Note F - Debt Facilities

6 Months Ended

Oct. 31, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

F – Debt Facilities

A summary of debt facilities is as follows:

(In thousands)	October 31, 2024			April 30, 2024
Revolving line of credit	$	108,616		$	201,743
Debt issuance costs		(1,251	)		(924	)
Revolving line of credit, net	$	107,365		$	200,819
Non-recourse notes payable - 2023-1 Issuance	$	91,665		$	150,190
Non-recourse notes payable - 2023-2 Issuance		141,450			203,189
Non-recourse notes payable - 2024-1 Issuance		127,447			202,916
Non-recourse notes payable - 2024-2 Issuance		300,000			-
Debt issuance costs - non-recourse notes payable		(4,148	)		(2,666	)
Non-recourse notes payable, net		656,414			553,629
Total debt	$	763,779		$	754,448

Revolving Line of Credit

On September 16, 2024, the Company entered into Amendment No. 8 to its revolving credit facility agreement (the “Amendment”), 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 made certain modifications to the fixed charge coverage ratio covenant and restricts the Company from making future repurchases of its common stock, along with the agreement’s existing restrictions on other distributions to the Company’s shareholders. In addition, the Amendment adds Colonial Underwriting, Inc., an Arkansas corporation, as a new guarantor.

At October 31, 2024, the Company and its subsidiaries have $320.0 million of permitted borrowings under the 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 8.00% plus 1% at October 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 October 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 October 31, 2024, the Company had additional availability of approximately $97.0 million under the revolving credit facilities.

Under the existing terms of the loan and security agreement, as amended, for the revolving credit facility, the facility is scheduled to mature in September 2025. However, discussions are in process for the extension of the revolver, and the Company expects that it will reach agreement on an extension of the credit facility prior to its maturity.

Non-Recourse and Recourse Notes Payable

The Company has issued five separate series of asset-backed non-recourse notes (known as the “2022 Issuance”, “2023-1 Issuance”, “2023-2 Issuance”, “2024-1 Issuance” and “2024-2 Issuance”). All five 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, January 21, 2031, and August 20, 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 four 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	%
2024-2		300,000		9.51	%

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 provided 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 on any outstanding balances accrues at a rate of SOFR plus 350 basis points, with a scheduled maturity date of July 12, 2026. In October 2024, the Company used the proceeds from its 2024-2 Issuance to pay down the outstanding balance under the warehouse loan facility. No debt was outstanding under the warehouse loan facility as of October 31, 2024.