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Debt | 9 Months Ended
--- | ---
Sep. 30, 2021
Debt Disclosure [Abstract] |
Debt | Note 6 – Debt The following table summarizes the Company’s debt as of September 30, 2021 and December 31, 2020:
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Interest Rate |  |  | Principal Balance |  |  | Interest Rate |  |  | Principal Balance |
Credit Agreement: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Revolving Note (U.S. Dollar Denominations) |  |  | 1.33 | % |  | $ | 35,000 |  |  |  | 1.65 | % |  | $ | 171,500 |
U.S. Revolving Note (Euro Denominations) |  |  | 1.25 | % |  |  | — |  |  |  | 1.50 | % |  |  | 14,684 |
DEG Vietnam Loan |  |  | 5.21 | % |  |  | 5,000 |  |  |  | 5.21 | % |  |  | 6,250 |
Total debt |  |  |  |  |  |  | 40,000 |  |  |  |  |  |  |  | 192,434 |
Current maturities |  |  |  |  |  |  | (2,500 | ) |  |  |  |  |  |  | (2,500 | )
Long-term debt, less current maturities |  |  |  |  |  | $ | 37,500 |  |  |  |  |  |  | $ | 189,934 |
Credit Agreement On June 27, 2019, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with a consortium of lenders and Bank of America, N.A. as administrative agent, which includes a revolving credit note (“U.S. Revolving Note”). The Credit Agreement has a maximum borrowing capacity of $475,000 and matures on June 27, 2024. The Credit Agreement also provides $15,000 availability for the issuance of letters of credit and a maximum of $40,000 for swing line borrowing. Any amount of the facility utilized for letters of credit or swing line loans outstanding will reduce the amount available under the Credit Agreement. The Company had no outstanding letters of credit issued under the Credit Agreement as of September 30, 2021 and December 31, 2020. The U.S. borrowers and guarantors participating in the Credit Agreement also entered into a related amended and restated pledge and security agreement. The amended and restated pledge and security agreement grants a security interest to the lenders in substantially all of the personal property of the Company and its U.S. subsidiaries designated as borrowers to secure their respective obligations under the Credit Agreement, including the stock and membership interests of specified subsidiaries (limited to 66% of the stock in the case of certain non-U.S. subsidiaries). In addition to the security obligations, all obligations under the Credit Agreement are unconditionally guaranteed by certain of the Company’s subsidiaries. The Credit Agreement restricts, among other things, the amount of dividend payments the Company can make to shareholders. The Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability of the borrowers and any material subsidiary to incur additional indebtedness, create liens, pay dividends, make certain types of investments (including acquisitions), enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets, merge with other companies or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and Consolidated Leverage Ratio (based on consolidated EBITDA for the applicable trailing 12-month period as defined in the Credit Agreement) as of the end of any fiscal quarter. The Credit Agreement also contains customary events of default. As of September 30, 2021, the Company was in compliance with the terms of the Credit Agreement. Under the Credit Agreement, U.S. Dollar denominated loans bear interest at either a base rate (“Base Rate Loans”) or Eurocurrency rate (“Eurocurrency Rate Loans”), plus a margin (“Applicable Rate”). The rate for Base Rate Loans is equal to the highest of the Federal Funds Rate (0.06% at September 30, 2021) plus 0.50%, Bank of America’s prime rate (3.25% at September 30, 2021), or the Eurocurrency rate plus 1.00%. The rate for Eurocurrency Rate Loans denominated in U.S. Dollars is equal to the London Interbank Offered Rate (0.08% at September 30, 2021). All loans denominated in a currency other than the U.S. Dollar must be Eurocurrency Rate Loans. Interest is payable at least quarterly. The Applicable Rate varies based on the Consolidated Leverage Ratio reported by the Company. As long as the Company is not in default of the terms and conditions of the Credit Agreement, the lowest and highest possible Applicable Rate is 1.25% and 2.25%, respectively, for Eurocurrency Rate Loans and 0.25% and 1.25%, respectively, for Base Rate Loans. In March 2020, the Company increased its borrowings under the Credit Agreement by $169,546 as a safeguard to increase its cash position and provide additional financial flexibility due to the COVID-19 pandemic. The proceeds were used for working capital and for other general corporate purposes permitted by the Credit Agreement. As of the end of the first quarter of 2021, the Company repaid the full drawdown of $169,546 from March 2020 under the Credit Agreement. As of September 30, 2021, $35,000 was outstanding under the Credit Agreement. Borrowing availability is subject to, among other things, the Company’s compliance with the minimum Consolidated Interest Coverage Ratio and Consolidated Leverage Ratio as of the end of any fiscal quarter. Based upon consolidated EBITDA for the trailing twelve months calculated for purposes of the Consolidated Leverage Ratio, $440,000 remained available as of September 30, 202 1 for additional borrowings under the Credit Agreement subject to specified conditions that Gentherm currently satisfies. DEG Vietnam Loan The Company also has a fixed interest rate loan with the German Investment Corporation (“DEG”), a subsidiary of KfW Banking Group, a Germany government-owned development bank. The fixed interest rate senior loan agreement with DEG was used to finance the construction and set up of the Vietnam production facility (“DEG Vietnam Loan”). The DEG Vietnam Loan is subject to semi-annual principal payments that began November 2017 and will end May 2023. Under the terms of the DEG Vietnam Loan, the Company must maintain a minimum Enhanced Equity Ratio, as defined by the DEG Vietnam Loan agreement, based on the financial statements of Gentherm’s wholly owned subsidiary, Gentherm Vietnam Co. Ltd. As of September 30, 2021, the Company was in compliance with the terms of the DEG Vietnam Loan. The scheduled principal maturities of our debt as of September 30, 2021 were as follows:
|  | DEG Vietnam Note |  |  | U.S. Revolving Note |  |  | Total |
2021 |  | $ | 1,250 |  |  | $ | — |  |  | $ | 1,250 |
2022 |  |  | 2,500 |  |  |  | — |  |  |  | 2,500 |
2023 |  |  | 1,250 |  |  |  | — |  |  |  | 1,250 |
2024 |  |  | — |  |  |  | 35,000 |  |  |  | 35,000 |
Total |  | $ | 5,000 |  |  | $ | 35,000 |  |  | $ | 40,000 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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