7.  CREDIT FACILITIES

On April 1, 2018, the Company entered into an amendment to its credit agreement with PNC Bank, National Association, as administrative agent, and the lenders party thereto. The amendment increased the revolving credit facility up to an aggregate maximum principal amount of $400,000, up from $300,000 under the original agreement, added a new term loan credit facility in an aggregate principal amount of $100,000, and increased the accordion feature to permit the increase of the Amended and Restated Facility (“A&R Facility”) by up to an additional $200,000. Borrowings under the line of credit bear interest at defined rates plus an applicable margin based on the Company’s leverage ratio. Quarterly term loan payments of $1,250 are due beginning on July 2, 2018. The quarterly payments increase to $1,875 in July 2020, and $2,500 in July 2022, with the balance due on the maturity date of April 3, 2023. The revolving credit facility matures on April 3, 2023.

The amendment was entered into contemporaneously with the transfer of substantially all of the Company’s historical net operating assets of the Sun Hydraulics brand entities to the Company’s wholly-owned subsidiary, Sun Hydraulics, LLC, a newly-formed Florida limited liability company, and in preparation for the acquisition of Faster. Sun Hydraulics, LLC was added as an additional guarantor of the amended facility.  In addition, Sun Hydraulics, LLC joined the existing Security Agreement between the Company, Enovation Controls and the Bank, for the benefit of the lenders, granting a security interest in substantially all of their respective assets.

The Faster acquisition was completed on April 5, 2018, at which time the Company borrowed $258,000 on the revolving credit facility and executed the term loan. On June 30, 2018, the balance of the term loan was $97,580, net of unamortized debt issuance costs. At June 30, 2018, and December 30, 2017, the balance on the revolving line was $256,750 and $116,000, respectively, with $143,250 and $184,000 of additional credit available, respectively, subject to pro forma compliance with debt covenants. The interest rate in effect at June 30, 2018 was 4.01%. Interest expense recognized during the six months ended June 30, 2018 and July 1, 2017, totaled $4,534 and $1,778, respectively. As of the date of this filing, the Company was in compliance with all debt covenants related to the credit agreement.

On March 30, 2018, the Company entered into a credit agreement with Shinhan Bank that provides a term loan of 1,000,000 Korean won. The proceeds from the term loan will be used to fund the construction of the new production facility in South Korea. The loan matures in March 2020, at which time the full amount will become due.  On June 30, 2018, the balance was 1,000,000 Korean won, approximately $897. Interest is charged at a one-year variable rate, 2.05% as of June 30, 2018. Interest expense recognized during the six months ended June 30, 2018, totaled $5.