|9 Months Ended|
Oct. 03, 2022
|Debt Disclosure [Abstract]|
The Company’s Credit Agreement with a syndicate of commercial banks provides up to $71.8 million in financing. The Credit Agreement, which terminates on June 15, 2024, provides the Company with lender financing structured as a $57.8 million term loan, a $4 million revolving loan, and a $10 million delayed draw term loan facility (the “Delayed Draw Term Loan Facility”) provided by a related party that is a significant stockholder. The terms of the Credit Agreement require the Company to repay the principal of the term loan in quarterly installments with the balance due at the maturity date.
The loan and revolving line of credit are secured by substantially all of the Company’s assets and incurs cash interest on outstanding amounts at 4.75% per annum through June 15, 2023 and 6.75% from June 16, 2023 through maturity. Pursuant to the terms of an amendment to the Credit Agreement effective as of March 9, 2022, certain of the covenants of the Credit Agreement were amended, and the Company, together with the other borrower and the guarantors party to the Credit Agreement, agreed to pay incremental deferred interest of 2% per annum, in the event that the obligations under the Credit Agreement are not repaid on or prior to June 15, 2023; provided, however, that if no event of default has occurred and is continuing then (1) no incremental deferred interest will be due if all of the obligations under the Credit Agreement have been paid on or prior to December 31, 2022, and (2) only 50% of the incremental deferred interest will be owed if all of the obligations under the Credit Agreement have been paid from and after January 1, 2023 and on or prior to March 31, 2023.
Please see Note 1, Organization and Summary of Significant Accounting Policies, for further discussion on the Credit Agreement, including regarding our potential default thereof.Interest expense for the three and nine months ended October 3, 2022 was $2.2 million and $6.6 million. Included within interest expense for the three and nine months ended October 3, 2022 is amortization of debt issuance costs in the amount of $0.1 million and $0.4 million and the amortization of related party note debt discount in the amount of $0.1 million and $0.4 million. Additionally, included within interest expense for the three and nine months ended October 3, 2022 is non-cash interest expense on the redeemable preferred stock in the amount of $1.0 million and $2.8 million. Interest expense for the three and nine months ended September 30, 2021 was de minimis.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef