DEBT

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

DEBT

DEBT

M&T Credit Facilities

As of September 30, 2024, our syndicated, senior secured credit agreement (the “M&T Credit Agreement”) with Manufacturers and Traders Trust Company, as administrative agent (“M&T”), and the lenders party thereto provided a $400 million floor plan credit facility (the “Floor Plan Credit Facility”) and a $41.0 million revolving credit facility (the Revolving Credit Facility” and, together with the Floor Plan Credit Facility, the “M&T Credit Facilities”) which mature February 21, 2027.

On March 8, 2024, we entered into a first amendment to the M&T Credit Agreement. Among other changes, the first amendment eliminated testing of the total net leverage ratio and the fixed charge coverage ratio financial covenants for certain test periods and reduced the required minimum current ratio financial covenant for certain test periods. Additionally, the first amendment created new financial covenants for minimum consolidated EBITDA and minimum liquidity. The first amendment also restricted our ability to make certain investments, dispositions and restricted payments, and it added a new pricing tier to the leveraged-based pricing grid for the M&T Credit Facilities, with pricing 35 basis points higher than the highest tier immediately prior to the first amendment.

On May 14, 2024, we entered into a second amendment to the M&T Credit Agreement. The second amendment reduced the lenders’ aggregate commitment under the Floor Plan Credit Facility from $525 million to $480 million and further amended the definition of the applicable margin of the M&T Credit Facilities to provide that, until the company achieves a total net leverage ratio for the fiscal quarter ending June 30, 2025 that is less than 3.00 to 1.00 (such period, the “Ratio Adjustment Period”), pricing would further increase by 15 basis points higher than the highest tier that was in effect under the first amendment. The second amendment also provided that, during the Ratio Adjustment Period, the company would no longer be permitted to borrow under the Revolving Credit Facility. Under the second amendment, testing of the total net leverage and fixed charge coverage ratio financial covenants were eliminated until the fiscal quarter ending March 31, 2025, and the minimum amounts for the current ratio financial covenant were reduced for certain test periods. The second amendment also made certain adjustments to the minimum consolidated EBITDA and minimum liquidity financial covenants. We agreed in the second amendment to further restrictions on investments and dispositions, and we agreed to certain additional restrictions on transactions with affiliates.

Under the second amendment, we agreed to pay down $10.0 million on our revolving credit facility by December 31, 2024. During the nine months ended September 30, 2024, we paid $7.5 million of such required amount.

During July, August and September 2024, we were not in compliance with certain financial and other covenants under the M&T Credit Agreement, and we entered into a series of temporary, limited waiver agreements with M&T and the lenders party to the M&T Credit Agreement. The M&T limited waivers provided a temporary waiver of defaults resulting from, among other things:

•our inability to comply with the minimum EBITDA financial covenant with respect to June, July, August, September and October 2024;

•our inability to comply with the minimum liquidity financial covenant for July, August, September and October 2024;

•our inability to comply with the minimum current ratio financial covenant for our fiscal quarters ended June 30, 2024 and September 30, 2024; and

•the filing of certain mechanic’s, materialman’s, construction or similar liens against certain of our real property, relating to our failure to pay for certain improvements made thereto.

Under the limited waivers, we decreased the lenders’ aggregate commitment under the Floor Plan Credit Facility from $480 million to $400 million and agreed to a temporary limit on the outstanding loans under the Floor Plan Credit Facility of $380 million. We also agreed, among other terms, to repay the Revolving Credit Facility by $1 million, which we did on August 30, 2024; to provide M&T and the lenders with an increased level of financial reporting; to engage CR3 Partners as our financial advisor; to cause an employee of CR3 Partners to be appointed as our interim Chief Financial Officer until a permanent Chief Financial Officer reasonably acceptable to M&T is selected and approved by our board of directors; to attempt to raise new capital and to engage an investment banker to assist us in connection with doing so; to a new average daily liquidity financial covenant, which was tested weekly; to restrictions on transactions, including investments and dispositions, outside of the ordinary course of business; and to refrain from declaring dividends or making other restricted payments.

At September 30, 2024, there was $316.6 million outstanding on the Floor Plan Credit Facility at an interest rate of 7.43% and $41.0 million outstanding on the Revolving Credit Facility at an interest rate of 8.75%.

As of September 30, 2024, the Floor Plan Credit Facility bears interest at: (a) one-month term SOFR or daily SOFR plus an applicable margin of 2.55% or (b) the Base Rate (as defined in the M&T Credit Agreement) plus a margin of 1.55%. The Floor Plan Credit Facility is also subject to an annual unused commitment fee at 0.15% of the average daily unused portion of the Floor Plan Credit Facility.

As of September 30, 2024, the Revolving Credit Facility bears interest at: (a) one-month term SOFR or daily SOFR plus an applicable margin of 3.40% or (b) the Base Rate plus a margin of 2.40%. As of September 30, 2024, the Revolving Credit Facility was also subject to a quarterly unused commitment fee at 0.15% of the average daily unused portion of the Revolving Credit Facility.

Borrowings under the M&T Credit Agreement are secured by a first priority lien on substantially all of our assets other than real estate.

The M&T Credit Agreement contains certain reporting and compliance-related covenants and negative covenants, among other things, related to borrowing and events of default. It also includes certain non-financial covenants and covenants limiting our ability to dispose of assets, undergo a change in control, merge with, acquire stock, or make investments in other companies, in each case subject to certain exceptions. Upon the occurrence of an event of default, in addition to the lenders being able to declare amounts outstanding under the M&T Credit Facilities due and payable or foreclose on the collateral, the lenders can elect to increase the interest rate by 2.0% per annum during the period of default. The M&T Credit Agreement contains a cross-default provision applicable to the Coliseum Loan Agreement, described below.

