Revolving Credit Facility

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Revolving Credit Facility

Revolving Credit Facility

In June 2023, the Company, as Parent Guarantor, along with the Company’s subsidiary, Priority Fulfillment Services, Inc. (“PFS”), as Borrower, entered into a credit agreement (“Credit Agreement”) with Texas Capital Bank, as agent for itself and one or more lenders now or hereafter made a party thereto (the “Lenders”). Under the Credit Agreement, and subject to the terms set forth therein, the Lenders have agreed to provide PFS with cash borrowings or issuances of letters of credit of up to $25.0 million (the "Revolving Credit Facility"). Availability under the Revolving Credit Facility is based on a defined percentage of eligible accounts receivable.

The interest rate applicable to the Revolving Credit Facility is, at the Company’s option, either (a) Secured overnight funding rate (“SOFR”), plus an adjustment of 0.10% to 0.25% based on the borrowing term, plus an applicable margin ranging from 2.25% to 2.75% per annum, based on the Company's utilization of the Revolving Credit Facility or (b) the Alternate Base Rate plus an applicable margin ranging from 1.25% to 1.75% per annum, based on the Company's utilization of the Revolving Credit Facility, both options being subject to a 1.00% floor. The Alternate Base Rate is the highest of (i) Prime Rate of interest as published in The Wall Street Journal as the then-current U.S. Prime Rate, (ii) the Federal Funds rate for such day plus 0.5% and (iii) adjusted term SOFR rate for a one-month interest period plus 1.00%. Quarterly, the company is required to pay a commitment fee ranging from 0.375% to 0.50% per annum on the unused portion of the Revolving Credit Facility. The Revolving Credit Facility matures on the earlier of (i) June 16, 2028 and (ii) the date of termination of the commitments under the Credit Agreement.

All obligations to the Lenders under the Credit Agreement are secured by a guaranty of the Company and each Subsidiary Guarantor and, pursuant to the terms of a separate Pledge and Security Agreement, a lien on substantially all of the assets of PFS and the Subsidiary Guarantors, and a pledge by PFS and each Subsidiary Guarantor of 100% of the equity capital of its respective U.S. subsidiaries and 65% of the equity capital of its respective foreign subsidiaries.

In conjunction with the closing of the Revolving Credit Facility, the Company incurred $0.4 million of issuance costs recorded as Other Assets on the Company's condensed consolidated balance sheet and is amortizing the costs over the term of the Credit Agreement. As of June 30, 2023, we had no borrowings outstanding under the Revolving Credit Facility and had availability of approximately $21.1 million.

As of June 30, 2023, the Company was in compliance with all required covenants in the Revolving Credit Facility.