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Note 10 - Notes Payable
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Debt Disclosure [Text Block]
10.

Notes Payable

 

Notes Payable, at Face Value

 

Other notes payable outstanding as of December 31, 2021 and December 31, 2020 that are secured by the financial and operating assets of either the borrower, another of our subsidiaries or both, include the following, scheduled (in millions); except as otherwise noted, the assets of our holding company (Atlanticus Holdings Corporation) are subject to creditor claims under these scheduled facilities:

 

  

As of

 
  

December 31, 2021

  

December 31, 2020

 

Revolving credit facilities at a weighted average interest rate equal to 4.3% as of December 31, 2021 (4.8% as of December 31, 2020) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $1,391.6 million as of December 31, 2021 ($943.6 million as of December 31, 2020)

        

Revolving credit facility, not to exceed $55.0 million (expiring November 1, 2023) (1) (2) (3)

 $32.1  $34.9 

Revolving credit facility, not to exceed $50.0 million (expiring October 30, 2023) (2) (3) (4) (5)

  48.7   50.0 

Revolving credit facility, not to exceed $70.0 million (repaid in May 2021) (2) (3) (4) (5) (6)

  —   5.8 

Revolving credit facility, not to exceed $100.0 million (expiring October 15, 2022) (2) (3) (4) (5) (6)

  —   10.0 

Revolving credit facility, not to exceed $15.0 million (expiring July 15, 2022) (2) (3) (4) (5)

  5.7   4.7 

Revolving credit facility, not to exceed $100.0 million (expiring August 15, 2022) (2) (3) (4) (5) (6)

  —   2.5 

Revolving credit facility, not to exceed $200.0 million (repaid in June 2021) (3) (4) (5) (6)

  —   200.0 

Revolving credit facility, not to exceed $200.0 million (expiring May 15, 2024) (3) (4) (5) (6)

  200.0   200.0 

Revolving credit facility, not to exceed $25.0 million (expiring April 21, 2023) (2) (3) (4) (5)

  19.2   7.8 

Revolving credit facility, not to exceed $100.0 million (expiring January 15, 2025) (3) (4) (5) (6)

 

100.0

   100.0 

Revolving credit facility, not to exceed $250.0 million (expiring October 15, 2025) (3) (4) (5) (6)

  250.0   250.0 

Revolving credit facility, not to exceed $15.0 million (expiring February 15, 2024) (3) (4) (5)

  10.0   — 

Revolving credit facility, not to exceed $300.0 million (expiring December 15, 2026) (3) (4) (5) (6)

  300.0   — 

Revolving credit facility, not to exceed $75.0 million (expiring March 15, 2025) (3) (4) (5) (6)

  —   — 

Revolving credit facility, not to exceed $300.0 million (expiring May 15, 2026) (3) (4) (5) (6)

  300.0   — 

Other facilities

        

Other debt

  5.9   3.2 

Unsecured term debt (expiring August 26, 2024) with a weighted average interest rate equal to 8.0% (3)

  17.4   17.4 

Amortizing debt facility (repaid in September 2021) (2) (3) (4) (5)

  —   5.0 

Total notes payable before unamortized debt issuance costs and discounts

  1,289.0   891.3 

Unamortized debt issuance costs and discounts

  (10.1)  (8.7)

Total notes payable outstanding, net

 $1,278.9  $882.6 

 

(1)

Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations.

(2)

These notes reflect modifications to either extend the maturity date, increase the loan amount or both, and are treated as accounting modifications.

(3)

See below for additional information.
(4)Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes. 

(5)

Loans are associated with variable interest entities.

(6)

Creditors do not have recourse against the general assets of the Company but only to the collateral within the VIEs.
*As of December 31, 2021, the LIBOR rate was 0.10% and the prime rate was 3.25%.

 

In  October 2015, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $50.0 million revolving borrowing limit that can be drawn to the extent of outstanding eligible principal receivables (of which $48.7 million was drawn as of December 31, 2021). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to LIBOR plus 3.0%. The facility matures on October 30, 2023 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The facility is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

 

In  October 2016, we (through a wholly owned subsidiary) entered a revolving credit facility available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $32.1 million was drawn as of December 31, 2021). This facility is secured by the financial and operating assets of CAR and accrues interest at an annual rate equal to LIBOR plus a range between 2.4% and 3.0% based on certain ratios. The loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. In periods subsequent to October 2016, we amended the original agreement to either extend the maturity date and/or expand the capacity of this revolving credit facility. As of December 31, 2021, the borrowing limit was $55.0 million and the maturity is November 1, 2023. There were no other material changes to the existing terms or conditions as a result of these amendments and the new maturity date and borrowing limit are reflected in the table above.

 

In February 2017, we (through a wholly owned subsidiary) established a program under which we sell certain receivables to a consolidated trust in exchange for notes issued by the trust. The notes were secured by the receivables and other assets of the trust. Simultaneously with the establishment of the program, the trust issued a series of variable funding notes and sold an aggregate amount of up to $90.0 million (subsequently reduced to $70.0 million) of such notes to an unaffiliated third party. The facility was repaid in May 2021. In connection with the repayment, we removed an accrual of $1.5 million associated with a contingent liability incurred with the issuance of the notes. Removal of the contingent liability was recorded as a component of Other non-operating revenue on our consolidated statements of income.

