Car-Mart Amends Credit Terms
by March 12, 2012 1:15 pm 91 views
BENTONVILLE – America’s Car-Mart Inc. recently amended its credit agreement with lenders increasing its borrowing power to $125 million and extending the due date to March 2015.
The amended loan and security agreement was made public to shareholders Monday (March 12) after becoming effective March 9.
The new credit terms replace a credit line capped at $105 million and provide the growing company with more flexibility, according to chief financial officer Jeff Williams.
At Jan. 31, the end of the company’s third fiscal quarter, there was approximately $21 million in additional credit availability under the previous agreement.
The new agreement also contains a $50 million accordion feature to allow for additional future borrowings, subject to lender approval and/or successful syndication. Other key aspects allow for additional share repurchases in addition to setting new tiered pricing levels.
The amended rate floats with the lowest tier being LIBOR + 2.5%. (The London Interbank Offered Rate is the standard metric set by world banks for short term borrowing. It’s the yardstick by which banks set ranks for large commercial customers.)
The majority of Car-Mart’s lenders increased their loan capacity in the new agreement, with exception of lead manager, Bank of America.
Lender Group Commitments
Arvest: $10 million, up from $5.83 million
Bank of Arkansas: $35 million, equal to previous commitment
Bank of America: $50 million, down from $52.5 million
Commerce Bank: $15 million, up from $11.67 million
First Tennessee Bank: $15 million, new lender
"We continue to have what we believe to be one of the strongest balance sheets in our industry. Our debt to equity and debt to finance receivable ratios at Jan. 31, were 45.7% and 26.0%, respectively. They are strong and a reflection of our focus on cash flows and customer success," Williams said.
Car-Mart shares (NASDAQ:CRMT) were trading at $45.25 in the early afternoon hours Monday, down 53 cents or 1.15% from Friday’s close. In the past 52 weeks the share price has ranged from a high $48.24 to a low $22.77.