| NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS |
NOTE 10 - NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS
Notes payable, long-term debt and long-term obligations at December 31 are summarized as follows:
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2011 |
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2010 |
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Notes payable: |
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|
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Other |
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|
12,000 |
|
|
|
12,000 |
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Total |
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$ |
12,000 |
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|
$ |
12,000 |
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| |
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|
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Long-term debt: |
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|
|
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|
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Revolving note to domestic bank (A) |
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|
14,489,488 |
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|
|
10,489,488 |
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Term notes to domestic bank (B) |
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|
9,550,000 |
|
|
|
10,950,000 |
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Term notes to domestic bank (C) |
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|
-- |
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|
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564,628 |
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Term note to CEO (D) |
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200,000 |
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|
300,000 |
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Term note to domestic bank (E) |
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-- |
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|
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396,752 |
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| |
|
|
|
|
|
|
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Total long-term debt |
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|
24,239,488 |
|
|
|
22,700,868 |
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| |
|
|
|
|
|
|
|
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Less current portion |
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|
1,500,000 |
|
|
|
1,864,770 |
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| |
|
|
|
|
|
|
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Total long-term debt, less current portion |
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$ |
22,739,488 |
|
|
$ |
20,836,098 |
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(A) |
On May 25, 2006 South Hampton entered into a $12.0 million revolving loan agreement with a domestic bank secured by accounts receivable and inventory. The loan was originally due to expire on October 31, 2008, but has been amended to extend the termination date to June 30, 2013. Additional amendments were entered into during 2008 and 2009 which ultimately increased the availability of the line to $18,000,000 based upon the Company's accounts receivable and inventory. At December 31, 2011, and 2010, there was a long-term amount outstanding of $14,489,488 and $10,489,488, respectively. The credit agreement contains a sub-limit of $3.0 million available to be used in support of the hedging program. The interest rate on the loan varies according to several options and the amount outstanding. At December 31, 2011 the rate was 2.75%, and approximately $3.5 million was available to be drawn. A commitment fee of 0.25% is due quarterly on the unused portion of the loan. If the amount outstanding surpasses the amount calculated by the borrowing base, a principal payment would be due to reduce the amount outstanding to the calculated base. Interest is paid monthly. Covenants that must be maintained include EBITDA, capital expenditures, dividends payable to parent, and leverage ratio. On February 10, 2012, South Hampton entered into the Twelfth Amendment to its Credit Agreement with the bank which increased the maximum unfinanced capital expenditures from $4.0 million to $6.0 million in the aggregate commencing with the calendar year ending December 31, 2012. |
(B) |
On September 19, 2007 South Hampton entered into a $10.0 million term loan agreement with a domestic bank to finance the expansion of the petrochemical facility. An amendment was entered into on November 26, 2008 which increased the term loan to $14.0 million due to the increased cost of the expansion. This note is secured by plant, pipeline and equipment. The agreement expires October 31, 2018. At December 31, 2011, and 2010, there was a short-term amount of $1,400,000 and $1,400,000 and a long-term amount of $8,150,000 and $9,550,000 outstanding, respectively. The interest rate on the loan varies according to several options. At December 31, 2011, the variable interest rate under the loan was 2.75%. However, as discussed in Note 19, effective August 2008 the Company entered into a pay-fixed, receive-variable interest rate swap with the lending bank which has the effect of converting the interest rate on $10.0 million of the loan to a fixed rate. Principal payments of $350,000 are paid quarterly with interest being paid monthly. |
(C) |
On November 30, 2010 as part of the acquisition of STTC, various notes payable were assumed. Principal and interest were due monthly on each note for a total of approximately $23,000. The total notes assumed equaled $584,186. Interest rates varied on these notes between 6.6% and 10%. These notes were paid off during 2011; therefore, at December 31, 2011, and 2010 there was a short-term amount of $0 and $271,526 and a long-term amount of $0 and $293,102 outstanding, respectively. |
(D) |
On November 30, 2010, as part of the consideration paid for the acquisition of STTC, a note payable issued to Nicholas Carter, previous owner of STTC, for $300,000. Principal of $100,000 plus accrued interest at 4.0% per annum is payable annually on November 30th of each year. At December 31, 2011, and 2010, there was a short-term amount of $100,000 and $100,000 and a long-term amount of $100,000 and $200,000 outstanding, respectively. |
(E) |
On December 7, 2010, STTC entered into a note agreement for the purchase of transportation equipment. The amount of the note was $396,752 with principal and interest at 4.0% per annum payable monthly over 48 months at approximately $9,000 per month. This note was paid off during 2011; therefore, at December 31, 2011, and 2010, there was a short-term amount of $0 and $93,244 and a long-term amount of $0 and $303,508 outstanding, respectively. |
Principal payments of long-term debt for the next five years and thereafter ending December 31 are as follows:
Year Ending December 31, |
|
Long-Term Debt |
|
2012 |
|
$ |
1,500,000 |
|
2013 |
|
|
15,989,488 |
|
2014 |
|
|
1,400,000 |
|
2015 |
|
|
1,400,000 |
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2016 |
|
|
1,400,000 |
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Thereafter |
|
|
2,550,000 |
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Total |
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$ |
24,239,488 |
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