On November 15, 2024, we entered into a third amendment to the M&T Credit Agreement. See Note 15 – Subsequent Events to our Condensed Consolidated Financial Statements for additional information.

The M&T Floor Plan Credit Facility consisted of the following:

(In thousands)	September 30, 2024		December 31, 2023
Floor plan notes payable, gross	$	317,245	$	447,647
Debt discount	(694)		(864)
Floor plan notes payable, net of debt discount	$	316,551	$	446,783

Other Long-Term Debt

Other outstanding long-term debt consisted of the following:

	September 30, 2024						December 31, 2023
(In thousands)	Gross Principal Amount		Debt Discount		Total Debt, Net of Debt Discount		Gross Principal Amount		Debt Discount		Total Debt, Net of Debt Discount
Term loan and mortgages	$	73,245	$	(1,341)	$	71,904	$	64,870	$	(2,300)	$	62,570
Less: current portion	1,162		—		1,162		1,141		—		1,141
Total	$	72,083	$	(1,341)	$	70,742	$	63,729	$	(2,300)	$	61,429

Mortgages

In July 2023, we entered into two mortgages for total proceeds of $29.3 million secured by certain real estate assets at our Murfreesboro and Knoxville locations. The loans bear interest between 6.85% and 7.10% per annum and mature in July 2033.

Term Loan from Coliseum

On December 29, 2023, we entered into a term loan agreement (the “Coliseum Loan Agreement”) with Coliseum Holdings I, LLC as lender (the “Lender”) under which the Lender provided us with a term loan initially in the principal amount of $35 million (the “Loan”). The Lender is an affiliate of Coliseum Capital Management, LLC (“Coliseum”). The Loan has a maturity date of December 29, 2026. Certain funds and accounts managed by Coliseum held 81% of our common stock (calculated as if the preferred stock has been converted into common stock) as of September 30, 2024, and the Lender is therefore considered a related party.

The Loan bears interest at a rate of 12% per annum, payable monthly in cash on the outstanding loan balance, except that for any quarterly period during the first year of the Loan term, we have the option at the beginning of such quarter to make pay-in-kind elections, whereby the entire outstanding balance would be charged interest at 14% per annum and interest amounts will be added to the outstanding principal rather than paid currently in cash. We exercised this option during each of the first four quarterly periods of the Loan. The Loan is secured by mortgages on all of our real estate, except our real estate at our Murfreesboro and Knoxville locations, and certain related assets. Issuance costs of $2 million were recorded as debt discount and are being amortized over the term of the Loan to interest expense using the effective interest method. The Loan is carried at the outstanding principal balance, less debt issuance costs and is included in Related party debt, current portion and Related party debt, non-current portion, net of debt discount in our Condensed Consolidated Balance Sheets.

On May 15, 2024, we entered into a first amendment to the Coliseum Loan Agreement. Under the first amendment, we borrowed an additional $15 million advance of the Loan and, as additional security for such advance, we mortgaged to the Lender our real property located in Fort Pierce, Florida and certain related assets. In connection with the additional advance, we issued warrants to clients of Coliseum to purchase 2,000,000 shares of our common stock at a price of $5.25 per share, subject to certain adjustments. The warrants may be exercised at any time on or after May 15, 2024 and until May 15, 2034.

As of September 30, 2024, the outstanding principal balance of the Loan, including all interest paid-in-kind through such date, was $54.8 million.

Under the terms of the Loan, for any repayments and prepayments that occur prior to January 1, 2025, we will owe a prepayment penalty of 1.0% on the outstanding principal balance being repaid and a yield maintenance premium approximately equal to the remaining interest owed on such balance repaid from date of repayment through January 1, 2025. For repayments and prepayments that occur after January 1, 2025 through maturity, we will owe a prepayment penalty of 2.0% on the outstanding principal balance being repaid.

The Coliseum Loan Agreement contains certain reporting and compliance-related covenants. The Coliseum Loan Agreement contains negative covenants, among other things, related to borrowing and events of default. It also includes certain non-financial covenants and covenants limiting our ability to dispose of assets, undergo a change in control, merge with, acquire stock, or make investments in other companies, in each case subject to certain exceptions. Upon the occurrence of an event of default, in addition to the lender being able to declare amounts outstanding under the Loan due and payable or foreclose on the collateral, the lender can elect to increase the interest rate by 7.0% per annum during the period of default. In addition, the Loan contains a cross-default provision applicable to the M&T Credit Agreement.

As of September 30, 2024, we were in default under the Coliseum Loan Agreement resulting from the filing of certain mechanic’s, materialman’s, construction or similar liens against certain of the real property mortgaged to the Lender, relating to our failure to pay for certain improvements made thereto. On September 27, 2024, the Lender granted us a waiver with respect to this event of default provided that any such liens are discharged by specified deadlines.

On November 15, 2024, we obtained an additional waiver under the Coliseum Loan Agreement. See Note 15 – Subsequent Events to our Condensed Consolidated Financial Statements for additional information.

Future maturities of long-term debt are as follows:

(In thousands)
Remainder of 2024	$	658
2025	771
2026	50,826
2027	886
2028	950
Thereafter	19,154
Total	$	73,245