America’s Car-Mart amends pricing tiers under revolving loan agreement

By Marisa Wong

Morgantown, W.Va., Oct. 30 – America’s Car-Mart, Inc. amended on Oct. 25 its second amended and restated loan agreement dated Dec. 12, 2016 to modify the pricing grid for determining the applicable interest rate and to update a definition, according to an 8-K filed Monday with the Securities and Exchange Commission.

The amendment provides for a 2.5-basis-points decrease in the second pricing tier to Libor plus 235 bps and a 12.5-bps decrease in the third pricing tier to Libor plus 275 bps. Pricing tiers are based on the company’s consolidated leverage ratio for the preceding fiscal quarter. The amendment also adds a fourth pricing tier at Libor plus 287.5 bps if the company’s consolidated leverage ratio is greater than 1.75 to 1.00 for the preceding fiscal quarter.

The amendment does not change the first pricing tier, which is at Libor plus 225 bps. The current applicable interest rate for revolving loans is in the second pricing tier, Libor plus 235 bps.

The company also amended the loan agreement to amend the definition of permitted distributions. The amendment (a) increases the aggregate limit on repurchases beginning with the effective date of the agreement to $50 million (net of proceeds received from the exercise of stock options) plus, for a period of six months, the amount of repurchases available to the company immediately prior to the effective date of the amendment (net of proceeds received from exercise of stock options); and (b) reduces the upper threshold to 20% from 25% for minimum net availability of the borrowing base for financial covenant testing and limitations on distributions.

In addition, the amendment increases the termination fee to 0.5% of the revolver commitment being terminated.

Borrowings continue to be secured primarily by accounts receivable and inventory.

Bank of America, NA is the agent. Subsidiaries Colonial Auto Finance, Inc., America’s Car Mart, Inc. and Texas Car-Mart, Inc. are borrowers.

America’s Car-Mart operates 143 automotive dealerships in 11 states. The company is based in Bentonville, Ark.

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