MINNEAPOLIS, Jan. 27, 2011 /PRNewswire/ -- Appliance Recycling Centers of America, Inc. announced today that it has completed two financing transactions.
On January 24, 2011, Appliance Recycling Centers of America, Inc. and its subsidiaries (the "Company") entered into a new credit agreement (the "Credit Agreement") evidencing a senior secured revolving credit facility with PNC Bank, National Association (the "Bank"), pursuant to which the Company may borrow an aggregate principal amount of up to $15,000,000. The Company intends to use amounts borrowed under the Credit Agreement for ongoing working capital needs and general corporate purposes. The Credit Agreement replaces the Company's current working capital line of credit and the term loan on its Compton, California, recycling facility.
The facility consists of a revolving line of credit and a term loan: 1. The revolving line of credit provides for advances up to $15 million and expires on January 24, 2014. The amount of borrowings available under the line of credit is based on a formula using receivables and inventories. 2. The term loan is for $2,550,000 and matures on January 24, 2014. The term loan is evidenced by a promissory note and mortgage on the Company's California facility located in Compton. The term loan proceeds were used to pay off in its entirety the previously existing mortgage.
Borrowings under the facility are secured by substantially all of the assets of the Company. The Credit Agreement contains certain financial covenants, calculated on a consolidated basis for the Company and its subsidiaries, which, among other things, impose a minimum fixed charge coverage ratio.
Upon entering the Credit Agreement with the Bank, the Company repaid and terminated its prior credit facility with Spectrum Commercial Services. In connection with this termination, the Company repaid all amounts borrowed under the previous credit facility.
Edward R. (Jack) Cameron, President and Chief Executive Officer, commented, "We are very pleased to have completed a credit agreement with PNC Bank. In signing this new facility, we have been able to not only lower our overall financing fees and interest rates, but also to refinance the mortgage on our California building at a very competitive interest rate. We appreciate the opportunity to work with PNC and are very happy to have a strong financial partner as we enter 2011."
About ARCA
ARCA (http://www.arcainc.com/), one of the nation's largest recyclers of major household appliances for the energy conservation programs of electric utilities, currently provides services for 150 utility programs in the U.S. and Canada. Toxic chemicals and environmentally harmful materials such as ozone-depleting refrigerants, PCBs, mercury and oil are carefully recovered in the decommissioning process for destruction or disposal, preventing them from contaminating soil, air and water resources. The Company is also the exclusive North American distributor for UNTHA Recycling Technology (URT), one of the world's leading manufacturers of technologically advanced refrigerator recycling systems and recycling facilities for electrical household appliances and electronic scrap. Through its ApplianceSmart operation (http://www.appliancesmart.com/), ARCA also is one of the nation's leading retailers of special-buy household appliances, primarily those manufactured by General Electric, Electrolux and Whirlpool. These special-buy appliances, which include close-outs, factory overruns and discontinued models, typically are not integrated into the manufacturer's normal distribution channel. ApplianceSmart sells these new appliances at a discount to full retail, offers a 100% money-back guarantee and provides warranties on parts and labor. As of January 2011, ApplianceSmart was operating 19 factory outlets: six in the Minneapolis/St. Paul market; one in the Rochester, Minn., market; four in the Columbus, Ohio, market; six in the Atlanta market; and two in San Antonio, Texas.
This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995, including statements regarding ARCA's future success. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with general economic conditions, competition in the retail and recycling industries and regulatory risks. Other factors that could cause operating and financial results to differ are described in ARCA's periodic reports filed with the Securities and Exchange Commission. Other risks may be detailed from time to time in reports to be filed with the SEC.
Appliance Recycling Centers of America, Inc.
CONTACT: Edward R. (Jack) Cameron, CEO, or Peter Hausback, EVP and CFO,
both of Appliance Recycling Centers of America, Inc., +1-952-930-9000
Web Site: http://www.arcainc.com/
