Annual report pursuant to Section 13 and 15(d)

Long-Term Borrowings

v3.8.0.1
Long-Term Borrowings
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
Long-Term Borrowings

 

(5)

LONG-TERM BORROWINGS

Long-term borrowings at December 31, 2017 and 2016 are as follows (in thousands):

 

 

 

2017

 

 

2016

 

Note payable to banks, due in monthly installments of $302.0

   (includes principal and interest), variable-rate interest at

   3.57% per annum, secured by property, balloon payment of

   $62,843 due August 2020

 

$

66,604

 

 

$

68,059

 

Note payable to Luen Thai Enterprise, Ltd., balloon payment

   of $5,745 due January 2021

 

 

5,745

 

 

 

 

Note payable to TCF Equipment Finance, Inc., due in monthly

   installments of $30.5 (includes principal and interest), fixed-

   rate interest at 5.24% per annum, due July 2019

 

 

555

 

 

 

883

 

Subtotal

 

 

72,904

 

 

 

68,942

 

Less current installments

 

 

1,801

 

 

 

1,783

 

Total long-term borrowings

 

$

71,103

 

 

$

67,159

 

 

The aggregate maturities of long-term borrowings at December 31, 2017 are as follows (in thousands):

 

2018

 

$

1,801

 

2019

 

 

1,666

 

2020

 

 

63,692

 

2021

 

 

5,745

 

 

 

$

72,904

 

 

The Company’s long-term debt obligations contain both financial and non-financial covenants, including cross-default provisions.

On April 30, 2010, HF Logistics-SKX, LLC (the “JV”), through a wholly-owned subsidiary of the JV (“HF-T1”), entered into a construction loan agreement with Bank of America, N.A. as administrative agent and as a lender, and Raymond James Bank, FSB, as a lender (collectively, the "Construction Loan Agreement"), pursuant to which the JV obtained a loan of up to $55.0 million used for construction of the project on certain property (the "Original Loan"). On November 16, 2012, HF-T1 executed a modification to the Construction Loan Agreement (the "Modification"), which added OneWest Bank, FSB as a lender, increased the borrowings under the Original Loan to $80.0 million and extended the maturity date of the Original Loan to October 30, 2015. On August 11, 2015, the JV, through HF-T1, entered into an amended and restated loan agreement with Bank of America, N.A., as administrative agent and as a lender, and CIT Bank, N.A. (formerly known as OneWest Bank, FSB) and Raymond James Bank, N.A., as lenders (collectively, the "Amended Loan Agreement"), which amends and restates in its entirety the Construction Loan Agreement and the Modification.  

As of the date of the Amended Loan Agreement, the outstanding principal balance of the Original Loan was $77.3 million. In connection with this refinancing of the Original Loan, the JV, the Company and HF Logistics (“HF”) agreed that the Company would make an additional capital contribution of $38.7 million to the JV, through HF-T1, to make a payment on the Original Loan based on the Company’s 50% equity interest in the JV. The payment equaled the Company’s 50% share of the outstanding principal balance of the Original Loan. Under the Amended Loan Agreement, the parties agreed that the lenders would loan $70.0 million to HF-T1 (the "New Loan"). The New Loan is being used by the JV, through HF-T1, to (i) refinance all amounts owed on the Original Loan after taking into account the payment described above, (ii) pay $0.9 million in accrued interest, loan fees and other closing costs associated with the New Loan and (iii) make a distribution of $31.3 million less the amounts described in clause (ii) to HF. Pursuant to the Amended Loan Agreement, the interest rate on the New Loan is the LIBOR Daily Floating Rate (as defined in the Amended Loan Agreement) plus a margin of 2%. The maturity date of the New Loan is August 12, 2020, which HF-T1 has one option to extend by an additional 24 months, or until August 12, 2022, upon payment of a fee and satisfaction of certain customary conditions. On August 11, 2015, HF-T1 and Bank of America, N.A. entered into an ISDA master agreement (together with the schedule related thereto, the "Swap Agreement") to govern derivative and/or hedging transactions that HF-T1 concurrently entered into with Bank of America, N.A. Pursuant to the Swap Agreement, on August 14, 2015, HF-T1 entered into a confirmation of swap transactions (the "Interest Rate Swap") with Bank of America, N.A. The Interest Rate Swap has an effective date of August 12, 2015 and a maturity date of August 12, 2022, subject to early termination at the option of HF-T1, commencing on August 1, 2020. The Interest Rate Swap fixes the effective interest rate on the New Loan at 4.08% per annum. Pursuant to the terms of the JV, HF Logistics is responsible for the related interest expense on the New Loan, and any amounts related to the Swap Agreement. The full amount of interest expense related to the New Loan has been included in the Company’s consolidated statements of equity within non-controlling interests. The Amended Loan Agreement and the Swap Agreement are subject to customary covenants and events of default. Bank of America, N.A. also acts as a lender and syndication agent under the Credit Agreement dated June 30, 2015 (see Note 6, Derivative Instruments). The Company is in compliance with its non-financial covenants, including any cross default provisions, and financial covenants of its short-term and long-term borrowings as of December 31, 2017.