Revolving Credit Facility

6 Months Ended

Dec. 31, 2024

Debt Disclosure [Abstract]

Revolving Credit Facility

Note 9: Revolving Credit Facility

On December 21, 2023, the Company terminated its existing credit facility with Bank of America and established a new credit facility with White Oak Commercial Financing, LLC.

Availability under the terminated Bank of America Credit Facility was limited by the Company’s borrowing base calculation, as defined in the credit agreement relating to this facility. In addition, there was a commitment fee of 0.25% for unused credit line with fees for the six months ending December 31, 2023, of $0.63 million. The credit facility was terminated on December 21, 2023, there was no revolver balance or availability after termination. As of December 21, 2023, the effective interest rate was 8.9% (SOFR plus a spread of 3.11%).

On December 21, 2023, the Company entered into a new credit facility with White Oak Commercial Finance, LLC, which will mature on December 21, 2026. The facility is a $120 million asset-based revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit facility bear interest at the 30-day SOFR rate, subject to a floor of 2%, plus a margin ranging from 4.50% to 4.75%, depending on the Company’s utilization and consolidated fixed charge coverage ratio. As of December 31, 2024, the effective interest rate was 9.7%.

If the Company reduces or terminates the commitments under the Revolving Credit Facility before its maturity, it will incur an early termination fee of 2% if done before December 21, 2024, or 1% if done between December 21, 2024, and August 21, 2025. Additionally, if the facility is reduced or terminated on or before June 21, 2025, the Company is required to pay a minimum interest amount of 10% of the revolver minimum based on $100 million until December 2024.

Availability under the Revolving Credit Facility is determined by the Company’s borrowing base calculation, as defined in the credit agreement relating to this facility. The Company also incurs a commitment fee of 0.25% on unused credit line with fees for six months ending December 31, 2024, of $0.1 million. As of December 31, 2024, the Company had approximately $50 million in available credit, with an outstanding balance of $70 million.

The maximum borrowings under the Revolving Credit Facility are determined by a formula based on eligible accounts receivable and inventory, subject to lender discretion. The facility includes standard representations and warranties, events of default, and financial reporting requirements, including maintaining a fixed charge coverage ratio of at least 1.1 to 1.0 on a trailing twelve-month basis. The facility also imposes covenants restricting the Company’s ability to incur additional indebtedness, grant liens, pay dividends, make unpermitted investments, or materially change its business operations. The facility is secured by a first-priority security interest in the Company’s and its subsidiaries’ cash, accounts receivable, and related assets.

The Company was in compliance with its covenants as of December 31, 2024. Revolving Credit Facility, net consists of the following at:

($ in thousands)	December 31, 2024		June 30, 2024
Outstanding Balance	$	69,665	$	72,979
Less: Deferred Finance Costs		(2,690)		(3,392	)
Revolving Credit Facility, Net	$	66,975	$	69,587

During the three and six months ending December 31, 2024, and 2023, the Company had interest expenses of $2.0 million and $3.0 million, respectively and $4.0 million and $5.9 million, respectively. Amortization of deferred finance costs of $0.4 million, $0.1 million, respectively $0.7 million and $0.2 million, respectively and unused credit line fees of $0.1 million and $0.01 million, respectively.