MINNEAPOLIS, Jan. 27, 2011 /PRNewswire/ -- Appliance Recycling Centers of America, Inc. (Nasdaq: ARCI) announced today that it has completed two financing transactions.
On January 24, 2011, Appliance Recycling Centers of America, Inc. and its subsidiaries (the "Company") entered into a new credit agreement (the "Credit Agreement") evidencing a senior secured revolving credit facility with PNC Bank, National Association (the "Bank"), pursuant to which the Company may borrow an aggregate principal amount of up to $15,000,000. The Company intends to use amounts borrowed under the Credit Agreement for ongoing working capital needs and general corporate purposes. The Credit Agreement replaces the Company's current working capital line of credit and the term loan on its Compton, California, recycling facility.
The facility consists of a revolving line of credit and a term loan:
- The revolving line of credit provides for advances up to $15 million and expires on January 24, 2014. The amount of borrowings available under the line of credit is based on a formula using receivables and inventories.
- The term loan is for $2,550,000 and matures on January 24, 2014. The term loan is evidenced by a promissory note and mortgage on the Company's California facility located in Compton. The term loan proceeds were used to pay off in its entirety the previously existing mortgage.
Borrowings under the facility are secured by substantially all of the assets of the Company. The Credit Agreement contains certain financial covenants, calculated on a consolidated basis for the Company and its subsidiaries, which, among other things, impose a minimum fixed charge coverage ratio.Upon entering the Credit Agreement with the Bank, the Company repaid and terminated its prior credit facility with Spectrum Commercial Services. In connection with this termination, the Company repaid all amounts borrowed under the previous credit facility.