Quarterly report pursuant to Section 13 or 15(d)

LIABILITIES AND LONG-TERM DEBT

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LIABILITIES AND LONG-TERM DEBT
6 Months Ended
Jun. 30, 2017
LIABILITIES AND LONG-TERM DEBT [Abstract]  
LIABILITIES AND LONG-TERM DEBT
9. LIABILITIES AND LONG-TERM DEBT

On October 1, 2014, we entered into an Amended and Restated Credit Agreement ("ARC") with the lenders which from time to time are parties to the ARC and Bank of America, N.A., as Administrative Agent for the Lenders, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Lead Arranger. On March 28, 2017, we entered into a Second Amendment to the ARC with terms which increase the Maximum Consolidated Leverage Ratio financial covenant of 3.25x to 4.00x at March 31, 2017, and 4.25x at June 30, 2017, before stepping down to 3.75x at September 30, 2017, 3.50x at December 31, 2017, and reverting to the original financial covenant of 3.25x at March 31, 2018.

Four Fiscal Quarter Ending
Maximum Consolidated Leverage Ratio
March 31, 2017
4.00 to 1.00
June 30, 2017
4.25 to 1.00
September 30, 2017
3.75 to 1.00
December 31, 2017
3.50 to 1.00
March 31, 2018 and each fiscal quarter thereafter
3.25 to 1.00

The Second Amendment also reduces the Minimum Consolidated Fixed Charge Coverage Ratio of 1.25x to 1.10x at March 31, 2017, 1.05x at June 30, 2017 and September 30, 2017, 1.10x at December 31, 2017, before reverting to the original financial covenant of 1.25x at March 31, 2018.
 
Four Fiscal Quarter Ending
Minimum Consolidated Fixed Charge Coverage Ratio
March 31, 2017
1.10 to 1.00
June 30, 2017
1.05 to 1.00
September 30, 2017
1.05 to 1.00
December 31, 2017
1.10 to 1.00
March 31, 2018 and each fiscal quarter thereafter
1.25 to 1.00

Also, under the terms of the Second Amendment, two additional levels of pricing were added – levels 4 and 5.

Level
Consolidated Leverage Ratio
LIBOR Margin
Base Rate Margin
Commitment Fee
1
Less than 1.50 to 1.00
2.00%
1.00%
0.25%
2
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00
2.25%
1.25%
0.25%
3
Greater than or equal to 2.00 to 1.00 but less than 3.00 to 1.00
2.50%
1.50%
0.375%
4
Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00
2.75%
1.75%
0.375%
5
Greater than or equal to 3.50 to 1.00
3.00%
2.00%
0.375%

We were in compliance with all covenants at June 30, 2017.

Under the ARC as amended, we have a $40.0 million revolving line of credit which matures on October 1, 2019.  As of June 30, 2017, and December 31, 2016, there was a long-term amount of $21.0 million and $9.0 million outstanding, respectively.  The interest rate on the loan varies according to several options.  Interest on the loan is paid monthly and a commitment fee of between 0.25% and 0.375% is due quarterly on the unused portion of the loan.  At June 30, 2017, approximately $19.0 million was available to be drawn.  Under the Second Amendment we could draw the full amount and maintain compliance with our covenants.

Under the ARC, we also borrowed $70.0 million in a single advance term loan (the "Acquisition Loan") to partially finance the acquisition of TC.  Interest on the Acquisition Loan is payable quarterly using a ten year commercial style amortization.  Principal is also payable on the last business day of each March, June, September and December in an amount equal to $1,750,000, provided that the final installment on the September 30, 2019, maturity date shall be in an amount equal to the then outstanding unpaid principal balance of the Acquisition Loan.  At June 30, 2017, there was a short-term amount of $7.0 million and a long-term amount of $43.8 million outstanding.  At December 31, 2016, there was a short-term amount of $8.8 million and a long-term amount of $47.3 million outstanding.

Under the ARC, we also had the right to borrow $25.0 million in a multiple advance loan ("Term Loans").  Borrowing availability under the Term Loans ended on December 31, 2015.  The Term Loans converted from a multiple advance loan to a "mini-perm" loan once certain obligations were fulfilled such as certification that construction of D-Train was completed in a good and workmanlike manner, receipt of applicable permits and releases from governmental authorities, and receipt of releases of liens from the contractor and each subcontractor and supplier.  Interest on the Term Loans is paid monthly.  At June 30, 2017, there was a short-term amount of $1.3 million and a long-term amount of $16.7 million outstanding.  At December 31, 2016, there was a short-term amount of $1.7 million and a long-term amount of $17.3 million outstanding.

Debt issuance costs of approximately $0.7 million for the periods ended June 30, 2017, and December 31, 2016, have been netted against outstanding loan balances.   The interest rate on all of the above loans varies according to several options as defined in the ARC.  At June 30, 2017, and December 31, 2016, the rate was 3.48% and 3.27%, respectively.

On July 25, 2017, Texas Oil & Chemical Co. II, Inc. ("TOCCO"), South Hampton Resources, Inc. ("SHR"), Gulf State Pipe Line Company, Inc. ("GSPL"), and Trecora Chemical, Inc. ("TC") (SHR, GSPL and TC collectively the "Guarantors") entered into a Third Amendment to Amended and Restated Credit Agreement ("3rd Amendment") with the lenders which from time to time are parties to the Amended and Restated Credit  Agreement (collectively, the "Lenders") and Bank of America, N.A., a national banking association, as Administrative Agent for the Lenders.  The 3rd Amendment increased the Revolving Facility from $40,000,000 to $60,000,000.  There were no other changes to the Revolving Facility.