit Facility and the Term Loan Agreement. These amendments are described in more detail below. As part of these transactions, the Company recorded a charge of $9.6 million related to the write-off of unamortized debt issuance costs, and debt amendment fees and capitalized $3.7 million in incremental debt issuance costs in accordance with U.S. GAAP. During March 2021, we entered into a new line of credit in China. The new credit limit is $9.3 million with a one-year maturity date and a variable interest rate of 3.85% to 4.35%. The loan is secured by the land and building of our Chinese facility. Amended ABL Credit Facility On June 23, 2020, we entered into an amendment to the ABL Credit Facility, which reduced commitments from $100.0 million to $90.0 million, amended the interest rates applicable to the borrowings, modified certain financial maintenance and other covenants as well as permitted indebtedness under the Term Loan Agreement. This amendment to the ABL Credit Facility provided for a borrowing base that is derived from our accounts receivable and inventory, collectively, with the equity interests in the guarantors, the ABL Priority Collateral, subject to certain reserves and other limitations. On November 1, 2021, the Company entered into the Fourth Amendment to the ABL Credit Facility and on December 31, 2021, the Company entered into the Fifth Amendment to the ABL Credit Facility. These 2021 ABL Amendments amended the interest rates applicable to the Amended ABL Credit Facility, modified certain financial maintenance and other covenants as well as included the consent of the lenders to incur incremental borrowings under the Amended Term Loan Agreement. The Amended ABL Credit Facility permits us to grant a first priority security interest in real estate, machinery and equipment and intellectual property collateral to Term Loan Agent, collectively the Term Loan Priority Collateral. Bank of America, N.A., as administrative agent and collateral agent, will not have a security interest in the real property securing the Amended Term Loan Agreement but will have a second priority security interest in machinery and equipment and intellectual property constituting Term Loan Priority Collateral. In addition, as a result of the 2021 ABL Amendments, the Company has also granted a 100% security in the equity interest of certain foreign subsidiaries. Borrowings under the Amended ABL Credit Facility bear interest at a rate per annum equal to, at our option, a base rate or a Eurodollar rate equal to LIBOR for the relevant interest period, plus, in each case, an applicable margin determined in accordance with the provisions of the 2021 ABL Amendments. The base rate will be the highest of (a) the federal funds rate plus 0.50%; (b) the prime rate of Bank of America, N.A.; and (c) LIBOR plus 1.00%. The applicable margin for borrowings under the Amended ABL Credit Facility will be determined based on the Company’s Consolidated Leverage Ratio (as defined in the 2021 ABL Amendments) and will range from 2.25% to 3.50% with respect to base rate borrowings and 3.25% to 4.50% with respect to Eurodollar rate borrowings. In addition to paying interest on outstanding principal under the Amended ABL Credit Facility, we will pay a commitment fee to the lenders with respect to the unutilized revolving commitments thereunder at a rate ranging from 0.375% to 0.50% depending on the Company’s Consolidated Leverage Ratio (as defined in the 2021 ABL Amendments). The weighted average interest rate for the Amended ABL Credit Facility was 5.74% during 2021. The Amended ABL Credit Facility contains financial covenants applicable to the Company and its subsidiaries. These financial covenants require that the Company and its subsidiaries (i) maintain minimum Availability (as defined in the Amended ABL Credit Facility) of $40 million during the months ending December 31, 2021 and January 31, 2022, $37.5 million during the month ending February 28, 2022, and $25 million thereafter; (ii) maintain minimum Consolidated Cash Flow (as defined in the Amended ABL Credit Facility) for each month, commencing with the month ending December 31, 2021, and calculated on a cumulative basis, ranging from negative $21 million as of December 31, 2021, to negative $40 million as of June 30, 2022; and (iii) maintain a minimum Formula Availability (as defined in the Amended ABL Credit Facility) in an amount ranging from $86.4 million during the month ending December 31, 2021 to $106.4 million during the month ending June 30, 2022. The Company was in compliance with these covenants at December 31, 2021. In addition, the Amended ABL Credit Facility includes certain milestones related to the Company’s consideration of a sale of the Company or other strategic alternatives. These milestones include: (i) a requirement that the Company deliver a confidential information memorandum regarding the sale process to potential buyers, investors and/or refinancing sources by January 14, 2022; (ii) a requirement that the Company provide a summary by February 18, 2022 of all written indications of interest regarding the acquisition of the Company or an alternative transaction that are received on or before that date,; (iii) a requirement that the Company notify by February 28, 2022 whether any binding letter of intent for the acquisition of the Company has been entered into prior to such date and, thereafter, providing copies of any such letter of intent entered into after such date (subject to any necessary redaction); (iv) a requirement that the Company enter into a definitive agreement for the acquisition of the Company by March 31, 2022 which provides for a purchase price in an amount sufficient to repay in full the outstanding loans under the Amended ABL Credit Facility and the Amended Term Loan Agreement and otherwise be in form and