Creative 2003 Annual Report Download - page 40

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3Dlabs has an overdraft facility for 2.0 million Pounds Sterling expiring on December 31, 2002 and the outstanding balance
was $3.7 million as at June 30, 2002. The facility charges interest at a rate of 1.0% above the bank’s currency base rate
if the overdraft balance is less than 2.0 million Pounds Sterling and 4.0% above the bank’s currency base rate at any
amount exceeding 2.0 million Pounds Sterling. The bank’s currency base rate was 4.0% at June 30, 2002. A $3.5 million
restricted investment with a Bermuda financial institution was held as collateral for this facility in the form of a certificate
of deposit (see Note 1). At June 30, 2003, the outstanding balance has been repaid in full and all liabilities discharged.
In August 2000, 3Dlabs entered into a $1.0 million credit facility to finance certain software purchases. The facility
requires equal quarterly installments of $0.25 million and expired December 31, 2001. The repayments under the credit
facility were revised in 2001, resulting in equal monthly repayments of $0.08 million commencing January 2002. The
advances under the facility accrue interest at a per annum rate of the bank’s currency base rate of 4.0% plus 1%. At June
30, 2002, $0.75 million was outstanding. A $1.0 million restricted investment with a Bermuda financial institution was
held as collateral for this facility in the form of a certificate of deposit (see Note 1). At June 30, 2003, the outstanding
balance has been repaid in full and all liabilities discharged.
3Dlabs has entered into a Loan and Security Agreement with a financial institution in an amount up to $20.0 million or
85% of the qualified accounts receivable of 3Dlabs’ U.S. companies, whichever is less. The Agreement expires in July 2004
and is secured by all tangible and intangible assets of 3Dlabs. Borrowings under the Agreement bear interest at 1.25%
above the institution’s prime rate. The Agreement contains certain covenants, including that 3Dlabs meet certain agreed-
upon financial covenants. There were no borrowings outstanding under the Agreement as at June 30, 2003.
In December 1999, prior to its acquisition by Creative, 3Dlabs issued a subordinated convertible note to an investor in the
principal amount of $7.5 million which matures in December 2004. The outstanding unpaid principal balance under the
note bears interest at a rate of 4.5% per annum, payable upon conversion, prepayment or at maturity. The holder of the
note has the option to convert all or a portion of the outstanding unpaid principal balance under the note plus interest
into shares of 3Dlabs’ common stock at a conversion price of $5.563 per share or to transfer the note to a third party. At
any time after June 2002, 3Dlabs has the option to require the noteholder to convert all or a portion of the outstanding
unpaid principal balance under the note plus interest, so long as the weighted average closing share price of 3Dlabs’
common stock is equal to or greater than the conversion price of $5.563 for twenty trading days prior to the conversion
date. In August 2002, after the closing of the acquisition of 3Dlabs by Creative, 3Dlabs, the noteholder and Creative
entered into an amendment of the convertible subordinated note agreement and convertible subordinated note to allow
the outstanding unpaid principal balance under the note plus interest to be convertible into ordinary shares of Creative,
at the conversion price equal to $18.05. To-date, no conversion has been made. 3Dlabs may prepay the outstanding
unpaid principal balance plus interest due upon thirty days’ prior written notice to the noteholder.
The following table presents the payments due by period for the long term debt and capital lease obligations as of
June 30, 2003:
Payments Due by Period (US$’000)
Less than 1 to 3 4 to 5 After 5
Debt Obligations Total 1 year years years years
Long Term Debt $ 29,091 $ 3,423 $ 6,845 $ 6,845 $ 11,978
Convertible Note 8,764 – 8,764 – –
Capital Lease Obligations 3,433 1,949 1,439 45 –
Total Debt Obligations $ 41,288 $ 5,372 $ 17,048 $ 6,890 $ 11,978