Aldila Inc. entered into a $3 million credit agreement with Wells Fargo Bank, National Association. Under the facility, the golf equipment company will be able to borrow up to $3 million from time to time through July 1, 2012 for working capital requirements.
Aldila is required to have a zero outstanding balance for at least 30 consecutive days during any year. All outstanding amounts of principle and interest must be repaid no later than July 1, 2012.
Advances under the line of credit will bear interest at either (i) a fluctuating rate of 2.75% above the one-month LIBOR rate, or (ii) a fixed rate of 2.5% above the LIBOR rate. Aldila may elect from time to time to convert all or a portion of the outstanding balance of the line of credit from one interest rate method to the other. Aldila will pay Wells Fargo an annual commitment fee of $30,000 (equal to 1% of the maximum amount under the line of credit). Aldila is not permitted to use the line of credit to pay dividends or to purchase its stock. The line of credit is secured by all of Aldila's accounts receivable and other rights of payment, general intangibles, inventory, and equipment.
Aldila's obligations to Wells Fargo are guaranteed by Aldila's wholly owned subsidiaries, Aldila Golf Corp. and Aldila Materials Technology Corp., which have also granted security interests in all of their accounts receivable and other rights of payment, general intangibles, inventory, and equipment.
