TRX INC/GA - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - November 10, 2011

2. DEBT

Debt consists of the following as of September 30, 2011 and December 31, 2010:

 

		Maturity Date				September 30, 2011				December 31, 2010
Note payable			April 2011			$	—			$	583
Revolver			June 2012				2,000				4,200
Total							2,000				4,783
Less current maturities							2,000				583
Long-term debt						$	—			$	4,200

Our note payable related to partial consideration for the acquisition of certain assets and the assumption of certain liabilities of Hi-Mark, LLC in 2007. Hi-Mark was principally owned by Kevin Austin, our Executive Vice President of TRAVELTRAX. Our quarterly principal payments were approximately $300 plus interest at a fixed annual rate of 8.0%. This note matured and was paid in April 2011.

Our credit agreement with Atlantic Capital Bank ("ACB") provides for a senior secured revolving credit facility with aggregate principal commitments not to exceed $10,000, which includes a $2,000 letter of credit subfacility limit. Any outstanding letters of credit on this subfacility reduce the borrowing capacity of the credit agreement. A loan under the credit agreement may be a Base Rate loan or a LIBOR loan, at the option of TRX. Interest under the credit agreement accrues at an interest rate indexed to the prime rate as announced publicly by ACB from time to time (the "Base Rate") or LIBOR (plus 1.75% for Base Rate loans and 3.00% for LIBOR loans) for the revolving credit facility, with a minimum borrowing rate of 4.25%. For letters of credit, the letter of credit fee is equal to the Applicable Rate (as defined in the credit agreement) times the daily amount available to be drawn under the letter of credit. Overdue amounts bear a fee of 2% per annum above the rate applicable to these amounts. We capitalized $215 of issuance cost related to this facility and our letter of credit, which is amortized as interest expense over the specific terms of the facility and letter of credit.

The credit agreement requires us to maintain (i) a ratio of consolidated funded indebtedness to consolidated EBITDA (as defined in the credit agreement, which may not be comparable to consolidated total debt or measures of GAAP profitability presented elsewhere in this document) of not more than 1.75 to 1.00 and (ii) a ratio of the remainder of consolidated EBITDA minus capital expenditures to the sum of interest expense for the period and debt principal payments required to be made in the next twelve months of not more than 1.40 to 1.00. The credit agreement also contains additional covenants which, among other things, require us to deliver to ACB specified financial information, including annual and quarterly financial information, and limit our ability to (or to permit any subsidiaries to), subject to various exceptions and limitations, (i) merge with other companies, (ii) create liens on our property, (iii) incur debt obligations, (iv) enter into transactions with affiliates, except on an arms-length basis, (v) dispose of property, or (vi) pay dividends. As of September 30, 2011, we were in compliance with all financial covenants in the credit agreement.

BCD Holdings N.V. ("BCD Holdings"), the parent of our majority shareholder, BCD, is the guarantor to our credit agreement. We pay BCD Holdings a guarantee fee of 250-350 basis points, depending on borrowing levels under the credit agreement.

Our financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on having sufficient liquidity for our operations. We are currently in compliance with all financial covenants in the credit agreement. As of September 30, 2011, we have borrowed $2,000 against the facility and there was a $1,500 letter of credit against this facility relating to the lease of our Atlanta office, leaving $6,500 that is currently available for borrowing. As of September 30, 2011, the interest rate on our outstanding borrowings was 4,25%. We expect to remain in compliance with all financial covenants over the remaining term of our revolving credit facility with ACB, however, we acknowledge that market conditions remain uncertain, and, as such, can provide no assurances that we will remain in compliance. We monitor our expected debt compliance and believe we would have time to further reduce our expenses and/or capital expenditures if needed to remain in compliance. If we are not successful in maintaining our debt compliance, ACB as lender is entitled to enforce the guarantee under our credit facility. Management believes that the existing cash on hand, cash flow from operations, availability under the credit agreement and through our ability to obtain future external financing will provide the needed liquidity to fund operations sufficient to continue as a going concern.

Our credit agreement with ACB matures June 30, 2012. Based on our favorable history of renewals and expected capital needs, we expect to renew the facility prior to its maturity.