Note 16 - Debt |
6 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Notes to Financial Statements | |
| Debt Disclosure [Text Block] |
Note 16. Debt
On April 27, 2022, the Company entered into a loan agreement and a security agreement with a bank that provides the Company with a $40,000,000 revolving line of credit that is secured by certain of the Company’s U.S. assets. The line of credit was originally scheduled to mature on April 27, 2025. Borrowed amounts will bear interest at a variable rate of the CME Group one-month term (“SOFR”) plus 1.85%, but not less than 1.80% per annum. As of March 31, 2025, the interest rate was 6.17%. The loan agreement and the security agreement contains customary affirmative and negative covenants and requirements relating to the Company and its operations, including a requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing twelve (12) month period. Debt service coverage ratio is the ratio of Cash Available for Debt Service to Debt Service, each as defined in the loan agreement. Debt and Cash Flow are also as defined in the loan agreement for the purposes of the debt to cash flow ratio covenant.
On August 5, 2024, the Company entered into an amendment to the loan agreement that, among other things, (i) eliminated the requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and that the Company maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing 12 month period; and (ii) added a requirement that the Company maintain accounts with the bank with a minimum aggregate liquidity of unrestricted and unencumbered cash and cash equivalents at all times of not less than the outstanding principal balance of the Company’s revolving credit promissory note payable to the bank. The Company was in compliance with the debt covenant for the three and six months ended March 31, 2025. The line of credit is collateralized by Clearfield, Inc.’s assets of $270,783,000 as of March 31, 2025. The outstanding principal balance on the line of credit was at March 31, 2025 and September 30, 2024.
On April 25, 2025, the Company entered into an amendment to the loan agreement that extended the maturity of the line of credit from April 27, 2025 to April 25, 2026.
During March 2021, Nestor Cables entered into a loan agreement, providing a €2,000,000 senior loan with a term of years. The Finland Government pays the interest, capped at 5% with the interest to be paid by the Finnish Government when the loan is used as intended and is repayable with a 2% additional interest penalty if there is a violation of the terms. The loan expired on March 31, 2024. A new loan was issued under the same program with consistent terms as detailed above and is due on March 31, 2026. The repayment and issuance of these loans occurred in April 2024. The loan is fully secured by a Finnish government guarantee. As of March 31, 2025, and September 30, 2024, the Company owed €2,000,000 on this loan, which equates to $2,165,000 and $2,228,000, respectively. As of September 30, 2024, Nestor Cables was not in compliance with the annual equity ratio covenant but received a waiver from the bank. The interest expense associated with this loan has been presented net of government payments on the Company’s income statement.
One of Nestor Cable’s bank accounts includes a feature that allows for applicable bank accounts to be in a negative position up to a certain maximum overdraft up to €2,000,000. Interest on drawn balances accrues at a rate equal to the 3-month Euribor rate plus 1.15%. As of March 31, 2025, and September 30, 2024, the Company had utilized overdrafts in the amount of €1,144,000 or $1,239,000 and €0, respectively. |