Business Context and Reporting Period
Company: Energy Recovery, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 5, 2012
Event: Entry into a Material Definitive Agreement (Loan Agreement).
Key Financial Metrics and Liquidity
This filing details a new credit facility rather than reporting operational financial results (revenue, profit, or cash flow). Key terms of the new agreement include:
- Total Credit Line: $16.0 million.
- Revolving Loans: Up to $10.0 million available for draw.
- Letters of Credit: Available up to the lesser of $16.0 million or the remaining credit line after revolving loans.
- Interest Rates: Prime Rate + 0% (Base Rate) or Adjusted LIBO Rate + 1.25% (Eurodollar).
- Facility Fee: 0.25% per annum on the average unused portion.
- Maturity Date: June 5, 2015.
- Collateral: Substantially all of the Company's assets.
Material Changes Versus Prior Period
The new agreement with HSBC Bank, USA, National Association replaces the Company's previous Amended Loan and Security Agreement with Citibank, which expired on May 30, 2012. This represents a change in primary lending partner and the establishment of a new credit structure.
Management Commentary, Risks, and Covenants
The agreement is subject to customary affirmative and negative covenants, including limitations on:
- Liens.
- Indebtedness.
- Investments.
- Dispositions of assets.
The filing notes that the description provided is not a complete description of the Agreement and refers investors to Exhibit 10.1 for the full text.
Important Facts for Investor Verification
- Verify the full text of the Loan Agreement (Exhibit 10.1) for specific covenant details and default provisions.
- Confirm the Company's current utilization of the $10.0 million revolving loan portion.
- Monitor compliance with the new covenants regarding liens and asset dispositions.
- Note that the filing does not provide specific revenue, profit, or cash flow figures for the period.