Question-and-Answer Session
Operator
Yes sir thank you. (Operator Instructions) Our first question comes from Steve Raineri - Franklin Templeton. Please go ahead
Steve Raineri - Franklin Templeton
Good morning everyone.
Jim Leto
Good morning Steve.
Joe Ragan
Good morning Steve.
Steve Raineri - Franklin Templeton
You mentioned something about a new credit agreement. Where do we stand on that?
Jim Leto
We are actually working through that now Steve we have made some progress and including in the facility with the future facility the foreign component that we have been looking for pretty
Jim Leto
I’m sorry, it’s the flooring components. Previously we had that as a part of our credit agreement were there is a flooring facility that actually works with the OEM partners and shares some of the discounting. It’s a very beneficial arrangement which could significantly cut our interest expense for the year. Previously in 2005 and prior we had one of those facilities in place. It’s just a difficult inter-creditor agreement to work through.
Steve Raineri - Franklin Templeton
Just like what the auto manufacturers with the dealers?
Jim Leto
The auto manufactures, with retailers it is exactly like that. So where GTSI has an arrangement previously we’ve had an arrangement with GE and then GE had the arrangements with the OEM’s where they got discounts and that's how they made their money. It's pretty sophisticated from our existing bank syndicate, so we've been working though those issues and we fell pretty good about the progress we’ve made.
Steve Raineri - Franklin Templeton
When do you anticipate wrapping this up?
Jim Leto
It is imminent. The discussions are underway so?
Steve Raineri - Franklin Templeton
And why do you think -- what type of size facility are we looking at? How much liquidity can it provide to our company?
Jim Leto
It would proved as much as $50 million of liquidity potently. Those were our discussions and the value of that would be a minimum of a million dollars in an annual bases in reduced interest expenses. So it’s a great deal. It just takes a little while to get through the inter-creditor issues and our bank group had done a great job in negotiating with them.
Steve Raineri - Franklin Templeton
Now wouldn’t $50 million be lower that your prior credit agreement?
Jim Leto
The prior credit agreement, that would be in addition to the senor facility. So we’ve be at least a $100 million total. Our current senor facility is $135 million. But we’ve got no where near that in ’07 , closer to $50 million is where we peaked out for our total need. So we are trying to balance the size of the facility with unused line fees, etc to optimize the agreement.
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