Bank Indebtedness and Letter of Credit

3 Months Ended

Mar. 31, 2012

Bank Indebtedness and Letter Of Credit [Abstract]

Bank Indebtedness and Letter Of Credit Disclosure [Text Block]

Bank Indebtedness and Letter of Credit

The Company has a credit facility with a Canadian chartered bank. The credit facility for AC Technical is $500,000 and bears interest at the bank’s domestic prime rate plus 1.5% for Canadian dollar amounts. Interest is payable monthly. The facility is secured by a first security interest in book debts, inventory, certain other assets and keyman life insurance. As at March 31, 2012, the interest rate of the Canadian dollar amount was 4.0%. At March 31, 2012, the borrowing outstanding under the facility was $246,509 and the average borrowing outstanding during the three months ended March 31, 2012 was $123,500. The agreements contain financial covenants pertaining to maintenance of tangible net worth and debt service coverage ratio. In the event of default, the bank could at its discretion cancel the facilities and demand immediate repayment of all outstanding amounts.

At March 31, 2012, the Company was contingently liable under an irrevocable letter of credit issued by our bank in October 2011 in the amount of $750,000 which will expire in October 2012. The letter of credit was issued to an insurance company as security for the bonding facility in the amount of $750,000 to AC Technical.

CREATIVE VISTAS INC 10-Q