Debt

6 Months Ended

Jun. 30, 2020

Debt [Abstract]

Debt

(7) Debt

Debt consisted of the following at June 30, 2020 and December 31, 2019:

	June 30,		December 31,		Interest rates at
	2020		2019		June 30, 2020	Maturity
Revolving Credit Facility
Credit Facility	$	161,000	$	126,000	2.85%	June 2024
Debt
Stoneridge Brazil short-term obligations		918		-	5.64%	June 2021
Stoneridge Brazil long-term notes		527		972	8.80%	November 2021
Suzhou short-term credit line		3,538		2,154	4.35% - 5.00%	August 2020
Total debt		4,983		3,126
Less: current portion		(4,831)		(2,672)
Total long-term debt, net	$	152	$	454

Revolving Credit Facility

On September 12, 2014, the Company entered into a Third Amended and Restated Credit Agreement (the “Amended Agreement”). The Amended Agreement provided for a $300,000 revolving credit facility, which replaced the Company’s $100,000 asset-based credit facility and included a letter of credit subfacility, swing line subfacility and multicurrency subfacility.

On June 5, 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (the “2019 Credit Facility”). The 2019 Credit Facility provides for a $400,000 senior secured revolving credit facility and it replaced and superseded the Amended Agreement. The 2019 Credit Facility has an accordion feature which allows the Company to increase the availability by up to $150,000 upon the satisfaction of certain conditions and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility. The 2019 Credit Facility has a termination date of June 5, 2024. In 2019, the Company capitalized $1,366 of deferred financing costs and wrote off previously recorded deferred financing costs of $275 as a result of entering into the 2019 Credit Facility. Borrowings under the 2019 Credit Facility bear interest at either the Base Rate or the LIBOR rate, at the Company’s option, plus the applicable margin as set forth in the 2019 Credit Facility. The 2019 Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio of 3.50 to 1.00 and more than a minimum interest coverage ratio of 3.50 to 1.00.

The 2019 Credit Facility contains customary affirmative covenants and representations. The 2019 Credit Facility also contains customary negative covenants, which, among other things, are subject to certain exceptions, including restrictions on (i) indebtedness, (ii) liens, (iii) liquidations, mergers, consolidations and acquisitions, (iv) disposition of assets or subsidiaries, (v) affiliate transactions, (vi) creation or ownership of certain subsidiaries, partnerships and joint ventures, (vii) continuation of or change in business, (viii) restricted payments, (ix) prepayment of subordinated and junior lien indebtedness, (x) restrictions in agreements on dividends, intercompany loans and granting liens on the collateral, (xi) loans and investments, (xii) sale and leaseback transactions, (xiii) changes in organizational documents and fiscal year and (xiv) transactions with respect to bonding subsidiaries. The 2019 Credit Facility contains customary events of default, subject to customary thresholds and exceptions, including, among other things, (i) non-payment of principal and non-payment of interest and fees, (ii) a material inaccuracy of a representation or warranty at the time made, (iii) a failure to comply with any covenant, subject to customary grace periods in the case of certain affirmative covenants, (iv) cross default of other debt, final judgments and other adverse orders in excess of $30,000, (v) any loan document shall cease to be a legal, valid and binding agreement, (vi) certain uninsured losses or proceedings against assets with a value in excess of $30,000, (vii) ERISA events, (viii) a change of control, or (ix) bankruptcy or insolvency proceedings.

Due to the expected impact of the COVID-19 pandemic on the Company’s end-markets and the resulting expected financial impacts on the Company, on June 26, 2020, the Company entered into a Waiver and Amendment No. 1 to the Fourth Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 provides for certain covenant relief and restrictions during the “Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter ending June 30, 2021 in form and substance satisfactory to the administrative agent). During the Covenant Relief Period:

● the maximum net leverage ratio is suspended;

● the calculation of the minimum interest coverage ratio will exclude second quarter 2020 financial results effective for the quarters ended September 30, 2020 through March 31, 2021;

● the minimum interest coverage ratio of 3.50 is reduced to 2.75 and 3.25 for the quarters ended December 31, 2020 and March 31, 2021, respectively;

● the Company’s liquidity may not be less than $150,000;

● the Company’s aggregate amount of cash and cash equivalents cannot exceed $130,000;

● there are certain restrictions on Restricted Payments (as defined); and

● a Permitted Acquisition (as defined) may be not consummated unless otherwise approved in writing by the required lenders.

Amendment No. 1 changes the leverage based LIBOR pricing grid through the maturity date and also provides for a LIBOR floor of 50 basis points on outstanding borrowings excluding any Specified Hedge Borrowings (as defined) which remain subject to a LIBOR floor of 0 basis points. As of June 30, 2020, Specified Hedge Borrowings were $50,000.

The Company capitalized an additional $1,037 of deferred financing costs as a result of entering into Amendment No. 1.

Borrowings outstanding on the 2019 Credit Facility were $161,000 and $126,000 at June 30, 2020 and December 31, 2019, respectively.

The Company was in compliance with all credit facility covenants at June 30, 2020 and December 31, 2019.

The Company also has outstanding letters of credit of $1,720 and $1,768 at June 30, 2020 and December 31, 2019, respectively.

Debt

Stoneridge Brazil maintains short-term and long-term notes used for working capital purposes which have fixed or variable interest rates. The weighted-average interest rates of short-term and long-term debt of Stoneridge Brazil at June 30, 2020 was 5.64% and 8.80%, respectively. Depending on the specific note, interest is payable either monthly or annually. Principal repayments on Stoneridge Brazil debt at June 30, 2020 are as follows: $1,293 from July 2020 through June 2021 and $152 from July 2021 through December 2021. 

In December 2019, Stoneridge Brazil, established an overdraft credit line which allowed overdrafts on Stoneridge Brazil’s bank account up to a maximum level of 5,000 Brazilian real (“R$”), or $1,244, at December 31, 2019. There was no balance outstanding on the overdraft credit line as of December 31, 2019. During the six months ended June 30, 2020, the subsidiary borrowed and repaid R$7,150, or $1,306, prior to terminating the overdraft credit line.

The Company’s wholly-owned subsidiary located in Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a maximum level of 20,000 Swedish krona, or $2,146 and $2,136, at June 30, 2020 and December 31, 2019, respectively. At June 30, 2020 and December 31, 2019, there was no balance outstanding on this overdraft credit line however, during the six months ended June 30, 2020, the subsidiary borrowed and repaid 126,652 Swedish krona, or $13,629.

The Company’s wholly-owned subsidiary located in Suzhou, China (the “Suzhou subsidiary”), has two credit lines (the “Suzhou credit line”) which allow up to a maximum borrowing level of 50,000 Chinese yuan, or $7,077 at June 30, 2020 and 40,000 Chinese yuan, or $5,746 at December 31, 2019. At June 30, 2020 and December 31, 2019 there was $3,538 and $2,154, respectively, in borrowings outstanding on the Suzhou credit line with weighted-average interest rates of 4.62% and 4.80%, respectively. The Suzhou credit line is included on the condensed consolidated balance sheet within current portion of debt. In addition, the Suzhou subsidiary has a bank acceptance draft line of credit which facilitates the extension of trade payable payment terms that have currently been extended by 180 days. This bank acceptance draft line of credit allows up to a maximum borrowing level of 15,000 Chinese yuan, or $2,123 and $2,154, at June 30, 2020 and December 31, 2019, respectively. At June 30, 2020 there was no funding utilized on the Suzhou bank acceptance draft line and at December 31, 2019 there was approximately $150 utilized on the Suzhou bank acceptance draft line of credit.