DEBT

6 Months Ended

Mar. 31, 2024

DEBT

DEBT

6. DEBT

The Company primarily finances its operations through three credit facility agreements (a) a facility that is an obligation of AMCON Distributing Company (the “AMCON Facility”), (b) a facility that is an obligation of Team Sledd, LLC (“Team Sledd” and, the “Team Sledd Facility”) and (c) a facility that is an obligation of Henry’s Foods, Inc. (“Henry’s” and, the “Henry’s Facility”) (collectively, the “Facilities”) and long-term debt agreements with banks. The Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company.

At March 2024, the Facilities had a total combined borrowing capacity of $300.0 million, which includes provisions for up to $30.0 million in credit advances for certain inventory purchases, which are limited by accounts receivable and inventory qualifications, and the value of certain real estate collateral. The Henry’s Facility matures in February 2026, the AMCON Facility matures in June 2027 and the Team Sledd Facility matures in March 2028, 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 certain real estate. The Facilities each feature an unused commitment fee and springing financial covenants. Borrowings under the Facilities bear interest at either the bank’s prime rate or the Secured Overnight Financing Rate (“SOFR”), 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 March 2024 was $191.2 million, of which $99.2 million was outstanding, leaving $92.0 million available.

The average interest rate of the Facilities was 6.97% at March 2024. For the six months ended March 2024, the peak borrowings under the Facilities was $156.8 million, and the average borrowings and average availability under the Facilities was $120.1 million and $83.5 million, respectively.

LONG-TERM DEBT

In addition to the Facilities, the Company also had the following long-term debt obligations at March 2024 and September 2023.

	March 2024		September 2023
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		4,958,774		5,174,188
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		1,819,711		1,891,638
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 7.40% at March 2024, collateralized by certain of Team Sledd's equipment		240,630		288,237
Note payable, interest payable at a fixed rate of 6.04% with monthly installments of principal and interest of $131,987 through February 2028, collateralized by certain of Henry's equipment		5,511,651		6,276,441
Unsecured note payable, interest payable at a fixed rate of 5.50% with quarterly installments of principal and interest of $727,741 through February 2027		8,000,000		—
		20,530,766		13,630,504
Less current maturities		(4,485,028)		(1,955,065)
	$	16,045,738	$	11,675,439

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

Fiscal Year Ending
2024 (1)	$	2,553,909
2025		4,667,440
2026		4,773,843
2027		3,574,419
2028		1,329,208
2029 and thereafter		3,631,947
	$	20,530,766

(1) Represents payments for the remaining six months of Fiscal 2024.

Cross Default and Co-Terminus Provisions

Team Sledd’s three notes payable and the Team Sledd Facility contain cross default provisions. The Henry’s note payable and the Henry’s Facility contain cross default provisions. There were no such cross defaults for either Team Sledd or Henry’s at March 2024. Additionally, the Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company. The Company and its subsidiaries, including Team Sledd and Henry’s, were in compliance with all of the financial covenants under the respective Facilities at March 2024.

Other

The Company has issued a letter of credit for $1.5 million to its workers’ compensation insurance carriers as part of its self-insured loss control program.