Torotel completed a $1 million ABL revolving credit facility and a $250,000 12-month term loan with Cornerstone Bank.
According to a related 8-K financing, the asset-based revolving line of credit is intended for working capital purposes and has a capacity of $1 million with a 12-month term that is renewable annually upon mutual agreement of the company and the bank. The borrowing base of the revolving line of credit is limited to 80% of eligible accounts receivable, plus 50% of eligible inventory, plus 80% of eligible equipment.
The associated interest rate is 0.750 percentage points over the Cornerstone Bank corporate base rate (currently 6%) or a floor of 5%. Monthly repayments of interest only are required, with the principal due at maturity. This revolving line of credit is cross collateralized and cross defaulted with the other financing agreements. It is secured by a first lien on all business assets of the company pursuant to a commercial security agreement dated October 19, 2018.
The guidance line of credit is intended to be used for equipment purchases and has a capacity of $250,000 with a 12-month term that is renewable annually upon mutual agreement of the company and the bank. The advance rate of this facility is 0.750 percentage points over the Cornerstone Bank corporate base rate (currently 6%) or a floor of 5%. This guidance line of credit is cross collateralized and cross defaulted with the other financing agreements and is secured by a purchase money security interest in the assets purchased as well as a first lien on all business assets of the company. Upon execution of the agreement, the company received initial advances of $54,000 under the guidance line of credit.
Torotel Products designs and manufactures custom magnetics for the aerospace, defense and industrial sectors.
