Current liabilities were $3.2 million lower than in the prior year. This decline was driven by a $4.6 million pay-down on the credit facility ($10.7 million at December 31, 2012) due to the accelerated customer payment arrangement, offset by $1.8 million in higher accounts payable for inventories with spring deliveries.
At December 31, 2012, the Company had $848,000 net borrowing availability, or $3.5 million excluding the minimum excess availability requirement of $2.7 million. As of April 15, 2013, the Company had $339,000 in net borrowing availability, or $2.4 million excluding the amended minimum excess availability requirement of $2.1 million, and $11.3 million in outstanding borrowings under its senior credit facility.
Receives Waiver from Senior Lender
On April 11, 2013, the Company obtained a waiver from its senior lender which waived the previously announced violation of the fixed charge coverage covenant under its credit facility and amended certain terms of the credit facility.
"Our current lender has continued supporting our operations while we have been in violation of the monthly trailing twelve month fixed charge coverage profitability covenant," said McGeachy. "We have continued to ship goods to our retailers without any service interruption and our suppliers have continued to be supportive while we execute our liquidity enhancement plans."
Signs Non-binding Term Sheet
The Company announced it signed a non-binding term sheet with a lender who could replace the Company's current lender on or before May 31, 2013. If executed, terms under the proposed credit facility would improve liquidity against the Company's current assets through:
- Higher advance rates on inventories
- Higher advance rates on accounts receivables
- Reduction of minimum excess availability
- Advances against held for sale idle real estate in Yoakum, Texas
- Advances against Gift segment holiday order book
"We are several weeks into the diligence process with a credible lender and, although there can be no guarantees with respect to definitive documentation, anticipate announcing a new credit facility by the end of May at the latest," said McGeachy.