substance reasonably satisfactory,; and (v) a requirement that the Company consummate the sale of the Company or a similar transaction by no later than May 15, 2022. As of December 31, 2021, outstanding letters of credit issued under the Amended ABL Credit Facility were $6.8 million and are subject to fees which will be due quarterly in arrears based on the applicable margin described above plus a fronting fee. The total rate for letters of credit was 4.125% as of December 31, 2021. Prior to the 2021 ABL Amendments, the Company had $0.5 million of unamortized deferred financing costs associated with the ABL Credit Facility. In accordance with U.S. GAAP, as a result of the 2021 ABL Amendments, the Company recorded a charge of $0.4 million related to the write-off of unamortized debt issuance costs and capitalized an additional $2.0 million of incremental new debt issuance costs. Amended Term Loan Agreement On June 23, 2020, we entered into the Term Loan Agreement with Pathlight Capital L.P. as the administrative agent. The Term Loan Agreement provided us with secured borrowings of $70.0 million. The borrowing base was derived from the Company’s machinery and equipment, intellectual property and real property, subject to certain reserves and other limitations. The Term Loan Agreement is scheduled to mature on June 23, 2025. During 2021, upon the sale of our South Gate Facility, we made a mandatory prepayment of $20.0 million to Pathlight Capital L.P. towards the principal balance on our Term Loan Agreement as required by the Term Loan Agreement. As part of the mandatory payment, we paid an additional $0.4 million in prepayment premium fees. On November 1, 2021, the Company entered into the First Amendment to the Term Loan Agreement and on December 31, 2021, the Company entered into the Second Amendment to the Term Facility. These 2021 Term Loan Amendments amended the interest rates applicable to the Amended Term Loan Agreement, modified certain financial maintenance and other covenants as well as eliminated scheduled amortization payments. Additionally, the 2021 Term Loan Amendments provided incremental borrowings of $35.0 million. After completion of the 2021 Term Loan Amendments the outstanding aggregate principal under the Amended Term Loan Agreement was $83.3 million. In connection with the 2021 Term Loan Amendments, the Company paid the Term Loan Agent an amendment fee equal to 2.5% of the outstanding principal balance of the original Term Loan Agreement and 5.0% of the incremental borrowings under the Amended Term Loan Agreement. These amendment fees were added to the outstanding principal of the Amended Term Loan Agreement. As a result, total borrowings under the Amended Term Loan Agreement were $86.2 million at December 31, 2021. Under the Amended Term Loan Agreement, borrowings bear interest at LIBOR plus the applicable margin, which was reduced from 12.0% per annum to 11.0% per annum by the 2021 Term Loan Amendments. Interest on amounts outstanding under the original Term Loan Agreement is required to be paid in cash. Interest on the incremental $35.0 million of term loan borrowings under the 2021 Term Loan Amendments will be paid-in-kind and added to the principal balance of Amended Term Loan Agreement. We must use cash proceeds from certain dispositions, including sales of real estate, equity and debt issuances and extraordinary events, to prepay outstanding loans under the Amended Term Loan Agreement, subject to specified exceptions, including the prepayment requirements with respect to the Amended ABL Credit Facility. Additionally, if prepaid within one year amounts outstanding are subject to a prepayment fee equal as defined in the Amended Term Loan Agreement. All obligations under the Amended Term Loan Agreement are guaranteed by each of our wholly owned domestic subsidiaries that individually, or together with its subsidiaries, has assets of more than $1.0 million and are secured by a first priority lien on the Term Priority Collateral and a second priority lien on the ABL Priority Collateral. Also under the terms of the 2021 Term Loan Amendments, the Company’s Australian subsidiary granted a security interest in its real and personal property to the Term Loan Agent, which is included in the term loan borrowing base. The Amended Term Loan Agreement contains a number of covenants that, among other things, and subject to certain exceptions, restrict our ability to create liens, to undertake fundamental changes, to incur debt, to sell or dispose of assets, to make investments, to make restricted payments such as dividends, distributions or equity repurchases, to change the nature of our businesses, to enter into transactions with affiliates and to enter into certain burdensome agreements. At December 31, 2021, we were in compliance with these debt covenants. In addition, the Amended Term Loan Agreement requires us to comply with the Amended ABL Credit Facility financial covenants. The Amended Term Loan Agreement also contains customary affirmative covenants and events of default, including a cross-default provision in respect of certain material indebtedness and a change of control provision. If an event of default occurs, the lenders may choose to accelerate the maturity of the Amended Term Loan Agreement and require repayment of all obligations thereunder. Prior to the 2021 Term Loan Amendments, the Company had $5.5 million of unamortized deferred financing costs associated with the Term Loan Agreement. In accordance with U.S. GAAP, as a result of the 2021 Term Loan Amendments, the Company recorded a charge of $5.5 million related to the write-off of unamortized debt issuance costs and capitalized an additional $1.7 million of incremental new debt issuance costs. The Company also incurred $3.7 million of debt amendment fees which were not capitalized. |