Senior Bank Loan, Security and Guarantee Agreement
|12 Months Ended|
Sep. 30, 2022
|Senior Bank Loan, Security and Guarantee Agreement||
9. Senior Bank Loan, Security and Guarantee Agreement
On May 14, 2021, the Company and its subsidiaries entered a Loan, Security and Guaranty Agreement for a $20 million asset-based senior secured revolving credit facility with CIT Bank, N.A. The CIT Facility is collateralized by 100% of the assets of the Company and its subsidiaries who are co-borrowers and/or guarantors. The CIT Facility matures on the fifth anniversary of the closing date (May 14, 2026).
As of September 30, 2022, the Company had no outstanding borrowings and $15,352 available for borrowing under the terms of the CIT Facility. The Company also had $561 in unamortized debt issue cost associated with the CIT Facility. The amortization expense of these debt costs totaled $153 and $51 for fiscal 2022 and 2021, respectively.
Under the CIT Facility, advances will be subject to a borrowing base formula that is computed based on 85% of eligible accounts receivable of the Company and subsidiaries as defined in the CIT Facility, and subject to certain other criteria, conditions, and applicable reserves, including any additional eligibility requirements as determined by the administrative agent. The CIT Facility is subject to usual and customary covenants and events of default for credit facilities of this type. The interest rate, at the Company’s election, will be based on either the Base Rate, as defined, plus the applicable margin; or LIBOR (or any successor thereto) for the applicable interest period, subject to a 1% floor, plus the applicable margin. The CIT Facility also contains provisions addressing the potential future replacement of LIBOR utilized and referenced in the loan agreement, in the event LIBOR becomes no longer available. In addition to interest costs on advances outstanding, the CIT Facility will provide for an unused line fee ranging from 0.375% to 0.50% depending on the amount of undrawn credit, original issue discount and certain fees for diligence, implementation, and administration. The unused line fees incurred and included in interest expense totaled $101 and $39 in fiscal 2022 and 2021, respectively.