In February 2010, the Company completed a three-year term subordinated secured debenture financing in the amount of $9,000, at an effective interest rate of 11.89%.
In August 2012, the Company redeemed $500 of the subordinated secured debentures and in October 2012, the balance of the debentures were redeemed in the principal amount of $8,500. A 2% early redemption fee on the principal amount was paid to all debenture holders as the debentures were to have matured in February 2013. Utilization of the Company's operating line of credit to redeem the debentures is expected to achieve significant savings in interest costs because of the reduction in comparable interest rates.
The Company's Masonry Products and Landscape Products business segments are seasonal in nature. The Landscape Products business is affected to a greater degree than the Masonry Products business. As a result of this seasonality, operating results are impacted accordingly and cash requirements are generally expected to increase through the first half of the year and decline through the second half of the year.
As at December 31, 2012, bank operating advances were $10,435. This represented an increase of $5,288 from the amount outstanding at December 31, 2011.
Trade payables totaled $11,675 at December 31, 2012 compared to $9,026 at December 31, 2011.
The ratio of total liabilities to shareholders' equity was 0.50:1 at December 31, 2012 compared to 0.51:1 at December 31, 2011. The decrease in this ratio from December 2011 to December 2012 was primarily due to higher retained earnings resulting from the improvement in operating results in 2012 and the decline in debt due to repayments. The decrease to the ratio was offset in part by an increase in the foreign currency translation loss in 'Accumulated other comprehensive loss' due to the strengthening of the Canadian dollar against the U.S. dollar in 2012.
As at December 31, 2012, working capital was $7,325, representing a working capital ratio of 1.25:1 compared to working capital and a working capital ratio at December 31, 2011 of $13,137, and 1.65:1, respectively. The decline in working capital was primarily due to an increase in bank operating advances in 2012. Cash and cash equivalents totaled $1,412 at December 31, 2012 compared to $1,180 at December 31, 2011.
The Company's bank credit agreement provides for borrowings up to $20,000 based on margin formulae for trade receivables and inventories, less priority claims and the mark-to-market exposure on swap contracts, if applicable. It is a demand facility secured primarily by trade receivable and inventories of the Company's Masonry Products and Landscape Products business segments in Canada and the U.S. The agreement also contains certain financial covenants. As at December 31, 2012, the Company was in compliance with all the financial covenants.
On January 21, 2013, the Company amended its bank credit agreement, increasing its borrowing capacity to $22,000. This borrowing amount is based on the same margin formulae described above.
As at December 31, 2012, the borrowing limit was $17,864. The utilization was $10,682 and was comprised of a $8,900 banker's acceptance, 90 day note, a current account overdraft balance of $1,535, and outstanding letters of credit for $247.
The Company expects that future cash flows from operations, cash and cash equivalents on hand and the unutilized balance of its operating credit facility will be sufficient to satisfy its obligations as they become due.
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