Annual report pursuant to section 13 and 15(d)

NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS

v2.4.0.6
NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS
12 Months Ended
Dec. 31, 2012
NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS [Abstract]  
NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS
NOTE 11 – 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:

 
2012
 
 
2011
 
 
(thousands of dollars)
 
Notes payable:
 
 
 
 
 
 
Other
 
 
12
 
 
 
12
 
 
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
 
Revolving note to domestic bank (A)
 
 
7,489
 
 
 
14,489
 
Term notes to domestic bank (B)
 
 
8,150
 
 
 
9,550
 
Term note to CEO (C)
 
 
100
 
 
 
200
 
 
 
 
 
 
 
 
 
Total long-term debt
 
 
15,739
 
 
 
24,239
 
 
 
 
 
 
 
 
 
Less current portion
 
 
1,500
 
 
 
1,500
 
 
 
 
 
 
 
 
 
Total long-term debt, less current portion
 
$
14,239
 
 
$
22,739
 

 
 (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, 2015.  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, 2012, and 2011, there was a long-term amount outstanding of $7.5 million and $14.5 million, 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, 2012 the rate was 2.25%, and approximately $9.3 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 ended December 31, 2012. At December 31, 2012, the Company was not in compliance with the capital expenditures covenant of the agreement; however, a waiver was obtained.
 
 
(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, 2012, and 2011, there was a short-term amount of $1.4 million and $1.4 million and a long-term amount of $6.8 million and $8.2 million outstanding, respectively.  The interest rate on the loan varies according to several options.  At December 31, 2012, the variable interest rate under the loan was 2.25%.  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 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, 2012, and 2011, there was a short-term amount of $100,000 and $100,000 and a long-term amount of $0 and $100,000 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
 
 
(thousands of dollars)
 
2013
 
$
1,500
 
2014
 
 
1,400
 
2015
 
 
8,889
 
2016
 
 
1,400
 
2017
 
 
1,400
 
Thereafter
 
 
1,150
 
Total
 
$
15,739