America’s Car-Mart signed off on an amended lending agreement, extending its revolving credit until 2019 and increasing its total permitted borrowings by more than 15%.
On Monday (Dec. 12), lenders increased the Bentonville-based used car dealer’s borrowing power to $200 million, from $172.5 million, and extended its revolving credit facilities to Dec. 12, 2019, according to a news release.
The agreement also allows for “an accordion feature allowing for up to an additional $50 million in total commitments, subject to lender approval and/or successful syndication,” the release shows. Three pricing tiers, down from four, are included to determine the applicable interest rate “based on the company’s consolidated leverage ratio for the preceding fiscal quarter.”
The company is required to pay the lenders a monthly fee of 0.25% times the amount of unused credit commitments. The borrowed amount is secured mostly with accounts receivable and inventory of the company’s subsidiaries. The advance rate on accounts receivable will rise to 55%, from 50%, for 37 to 42 month terms, and the advance rate on accounts receivable will increase to 50%, from 45%, for 43 to 60 month terms.
The aggregate limit on repurchasing company stock will be reset to $40 million starting Dec. 12.
“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 Oct. 31, 2016, (53.1% and 26.3% respectively) are strong and a reflection of our focus on cash flows and customer success,” Jeff Williams, president of America’s Car-Mart, said in the release. “This new agreement gives us room to continue to grow our company and to serve customers looking for quality vehicles, affordable payment terms and excellence service.”
The agreement is an amendment to the company’s loan and security agreement dating back to March 9, 2012. The agreement also was amended Oct. 8, 2014, Feb. 13, 2014, June 24, 2013, Feb. 4, 2013, and Sept. 30, 2012.
The lending group includes Bank of America, Bank of Arkansas, Commerce Bank, First Tennessee Bank and Arvest Bank. Bank of America serves as agent for the lenders, lead arranger and book manager for the credit facilities.
Car-Mart (Nasdaq: CRMT) shares closed at $46.20, up 0.87% or 40 cents on Tuesday (Dec. 13) In the past 52 weeks, the stock price has ranged from $19.49 to $47.75.