Form 8-K BALLANTYNE STRONG, INC. For: Jun 07

June 11, 2021 5:00 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

June 7, 2021

Date of Report (Date of earliest event reported)

 

BALLANTYNE STRONG, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   1-13906   47-0587703
(State or other jurisdiction of   (Commission   (IRS Employer
incorporation or organization)   File No.)   Identification Number)

 

4201 Congress Street, Suite 175    
Charlotte, North Carolina   28209
(Address of principal executive offices)   (Zip Code)

 

(704) 994-8279

(Registrant’s telephone number including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)  

Name of Each Exchange on Which Registered

Common Shares, $.01 par value   BTN   NYSE American

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

 
 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On June 7, 2021, Strong/MDI Screen Systems Inc. (the “Borrower”), a wholly-owned subsidiary of Ballantyne Strong, Inc., and Canadian Imperial Bank of Commerce (the “Lender”) together entered into a demand credit agreement (the “2021 Credit Agreement”), which amended and restated the demand credit agreement dated as of September 5, 2017, between the Borrower and the Lender (the “2017 Credit Agreement”). By agreement of the parties, the 2021 Credit Agreement is dated effective May 31, 2021.

 

The 2021 Credit Agreement consists of a revolving line of credit in a maximum aggregate principal amount of CDN$2.0 million, subject to a borrowing base requirement and certain conditions set forth in the 2021 Credit Agreement (the “Line of Credit”), two installment loans in the aggregate principal amount of CDN$5,533,333, with (a) one in the amount of CDN$5.075 million and (b) one in the amount of CDN$458,333 (each, an “Installment Loan”), and a business credit card line with a credit limit of CDN$75,000 (together with the Installment Loans and the Line of Credit, the “Credit Facilities”).

 

Amounts outstanding under the Line of Credit will bear interest at the prime rate set by the Lender, with interest payable monthly and the outstanding principal amount payable upon demand from the Lender.

 

Each Installment Loan will bear interest at the prime rate plus 0.50% and will be payable in consecutive equal monthly installments, plus accrued interest, over a period of (a) approximately 17 years for the CDN$5.075 million Installment Loan and (b) approximately five years for the CDN$458,333 Installment Loan. The Lender may also demand repayment of an Installment Loan at any time. The Borrower is permitted to prepay all or part of an Installment Loan at any time without notice or penalty, provided that the Borrower is not in default on the applicable loan.

 

The Credit Facilities are secured by a lien on the Borrower’s Quebec, Canada facility and substantially all of the assets of the Borrower.

 

The Credit Facilities contain customary covenants, including as to compliance with laws (including environmental laws), delivery of quarterly and annual financial statements, maintenance of insurance, restrictions on the use of loan proceeds (with the proceeds from the Line of Credit to be used for the Borrower’s day-to-day business operations, the proceeds from the CDN$5.075 million Installment Loan to be used primarily for the financing of the Borrower’s Quebec, Canada facility, working capital needs and capital expenditure and the proceeds from the CDN$458,333 Installment Loan to be used primarily for the financing of equipment) and other customary covenants. The Borrower is also required to comply during the term of the Credit Facilities with the following financial covenants, to be measured quarterly:

 

  Total Liabilities to Effective Equity Ratio: The Borrower is required to maintain a ratio of total liabilities to “Effective Equity” (tangible shareholders’ equity, less (a) amounts receivable from affiliates, agents or representatives and (b) intangible assets, plus all postponed debt) not in excess of 2.50:1.0.
     
  Current Ratio: The Borrower is required to maintain a current ratio (current assets, excluding amounts due from related parties, divided by current liabilities) of not less than 1.30:1.0.
     
  Minimum Effective Equity: The Borrower is required to maintain minimum Effective Equity (as defined above) of not less than CDN$4.0 million.

 

The Credit Facilities contain customary events of default and remedies for credit facilities of this nature.

 

Borrower may also enter into additional derivative transactions with the Lender in order to manage currency or interest rate risk associated with the Credit Facilities.

