Note 11 - Debt

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

11.  DEBT

The Company has a Credit and Security Agreement with KeyBank National Association (as amended, the "Existing Credit Agreement"). The Existing Credit Agreement provides a $175 million 5-year senior secured revolving credit facility ("Revolver"), with a sublimit of up to $10 million available for letters of credit and a sublimit of up to $5 million available for swing line loans. Revolving loans borrowed under the CSA mature on September 1, 2026.

At  September 30, 2024 and  December 31, 2023, outstanding borrowings under the revolver amounted to $60 million at each date. The unused credit available under the credit facility was $115 million at each of September 30, 2024 and December 31, 2023. The Company incurred $0.4 million and $0.5 million of interest expense during the three months ended September 30, 2024 and 2023, respectively, and $1.3 million and $2.4 million during the nine months ended September 30, 2024 and September 30, 2023, respectively, in connection with interest due on its outstanding borrowings under the Existing Credit Agreement during each period, including the effects of the 2021 Swaps and amortization of deferred financing costs. During  January 2023, the Company amended its Existing Credit Agreement and related 2021 Swaps to transition the reference rate from LIBOR to SOFR effective  January 31, 2023.

The interest rate in effect at  September 30, 2024 and December 31, 2023 was 2.47% at each date. Our full debt balance at each of  September 30, 2024 and December 31, 2023 was covered by the 2021 Swaps, as further described in Note 10, "Derivative Instruments and Hedging Activities". No outstanding borrowings were subject to a variable interest rate at September 30, 2024 or December 31, 2023.

The Existing Credit Agreement contains customary representations and warranties, covenants and events of default. In addition, the Existing Credit Agreement contains financial covenants that measure (i) the ratio of the Company’s total funded indebtedness, on a consolidated basis, less the aggregate amount of all unencumbered cash and cash equivalents, to the amount of the Company’s consolidated EBITDA (“Leverage Ratio”) and (ii) the ratio of the amount of the Company’s consolidated EBITDA to the Company’s consolidated fixed charges (“Fixed Charge Coverage Ratio”). If an event of default occurs, the lenders under the Existing Credit Agreement would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor.  

Concurrently with the entry into the Enercon Purchase Agreement, Bel entered into a Commitment Letter, dated September 18, 2024 (the “Commitment Letter”), with KeyBank, Bank of America, N.A. (“BofA”), BMO Bank, N.A. (“BMO”), PNC Bank, National Association (“PNC”) (each of BofA, BMO, and PNC, together with KeyBank, the “Incremental Lenders”), KeyBanc Capital Markets Inc. (“KBCM”), PNC Capital Markets LLC (“PNC Capital”), and BofA Securities, Inc. (“BofA Securities”; together with KBCM, PNC Capital and the Incremental Lenders, the “Commitment Parties”), that provides a commitment, subject to satisfaction of certain conditions and the terms as agreed between the Company and the Commitment Parties, to increase the Maximum Revolving Amount available under the Existing Credit Agreement’s revolving credit facility by an aggregate of $150 million (the “Revolving Facility Increase”) to an aggregate amount of $325 million.  

Among the satisfaction of other conditions and deliverables, the completion of the Revolving Facility Increase will be subject to the execution and delivery of an amendment to, or an amendment and restatement of, the Existing Credit Agreement. 

In connection with Bel’s entry into the Commitment Letter, Bel entered into a Second Amendment Agreement dated September 18, 2024 (the “Second Amendment”) to the Existing Credit Agreement (as amended by the Second Amendment, the “Credit Agreement”). The Second Amendment makes certain amendments to the Existing Credit Agreement, including (i) increasing the cap set forth in Section 2.10(b) (governing “Increase in Commitment”) of the Existing Credit Agreement by $50 million to $150 million, (ii) adding certain customary provisions permitting the use of revolving loans on a limited conditions basis to finance the Enercon acquisition, and (iii) permitting the Enercon acquisition under the Credit Agreement. Except as otherwise specifically provided in the Second Amendment (including with respect to certain amendments which are effective upon and subject to the closing of the Enercon acquisition), the provisions of the Existing Credit Agreement revised by the Second Amendment were amended effective as of the date of the Second Amendment.  

At September 30, 2024, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Fixed Charge Coverage Ratio.