Notes Payable - Floor Plan

12 Months Ended

Sep. 30, 2021

Notes Payable - Floor Plan [Abstract]

Notes Payable - Floor Plan

10. Notes Payable — Floor Plan

The Company maintains an ongoing wholesale marine products inventory financing program with a syndicate of banks.The program is administered by Wells Fargo Commercial Distribution Finance, LLC (“Wells Fargo”). On September 23, 2021, the Company entered into the Third Amendment to the Sixth Amended and Restated Inventory Financing Agreement (the “Inventory Financing Facility”), to, among other things, address the future discontinuance of LIBOR by clarifying the mechanics related to the transition to a replacement benchmark rate and to extend the term of the Inventory Financing Facility to November 1, 2021. The maximum borrowing amount available remained unchanged. The Inventory Financing Facility is used to purchase new and pre-owned inventory (boats, engines, and trailers). The outstanding balance of the facility was $114.2 million and $124.0 million, as of September 30, 2021 and 2020, respectively.

On December 10, 2020, the Company and certain of its subsidiaries entered into the Second Amendment to the Inventory Financing Facility to change certain compliance reporting from weekly to monthly. The maximum borrowing amount available, interest rates and the termination date of the agreement remained unchanged.

For the years ended September 30, 2021, 2020 and 2019, interest on new boats and for rental units is calculated using the one month London Inter-Bank Offering Rate (“LIBOR”) plus an applicable margin of 2.75% to 5.00% depending on the age of the inventory. Interest on pre-owned boats is calculated at the new boat rate plus 0.25%. Wells Fargo will finance 100.0% of the vendor invoice price for new boats, engines and trailers. As of September 30, 2021 the interest rate on the Inventory Financing Facility ranged from 3.08% to 5.33% for new inventory and 3.33% to 5.58% for pre-owned inventory. As of September 30, 2020 the interest rate on the Inventory Financing Facility ranged from 3.15% to 5.40% for new inventory and 3.40% to 5.65% for pre-owned inventory. Borrowing capacity available at September 30, 2021 and September 30, 2020 was $278.3 million and $268.5 million, respectively.

As part of the Third Amendment to the Inventory Financing Facility, effective October 1, 2021, the reference rate on the Inventory Financing Facility will change from LIBOR. Subsequent to the change, the interest rate for amounts outstanding under the Inventory Financing Facility will be calculated using an applicable margin of 2.75% to 5.00% for new boats (and at the new boat rate plus 0.25% for pre-owned boats) plus the greater of 1) the Adjusted 30-Day Average SOFR (as defined in the Third Amendment to the Inventory Financing Facility) or 2) a floor of 0.0%.

The Inventory Financing Facility has certain financial and non-financial covenants as specified in the agreement. The financial covenants include requirements to comply with a maximum funded debt to EBITDA ratio as well as a minimum fixed charge coverage ratio. In addition, certain non-financial covenants could restrict the Company’s ability to sell assets (excluding inventory in the normal course of business), engage in certain mergers and acquisitions, incur additional debt and pay cash dividends or distributions, among others. The Company was in compliance with all covenants at September 30, 2021.

The collateral for the Inventory Financing Facility consists primarily of our inventory that is financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts and proceeds of the foregoing, and excludes the collateral that underlies the Credit Agreement (defined below).