 

The foregoing description of the Credit Facilities does not purport to be complete and is qualified in its entirety by reference to the 2021 Credit Agreement, filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

 
 

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information required by Item 2.03 is included in Item 1.01 above and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)Exhibits.

 

Exhibit    
No.   Description
10.1   Demand Credit Agreement, executed as of June 7, 2021, by and between Strong/MDI Screen Systems, Inc., as Borrower, and Canadian Imperial Bank of Commerce, as Lender.

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

BALLANTYNE STRONG, INC.
   
Date: June 11, 2021 By: /s/ Todd R. Major
    Todd R. Major
    Chief Financial Officer

 

 

 

 

Exhibit 10.1

 


CIBC_BTFYL_RGB_Logo

Canadian Imperial Bank of Commerce

1006-2540 Daniel-Johnson Blvd.

Laval, Quebec, Canada

H7T 2S3

Office: (450) 687-1159

Fax: (450) 687-0484

 

May 31st, 2021

 

Les Systèmes d’Écran Strong/MDI Inc.

Strong/MDI Screen Systems Inc.

1440 rue Raoul-Charette

Joliette, Quebec

Canada

J6E 8S7

 

Attention:

Mr. Mark Roberson, Chief Executive Officer

Mr. François Barrette, General Manager

Ms. Vicky Thérien, Controller

 

Respected sir and madam:

 

We are pleased to establish the following credit facilities. Each credit offered is referred to as a “Facility”.

 

A - Revolving Line of Credit Facility
 
Credit Limit: CDN $2,000,000.
   
Purpose: This revolving line of credit is to be used for: Day to day operating requirements under Business Operating Account # [redacted].
   
Description: A revolving demand credit. Principal that is borrowed and repaid may be re-borrowed up to the above Credit Limit.
   
Rate: Prime Rate plus 0.00 % per annum.
   
Repayment: On demand.

 

Page 1 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

Borrowing Base Requirement: The total amount available under this Facility shall be calculated as the lesser of:
   
    a) The Credit Limit noted above; and
       
    b) The sum of:
         
      i. 80% of Eligible Account Receivable Value which includes all Account Receivable domestic and foreign, plus,
         
      ii. 50% of Eligible Inventory Value (Raw materials and Finished goods) subject to an inventory cap of 1,000,000 $, less,
         
      iii. Prior Ranking Claims.
         
Conditions: It is understood that all Account Receivable generated from direct or indirect Affiliated company will not be considered as Eligible Account Receivable. This includes Accounts Receivables generated through MDI USA.
   
  It is understood that Accounts Receivables owed from IMAX (Canada) shall be considered eligible with aging up to 120 days.

 

B - Instalment Loan Facility
   

Loan Amount:

(rounded to the nearest dollar)

CDN $ 5,075,000.
   
Purpose: This Facility is to be used for: Loan # [redacted] required originally for the amount of $6,000,000 to finance building located at 1440 rue Raoul-Charette, Joliette, Quebec, Canada. A first disbursement of $3,500,000 has been made on April 24, 2018 and a second of $1,000,000 made on December 21st, 2018. The amount of $1,500,000 still available for disbursement upon client’s request. Further disbursement of this loan is available for working capital needs and capital expenditure.
   
Description A non-revolving Demand Instalment Loan. Principal that is repaid is not available to be re-borrowed.
   
Rate: Prime Rate plus 0.50% per annum.
   
Last Regular Scheduled Payment Date: April 24, 2038 if the loan is disbursed in full.

 

Page 2 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

Repayment: On demand. Until demand, this Facility is repayable as follows:
   
  203 regular monthly payments of CDN $25,000.00 each, plus accrued interest payable monthly.
   
  The first / next regular instalment payment is due on June 24, 2021 and the last regular instalment payment plus any outstanding principal and interest and any other amount due but unpaid with respect to this Facility are due on the Last Regular Scheduled Payment Date.
   
  You may only prepay this Facility in accordance with Schedule A.
   
C - Instalment Loan Facility
   

Loan Amount:

(rounded to the nearest dollar)

CDN$ 458,333.
   
Purpose: This Facility is to be used for: Loan # [redacted] required originally for the amount of $500,000 to finance equipment.
   
