Notes to Consolidated Financial Statements

7. LONG-TERM DEBT PAYABLE TO BANKS AND OTHERS

Long-term debt payable to banks and others, including current maturities, at March 31 consisted of the following (in thousands):

2001
 		 2000
Credit agreement - 10.5% $    2,900 $ -
Credit agreement - 9.95% 153,368 -
Credit agreement - 8.67% - 154,723
Term loan - 8.69% - 46,250
Term loan - 9.06% 38,750 -
Bridge loan -15.44% - 75,000
Senior Subordinated Notes - 16% 76,332 -
Other 1,289 1,371
272,639 277,344
Less current maturities and
amounts callable by lenders		 271,395 82,585
Less unamortized discount 189 -
Total long-term debt $    1,055 $ 194,759


Credit Facilities - Effective December 31, 2000, the Company was not able to meet certain financial ratio requirements of the credit facility (the "Credit Facility") as amended. Pursuant to discussions with the senior debt lenders (the "Lenders"), the Company and the Lenders agreed to an amendment to the Credit Facility to include a forbearance agreement as well as certain other fees and conditions, including the suspension of dividend payments. During the forbearance period the Lenders agree not to exercise certain of their rights and remedies under the Credit Agreement. The Company has, accordingly, classified its bank debt as "current" to reflect the fact that the forbearance period is less than one year. The term of the forbearance period, initially scheduled to expire on January 31, 2001, was subsequently extended by an additional amendment to March 29, 2001. This additional amendment also reduced the Revolver from $200 million to $175 million with an additional sub-limit on usage at $162 million. Prior to the March 29, 2001 expiration date, an extension was agreed to extend the termination date until June 27, 2001, provided that certain performance and debt reduction requirements are achieved in which case the forbearance termination date may be further extended under similar terms and conditions until September 27, 2001. The debt reduction requirements of the forbearance agreement stipulated that $50 million was to be repaid prior to the June 27, 2001 date, which was deemed satisfied, with the consent of the Lenders, by the sale of the Company's Breeze Industrial and Pebra divisions in July 2001, and the remainder to be repaid prior to the September 27, 2001 termination date. Funds for such debt repayments are expected to be realized from the sale of business assets with the prior consent of the Lenders. The forbearance agreement also requires the achievement of minimum levels of EBITDA (earnings before interest, taxes, depreciation, and amortization), and the adherence to borrowing limits as adjusted based on the scheduled debt reduction. Other terms of the forbearance agreement include certain fees, reporting and consulting requirements. The Company has taken action to reduce its debt by preparing to sell certain of its businesses in order to either comply with the requirements of the existing agreement as amended or to be in an improved financial position to negotiate further amendments or borrowing alternatives. The Company has made all of its scheduled interest and principal payments on a timely basis. Various factors, including changes in business conditions, anticipated proceeds from the sale of operations and economic conditions in domestic and international markets in which the Company competes, will impact the restructuring results and may affect the ability of the Company to restore compliance with the financial ratios specified in the existing Credit Facility.

The Company has unused borrowing capacity for both domestic and international operations of $6.2 million as of March 31, 2001, including letters of credit of $5.0 million. The Revolver and Term Loan are secured by the Company's assets. As of March 31, 2001, the Company had total borrowings of $271.2 million which have a current weighted-average interest rate of 11.5%.

Borrowings under the Revolver as of March 31, 2001, were $156.3 million. Interest on the Revolver is tied to the primary bank's prime rate, or at the Company's option, the London Interbank Offered Rate ("LIBOR"), plus a margin that varies depending upon the Company's achievement of certain operating results. As of March 31, 2001, $192.1 million of the Company's outstanding borrowings utilized LIBOR, of which $165.7 million were payable in U.S. Dollars and $7.3 million and $19.1 million were payable in Deutsche marks and Pounds sterling, respectively. The terms of the forbearance agreement provide that the Company's option to borrow at LIBOR is conditional upon the achievement of the debt reduction targets of $50 million by June 27, 2001, and the remainder by September 27, 2001. LIBOR borrowings, expiring prior to these dates, may not be renewed unless such debt reduction has occurred. Effective June 7, 2001, LIBOR borrowings consequently were converted to base rate borrowings at prime rate of 7% plus a margin of 2.5% to equal a borrowing rate of 9.5%.

Borrowings under the Term Loan as of March 31, 2001, were $38.8 million. As discussed above, the Term Debt, as well as all other debt under the Credit Facility, has been classified as currently payable to reflect the forbearance agreement in place.

The Credit Facility requires the Company to maintain interest rate protection on a minimum of 50% of its variable rate debt. The Company has, accordingly, provided sufficiently for this protection by means of interest rate swap agreements which have fixed the rate of interest on $50.0 million of debt at a base rate of 5.48% through May 4, 2002, and $75.0 million of debt at a base rate of 6.58% through March 3, 2003. Under the agreement, the base interest rate is added to the applicable interest rate margin to determine the total interest rate in effect. The Credit Facility restricts annual capital expenditures to $13.0 million in 2002 and $15.0 million thereafter, and contains other customary financial covenants, including the requirement to maintain certain financial ratios relating to performance, interest expense and debt levels.

Senior Subordinated Notes - On August 30, 2000, the Company completed a private placement of $75 million in senior subordinated notes (the "Notes") and certain warrants to purchase shares of the Company's common stock (the "Warrants") to a group of institutional investors (collectively, the "Purchasers"). The Company used the proceeds of the private placement to retire, in full, a $75 million Bridge Loan held by a group of lenders led by Fleet National Bank.

The Notes are due on August 29, 2005 and bear interest at a rate of 16% per annum, consisting of 13% cash interest on principal, payable quarterly, and 3% interest on principal, payable quarterly in "payment-in-kind" promissory notes. Prepayment of the Notes is permitted after August 29, 2001 at a premium initially of 9% declining to 5%, 3%, and 1% annually, respectively, thereafter. The Notes contain customary financial covenants and events of default, including a cross-default provision to the Company's senior credit facility.

The Warrants entitle the Purchasers to acquire in the aggregate 427,602 shares, or 6.5%, of the common stock of the Company at an exercise price of $9.93 a share, which represents the average daily closing price of the Company's common stock on the New York Stock Exchange for the thirty (30) days preceding the completion of the private placement, and which may be subject to a price adjustment on the first anniversary of the issuance of the Warrants. The Warrants must be exercised by August 29, 2010. These Warrants have been valued at an appraised amount of $0.2 million and have been recorded in paid in capital. In connection with the transaction, the Company and certain of its subsidiaries signed a Consent and Amendment Agreement with the Lenders under the Company's $250 million Credit Facility existing at that time, in which the Lenders consented to the private placement and amended certain financial covenants associated with the Credit Facility.

Other - As of March 31, 2001, the Company had $1.3 million of other long-term debt consisting of collateralized borrowing arrangements with fixed interest rates of 3% and 3.75% and loans on life insurance policies owned by the Company with a fixed interest rate of 5%.

Debt maturities (in thousands):
2002 $ 88
2003 91
2004 94
2005 79
2006 45
Thereafter 892
Total $ 1,289