Note F - Debt Facilities

3 Months Ended

Jul. 31, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

F – Debt Facilities

A summary of debt facilities is as follows:

(In thousands)	July 31, 2024			April 30, 2024
Revolving line of credit	$	185,945		$	201,743
Debt issuance costs		(1,099	)		(924	)
Revolving line of credit, net	$	184,846		$	200,819
Non-recourse notes payable - 2023-1 Issuance	$	118,623		$	150,190
Non-recourse notes payable - 2023-2 Issuance		169,698			203,189
Non-recourse notes payable - 2024-1 Issuance		161,899			202,916
Debt issuance costs - non-recourse notes payable		(1,554	)		(2,666	)
Non-recourse notes payable, net		448,666			553,629
Warehouse Facility		149,888			-
Debt issuance costs - warehouse facility		(1,060	)		-
Warehouse facility, net		148,828			-
Notes payable, net	$	597,494		$	553,629
Total debt	$	782,340		$	754,448

Revolving Line of Credit

At July 31, 2024, the Company and its subsidiaries have $340.0 million of permitted borrowings under a revolving line of credit. The revolving credit facilities are collateralized by finance receivables and inventory, are cross collateralized and contain a guarantee by the Company. Interest is payable monthly under the revolving credit facilities with a scheduled maturity date of September 30, 2025. The current applicable interest rate under the credit facilities is SOFR plus 3.50% or for non-SOFR amounts the base rate of 8.50% plus 1% at July 31, 2024 and April 30, 2024. The credit facilities contain various reporting and performance covenants including (i) maintenance of certain financial ratios and tests, (ii) limitations on borrowings from other sources, (iii) restrictions on certain operating activities and (iv) restrictions on the payment of dividends or distributions (see Note B).

The Company was in compliance with the covenants at July 31, 2024. The amount available to be drawn under the credit facilities is a function of eligible finance receivables and inventory; based upon eligible finance receivables and inventory at July 31, 2024, the Company had additional availability of approximately $33.5 million under the revolving credit facilities.

On September 16, 2024, the Company entered into Amendment No. 8 to its revolving credit agreement, which, among other things, reduced the total permitted borrowings from $340 million to $320 million and requires the Company to maintain a minimum amount available to be drawn under the credit facilities of $20 million. If the outstanding principal balance under the line of credit equals or exceeds $300 million, the Company will be required to maintain a minimum availability of $50 million. The amendment also makes certain modifications to the fixed charge coverage ratio covenant and other provisions of the credit agreement. See Note M for additional information on the amendment. 

Non-Recourse and Recourse Notes Payable

The Company has issued four separate series of asset-backed non-recourse notes (known as the “2022 Issuance”, “2023-1 Issuance”, “2023-2 Issuance” and “2024-1 Issuance”). All four issuances are collateralized by installment sale contracts directly originated by the Company. Credit enhancement for the non-recourse notes payable consists of overcollateralization, a reserve account funded with an initial amount of not less than 2.0% of the pool balance, excess interest on the auto finance receivables, and in some cases, the subordination of certain payments to noteholders of less senior classes of notes. The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the related auto finance receivables. In December 2023, the Company fully paid off the 2022 Issuance. The debt related to the remaining term securitization transactions accrues interest at fixed rates and has scheduled maturities through January 22, 2030, June 20, 2030, and January 21, 2031, respectively, but may be repaid earlier, depending upon collections from the underlying auto finance receivables. The original principal balance and weighted average fixed coupon rate for the three securitizations are as follows:

	Original Principal Balance (in thousands)		Weighted Average Fixed Coupon Rate
2023-1	$	400,200		8.68	%
2023-2		360,300		8.80	%
2024-1		250,000		9.50	%

On July 12, 2024, the Company’s principal operating subsidiary, America’s Car Mart, Inc., and a newly formed affiliate entered into a loan and security agreement under which the Company’s affiliate borrowed $150 million in funding through an amortizing warehouse loan facility collateralized by installment sale contracts directly originated by the Company’s operating subsidiaries. The Company used the funding from the warehouse loan facility to pay down outstanding amounts borrowed under the Company’s revolving line of credit to fund its finance receivables. The loan and security agreement provides for additional borrowing availability, subject to the terms and conditions of the agreement, and recourse against the Company with respect to up to 10% of the aggregate amount borrowed under the warehouse facility payable. Interest accrues at a rate of SOFR plus 350 basis points, with a scheduled maturity date of July 12, 2026. The interest rate at July 31, 2024 was 8.83%.