Description A non-revolving Demand Instalment Loan. Principal that is repaid is not available to be re-borrowed.
   
Rate: Prime Rate plus 0.50 % per annum.
   
Last Regular Scheduled Payment Date: December 2, 2025
   
Repayment: On demand. Until demand, this Facility is repayable as follows:
   
  55 regular monthly payments of CDN $8,333.33 each, plus accrued interest payable monthly.
   
  The first / next regular instalment payment is due on June 2, 2021 and the last regular instalment payment plus any outstanding principal and interest and any other amount due but unpaid with respect to this Facility are due on the Last Regular Scheduled Payment Date.
   
  You may only prepay this Facility in accordance with Schedule A.
   
D - Business Credit Card Facility
   
Credit Limit: CDN$ 75,000
   
Purpose: Purchase and payment of goods and services.
   
Repayment: On demand in accordance with the CIBC Business Credit Card Agreement (Business Liability)
   
Documentation: CIBC Business Credit Card Agreement (Business Liability)

 

Page 3 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

Security
 
The following security is required:  
   
Movable Hypothec-Enterprise: First ranking movable hypothec for a principal amount of CDN$ 6,000,000:
   
    On all your present and future movable property, including all claims, inventory, equipment, incorporeal rights (including intellectual property) and securities.
       
Immovable Hypothec — Commercial : First ranking immovable hypothec in the principal amount of CDN $6,000,000 over the immovable property situated at 1440 rue Raoul-Charette, Joliette, Quebec, Canada with supporting resolution, plus appropriate confirmation of hypothec of fire and other perils insurance, with loss payable to CIBC as first payee.
   
Other Security: An acknowledged hypothec and assignment of adequate fire and other perils insurance on equipment and inventory of the Borrower that are subject to CIBC’s security, with loss payable to CIBC as first payee.

 

Financial Covenants
   
You will maintain and respect the following ratios and other covenants:  
   
Total Liabilities to Effective Equity Ratio: 2.50 to 1.0 or less at all time. This will be monitored on a quarterly basis.
   
Current Ratio: 1.30 to 1.0 or more at all time. This will be monitored on a quarterly basis.
   
Minimum Effective Equity: CDN $4,000,000 or more at all time. This will be monitored on a quarterly basis.
   
Conditions: The covenants above are to be calculated as follows:
   
  On an unconsolidated basis
   
Other Covenants: It is understood that any investment in private or public companies, such as Itasca Capital Ltd./Greenfirst Forest Products Inc and Firefly System Inc, will be deducted in the calculation of the Minimum Effective Equity unless otherwise approved by the bank.

 

Reporting Requirements
 
The following reporting is required to be provided to us.
     
  (a) Review Engagement annual financial statements signed by your officer, within 120 days after the end of each fiscal year, on an unconsolidated basis.

 

Page 4 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

  (b) Audited annual financial statements signed by your officer for Ballantyne Strong Inc., within 120 days after the end of each fiscal year, on a consolidated basis.
     
  (c) Monthly certificate signed by your officer, including an aged Accounts Receivable Listing, an Inventory Declaration, an aged Payable Listing along with a list of any advances or priority payables within 20 day(s) of the end of each month. Accounts Receivables from US entities or subsidiaries related to Ballantyne Strong Inc. shall be identified as such on the Accounts Receivables list.
     
    It is understood that the listing will have aging categories up to 150 days.
     
  (d) An annual budget for your next fiscal year, including quarterly projected income statement within 120 days after the end of each fiscal year end, on an unconsolidated basis.
     
  (e) Internally Generated quarterly interim financial statements signed by your officer, within 30 days after the end of each fiscal quarter-end for Strong/MDI Screens Systems Inc, on an unconsolidated basis.
     
  (f) Confirmation of insurance in a form satisfactory to us, as required under your Facilities, from the insurance broker of Les Systèmes d’Écran Strong/MDI Inc. prior to any advance under a Facility if required, and thereafter, within 120 days after the renewal of each insurance policy.