 

In 2018, we (through a wholly owned subsidiary) entered into two separate facilities associated with the above mentioned program to sell up to an aggregate $200.0 million of notes which are secured by the receivables and other assets of the trust (of which $0.0 million was outstanding as of December 31, 2021) to separate unaffiliated third parties pursuant to facilities that can be drawn upon to the extent of outstanding eligible receivables. Interest rates on the notes are based on commercial paper rates plus 3.15% and LIBOR plus a range between 4.5% and 6.5%, respectively. The facilities mature on October 15, 2022 and August 15, 2022,
respectively, and are subject to certain affirmative covenants and collateral performance tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance of notes.

 

In December 2017, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $25.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $19.2 million was drawn as of December 31, 2021). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to LIBOR plus 3.5%. The facility matures on April 21, 2023 and is subject to certain affirmative covenants, including payment, delinquency and charge-off tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus.

 

In June 2019, we (through a wholly owned subsidiary) entered a revolving credit facility with a $15.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $5.7 million was drawn as of December 31, 2021). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the prime rate. The note is guaranteed by Atlanticus.

 

In June 2019, we sold $200.0 million of ABS secured by certain credit card receivables (expiring December 15, 2022). The facility was repaid in June 2021.

 

In August 2019, we issued a $17.4 million term note, which bears interest at a fixed rate of 8.0% and is due in August 2024. 

 

In September 2019, we (through a wholly owned subsidiary) entered a term facility with a $30.0 million revolving borrowing limit. The facility was repaid in September 2021.

 

In November 2019, we sold $200.0 million of ABS secured by certain credit card receivables (expiring May 15, 2024). A portion of the proceeds from the sale was used to pay-down our existing facilities associated with our credit card receivables and the remaining proceeds were used to fund the acquisition of future receivables. The terms of the ABS allow for a three-year revolving structure with a subsequent 12-month to 18-month amortization period. The weighted average interest rate on the securities is fixed at 4.91%.

 

In July 2020, we sold $100.0 million of ABS secured by certain private label credit receivables. A portion of the proceeds from the sale were used to pay-down some of our existing revolving facilities associated with our private label credit receivables, and the remaining proceeds were used to fund the acquisition of receivables. The terms of the ABS allow for a three-year revolving structure with a subsequent 18-month amortization period. The weighted average interest rate on the securities is fixed at 5.47%.

 

 

In October 2020, we sold $250.0 million of ABS secured by certain private label credit receivables. A portion of the proceeds from the sale were used to pay-down our existing term ABS associated with our private label credit receivables, noted above, and the remaining proceeds have been invested in the acquisition of receivables. The terms of the ABS allow for a 41 month revolving structure with an 18-month amortization period and the securities mature between August 2025 and October 2025. The weighted average interest rate on the securities is fixed at 4.1%.

 

In January 2021, we (through a wholly owned subsidiary) entered a revolving credit facility with a $15.0 million borrowing limit (of which $10.0 million was drawn as of December 31, 2021) that is available to the extent of outstanding eligible principal receivables. This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the greater of the prime rate or 4%. The facility matures on February 15, 2024 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

 

In June 2021, we sold $300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026 through December 15, 2026). The terms of the ABS allow for a four-year revolving structure with a subsequent 11-month to 18-month amortization period. The weighted average interest rate on the securities is fixed at 4.24%.

 

In September 2021, we entered a term facility with a $75 million limit (of which $0 was drawn as of December 31, 2021) that is available to the extent of outstanding eligible principal receivables. This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to 2.75%. The terms of the facility allow for a 24 month revolving structure with an 18-month amortization period and the facility matures in March 2025.

 

In November 2021, we sold $300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026). The terms of the ABS allow for a three-year revolving structure with a subsequent 18-month amortization period. The weighted average interest rate on the securities is fixed at 3.53%.

 

As of December 31, 2021, we were in compliance with the covenants underlying our various notes payable.

 

Notes Payable Associated with Structured Financings, at Fair Value

 

Scheduled (in millions) in the table below are (1) the carrying amount of our structured financing note secured by certain credit card receivables and reported at fair value as of  December 31, 2020, (2) the outstanding face amount of our structured financing note secured by certain credit card receivables and reported at fair value as of  December 31, 2020, and (3) the carrying amount of the credit card receivables and restricted cash that provide the exclusive means of repayment for the note (i.e., lenders have recourse only to the specific credit card receivables and restricted cash underlying each respective facility and cannot look to our general credit for repayment) as of  December 31, 2020. The facility was repaid in December 2021.

 

  

Carrying Amounts at Fair Value as of

 
  

December 31, 2020

 

Securitization facility (repaid in December 2021), outstanding face amount of $101.3 million as of December 31, 2020 bearing interest at a weighted average 5.7% interest rate, based upon LIBOR which was secured by credit card receivables and restricted cash aggregating $2.9 million as of December 31, 2020 in carrying amount

 $2.9 

 

Senior Notes, net

 

In November 2021, we issued $150.0 million aggregate principal amount of senior notes (included on our consolidated balance sheet as "Senior notes, net"). The senior notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any. The senior notes are effectively subordinated to all of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the senior notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company). The senior notes bear interest at the rate of 6.125% per annum. Interest on the senior notes is payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year. The senior notes will mature on November 30, 2026.  We are amortizing fees associated with the issuance of the senior notes into interest expense over the expected life of the notes. Amortization of these fees for the year ended  December 31, 2021 totaled $0.1 million.