DEBT

12 Months Ended

Sep. 30, 2022

DEBT

DEBT

7. DEBT:

The Company primarily finances its operations through two credit facility agreements (the “AMCON Facility” and the “Team Sledd Facility”, and together “the Facilities”) and long-term debt agreements with banks. In Q3 2022, the Company amended the AMCON Facility, increasing its aggregate borrowing capacity from $110.0 million to $150.0 million, extending the maturity date from March 2025 to June 2027, and adding certain real estate properties as eligible borrowing collateral under the credit agreement.

At September 2022, the Facilities have a total combined borrowing capacity of $250.0 million, which includes provisions for up to $30.0 million in credit advances for certain inventory purchases. The Team Sledd Facility matures in March 2027 and the AMCON Facility matures in June 2027, each without a penalty for prepayment. Obligations under the Facilities are collateralized by substantially all of the Company’s respective equipment, intangibles, inventories, accounts receivable, and in the case of the AMCON Facility, certain of the Company’s real estate. The Facilities each feature an unused commitment fee and financial covenants including fixed charge coverage ratios. Borrowings under the Facilities bear interest at either the bank’s prime rate, the Secured Overnight Financing Rate (“SOFR”) or the London Interbank Offered Rate (“LIBOR”), plus any applicable spreads.

The amount available for use from the Facilities at any given time is subject to a number of factors, including eligible accounts receivable and inventory balances that fluctuate day-to-day, as well as the value of certain real estate collateral. Based on the collateral and loan limits as defined in the Facility agreements, the credit limit of the combined Facilities at September 2022 was $184.8 million, of which $91.3 million was outstanding, leaving $93.5 million available.

The average interest rate of the Facilities was 5.11% at September 2022. During fiscal 2022, the peak borrowings under the Facilities was $123.5 million, and the average borrowings and average availability under the Facilities was $60.7 million and $69.4 million, respectively.

LONG-TERM DEBT

In addition to the Facilities, the Company also had the following long-term obligations at September 2022 and September 2021.

	2022		2021
Real Estate Loan, interest payable at a fixed rate of 3.625% with monthly installments of principal and interest of $47,399 through February 2025 with remaining principal due March 2025, collateralized by three distribution facilities	$	—	$	4,498,213
Unsecured note payable, interest payable at a fixed rate of 4.50% with quarterly installments of principal and interest of $49,114 through June 2023 with remaining principal due September 2023		968,589		1,117,254
Note payable, interest payable at a fixed rate of 4.10% with monthly installments of principal and interest of $53,361 through June 2033 with remaining principal due July 2033, collateralized by Team Sledd's principal office and warehouse		5,572,766		—
Note payable, interest payable at a fixed rate of 3.25% with monthly installments of principal and interest of $17,016 through August 2034 with remaining principal due September 2034, collateralized by Team Sledd's principal office and warehouse		2,052,327		—
Note payable with monthly installments of principal and interest of $7,934 through February 2025 with remaining principal due March 2025, and an effective variable rate of 2.90% at September 2022, collateralized by certain of Team Sledd's equipment		385,887		—
		8,979,569		5,615,467
Less current maturities		(1,595,309)		(561,202)
	$	7,384,260	$	5,054,265

The aggregate minimum principal maturities of the long-term debt for each of the next five fiscal years are as follows:

Fiscal Year Ending
2023	$	1,595,309
2024		676,613
2025		806,357
2026		628,351
2027		653,243
2028 and thereafter		4,619,696
	$	8,979,569

Market rate risk for fixed rate debt is estimated as the potential increase in fair value of debt obligations resulting from decreases in interest rates. Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the fair value of the Company’s long-term debt approximated its carrying value at September 2022.

Cross Default and Co-Terminus Provisions

The Company owns real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, which was financed through a single term loan (“the Real Estate Loan”) with BMO Harris Bank N.A. (“BMO”) which is also a participant lender on the AMCON Facility. During Q4 2022, in connection with the amendment to the AMCON Facility during Q3 2022, the Company’s Real Estate Loan with BMO was terminated and the $4.2 million remaining principal was paid in full. The Company’s real properties that were subject to the terminated agreement are now collateral under the AMCON Facility. The Real Estate Loan contained cross default provisions which would have caused the loan to be considered in default if the loans where BMO is a lender, including the AMCON Facility, were in default. There were no such cross defaults at September 2021. In addition, the Real Estate Loan contained co-terminus provisions which would have required all loans with BMO to be paid in full if any of the loans were paid in full prior to the end of their specified terms. Team Sledd’s three notes payable and the Team Sledd Facility contain cross default provisions. There were no such cross defaults at September 2022. The Company was in compliance with all of its financial covenants under the Facilities at September 2022.

Other

The Company has issued a letter of credit for $0.6 million to its workers’ compensation insurance carrier as part of its self-insured loss control program.