 

Fees
   
These fees are in addition to fees, costs or expenses described in Schedule A Standard Credit Terms.
   
Loan Administration Fee: CDN $125 per month payable in arrears. This fee will be charged for each month the Facility is available, even if you do not use, or maintain a balance in, the Facility.
   
Annual Fee: CDN $7,500.
   
Amendment Fee: CDN $500 payable on the date you sign such amendment.
   

 

Other Provisions

   
Currency and Interest Rate Risk Management: You may, from time to time, enter into derivative transactions with CIBC to manage currency or interest rate risk associated with Credits under this letter agreement. Derivative transactions shall be governed by separate documentation entered into with CIBC which may include, without limitation, an International Swaps and Derivatives Association (“ISDA”) master agreement. Notwithstanding the agreed-upon terms of the derivative transactions, you agree and acknowledge that the terms of the Credits are independent of the terms of the derivative transactions. CIBC reserves the right to review and amend the terms and conditions of the related loan or Facility, including without limitation amending interest spreads on Prime Rate or US Base Rate at any time and from time to time in accordance with the terms of this Letter. You further agree and acknowledge that security provided under the terms of this Letter that secures all of your present and future indebtedness and liabilities shall secure your indebtedness owing to each of CIBC and CIBC’s affiliates under any Facility-related derivative transactions, in addition to any security required under ISDA or other documentation.

 

Page 5 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

Schedule A: The attached Schedule A, which contains certain additional provisions applicable to the Facilities other than the Business Credit Card Facility and certain definitions, forms part of this Letter.
   
Schedule B : The attached Schedule B, which contains certain additional provisions applicable to the Business Credit Card Facility and certain definitions, forms part of this Letter.
   
Repayment: All amounts under any Facility are repayable immediately on demand by us unless otherwise indicated. We may terminate any Facility in whole or in part at any time.
   
Replacements: This Letter supersedes and replaces all prior discussions, letters and agreements (if any) describing the terms and conditions of Facilities contained in this Letter. This Letter does not however operate as a novation of any Facility previously granted. CIBC retains all of its rights in respect of any Security that has been granted to secure your obligations with respect to the Facilities.
   
English Language: The parties confirm their express wish that this Letter and all documents related thereto be drawn up in English. Les parties confirment leur volonté expresse de voir le présent contrat et tous les documents s’y rattachant être rédigés en anglais.

 

Please indicate that you have read and accept the foregoing terms and conditions (including the terms and conditions in any Schedule attached to this Letter) by signing the enclosed duplicate copy of this Letter.

 

If we have not received a duly executed copy of this Letter and you have not fulfilled all the conditions required for us to advance funds under the Facilities indicated in this Letter by June 25, 2021, we may in our sole discretion and without notice to you, cancel all of the Facilities listed in this Letter and we will be under no further obligation to advance any funds to you under this Letter.

 

We would like to take this opportunity to thank you for choosing CIBC. We look forward to assisting you and your business with any future financial needs you may have.

 

Page 6 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

  Yours truly,
   
  CANADIAN IMPERIAL BANK OF COMMERCE
   
    /s/Jean-Claude Dupuis
    Signature
  Name: Jean-Claude Dupuis
  Title: Manager, Commercial Banking
     
    /s/ Denis Lemire
    Signature
  Name: Denis Lemire
  Title: Senior Manager & Team Leader, Commercial Banking
     
Accepted this 7th day of June 2021.  

 

  Les Systèmes d’Écran Strong/MDI Inc.
  Strong/MDI Screen Systems Inc.
   
    /s/ François Barrette
    Signature
  Name: François Barrette
  Title: General Manager
     
    /s/ Vicky Thérien
    Signature
  Name: Vicky Thérien
  Title: Controller

 

Page 7 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 

 

Acknowledged this 7th day of June 2021.  
                                                                        
  Ballantyne Strong Inc.
 
    /s/ Mark Roberson
    Signature
  Name: Mark Roberson
  Title: Chief Executive Officer

 

Page 8 of 8Les Systèmes d’Écran Strong/MDI Inc. / Strong/MDI Screen Systems Inc.May 31, 2021

 



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