Debt |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Debt | |
| Debt |
Note 11. Debt
Credit and Security Facility
ESS Metron a wholly owned subsidiary of the Company, has a $10.0 million Credit and Security Facility, which consists of a $6.0 million Revolving Line of Credit and a $4.0 million Equipment Guidance Line.
The $6.0 million Revolving Line of Credit has a term of one year with interest due monthly and principal due at maturity. All amounts borrowed under the Revolving Line of Credit carry a variable interest rate of not less than 4.0% and are secured by the assets of ESS Metron. As of June 30, 2023, the interest rate was 7.5%.
The $4.0 million Equipment Guidance Line has a term of one year and permits the Company to finance up to 80.0% of certain equipment purchases. All amounts borrowed under the Equipment Guidance Line carry a variable interest rate of not less than 4.0% and are secured by the assets of ESS Metron. As of June 30, 2023, the interest rate was 7.5%.
Total borrowings under the Revolving Line of Credit during the six months ended June 30, 2023, were approximately $0.9 million and payments were $0.5 million. During the six months ended June 30, 2023, the entire amount outstanding under the Revolving Line of Credit of approximately $0.4 million converted to a fixed rate term loan (see below). As of June 30, 2023 and December 31, 2022, the outstanding balance of the Revolving Line of Credit was zero and less than $0.1 million, respectively, and was recognized within Other long-term liabilities on the Condensed Consolidated Balance Sheets.
All borrowings and accrued interest under the Equipment Guidance Line convert to fixed rate term loans every six months, which have either five-year terms for borrowings used to acquire vehicles and manufacturing equipment (“Manufacturing Term Loans”) or three-year terms for borrowings of equipment other than vehicles and manufacturing equipment (“Equipment Term Loans”). The Manufacturing Term Loans carry interest at a fixed rate equal to the five-year treasury rate plus 2.5% as of conversion and the Equipment Term Loans carry interest at a fixed rate equal to the three-year treasury rate plus 2.5% as of conversion. During the six months ended June 30, 2023, approximately $0.4 million outstanding under the Credit and Security Facility was converted into a three-year Equipment Term Loan with a fixed interest rate of 6.6%. As of June 30, 2023, no amount was outstanding under Manufacturing Term Loans and approximately $0.4 million was outstanding under Equipment Term Loans.
As of June 30, 2023, the outstanding balance on the Equipment Term Loans was recognized net of approximately $0.1 million of deferred financing costs. The net current balance on the Equipment Term Loans of $0.1 million was recognized within Accrued Expenses and the net long-term balance of $0.3 million was recognized within Other long-term liabilities on the Condensed Consolidated Balance Sheets.
As of June 30, 2023, the Company was in compliance with all covenants of the Credit and Security Facility. |