Credit Facilities and Long-Term Debt

3 Months Ended

Mar. 31, 2020

Credit Facilities and Long-Term Debt [Abstract]

Note 9. Credit Facilities and Long-Term Debt

Total debt outstanding is summarized as follows:

	March 31, 2020		December 31, 2019
	(In thousands)
Revolving credit facilities	$	105,000	$	52,460
Other (1)		4,706		4,585
Total debt	$	109,706	$	57,045

Current maturities of debt	$	109,595	$	56,916
Long-term debt		111		129
Total debt	$	109,706	$	57,045

(1)

Other includes borrowings under our Polish overdraft facility of Zloty 18.9 million (approximately $4.6 million) and Zloty 16.7 million (approximately $4.4 million) as of March 31, 2020 and December 31, 2019, respectively.

Revolving Credit Facility

In December 2018, we amended our Credit Agreement with JPMorgan Chase Bank, N.A., as agent, and a syndicate of lenders. The amended credit agreement provides for a senior secured revolving credit facility with a line of credit of up to $250 million (with an additional $50 million accordion feature) and extends the maturity date to December 2023. The line of credit under the amended credit agreement also allows for a $10 million line of credit to Canada as part of the $250 million available for borrowing. Direct borrowings under the amended credit agreement bear interest at LIBOR plus a margin ranging from 1.25% to 1.75% based on our borrowing availability, or floating at the alternate base rate plus a margin ranging from 0.25% to 0.75% based on our borrowing availability, at our option. The amended credit agreement is guaranteed by certain of our subsidiaries and secured by certain of our assets.

Borrowings under the amended credit agreement are secured by substantially all of our assets, including accounts receivable, inventory and certain fixed assets, and those of certain of our subsidiaries. Availability under the amended credit agreement is based on a formula of eligible accounts receivable, eligible drafts presented to the banks under our supply chain financing agreements and eligible inventory. After taking into account outstanding borrowings under the amended credit agreement, there was an additional $141.8 million available for us to borrow pursuant to the formula at March 31, 2020. Outstanding borrowings under the amended credit agreement, which are classified as current liabilities, were $105 million and $52.5 million at March 31, 2020 and December 31, 2019, respectively; while letters of credit outstanding under the credit agreement were $3.1 million at both March 31, 2020 and December 31, 2019. Borrowings under the credit agreement have been classified as current liabilities based upon accounting rules and certain provisions in the agreement.

At March 31, 2020, the weighted average interest rate on our amended credit agreement was 2.2%, which consisted of $105 million in direct borrowings. At December 31, 2019, the weighted average interest rate on our amended credit agreement was 3.5%, which consisted of $40 million in direct borrowings at 2.3% and an alternative base rate loan of $12.5 million at 5%. During the three months ended March 31, 2020, our average daily alternative base rate loan balance was $2.5 million, compared to a balance of $1.4 million for the three months ended March 31, 2019 and a balance of $1.7 million for the year ended December 31, 2019.

At any time that our borrowing availability is less than the greater of either (a) $25 million, or 10% of the commitments if fixed assets are not included in the borrowing base, or (b) $31.25 million, or 12.5% of the commitments if fixed assets are included in the borrowing base, the terms of the amended credit agreement provide for, among other provisions, a financial covenant requiring us, on a consolidated basis, to maintain a fixed charge coverage ratio of 1:1 at the end of each fiscal quarter (rolling four quarters). As of March 31, 2020, we were not subject to these covenants. The amended credit agreement permits us to pay cash dividends of $20 million and make stock repurchases of $20 million in any fiscal year subject to a minimum availability of $25 million. Provided specific conditions are met, the amended credit agreement also permits acquisitions, permissible debt financing, capital expenditures, and cash dividend payments and stock repurchases of greater than $20 million.

On April 15, 2020, we borrowed $75 million under our amended credit agreement. Following this draw down, our outstanding borrowings under the amended credit agreement as of April 15, 2020, were $191.3 million, leaving $47.2 million of availability (excluding the additional $50 million accordion feature). The borrowing was made as a precautionary measure to increase our cash position and preserve financial flexibility in light of the current uncertainty in the global markets resulting from the COVID-19 pandemic. The funds may be used for working capital, ongoing operating needs and general corporate purposes pursuant to the terms of the amended credit agreement.

Polish Overdraft Facility

Our Polish subsidiary, SMP Poland sp. z.o.o., has entered into an overdraft facility with HSBC France (Spolka Akcyjna) Oddzial w Polsce, formerly HSBC Bank Polska S.A., for Zloty 30 million (approximately $7.2 million). The facility, as amended, expires in December 2020. Borrowings under the overdraft facility will bear interest at a rate equal to WIBOR + 0.75% and are guaranteed by Standard Motor Products, Inc., the ultimate parent company. At March 31, 2020 and December 31, 2019, borrowings under the overdraft facility were Zloty 18.9 million (approximately $4.6 million) and Zloty 16.7 million (approximately $4.4 million), respectively.

Deferred Financing Costs

We had deferred financing costs of $0.8 million and $0.9 million as of March 31, 2020 and December 31, 2019, respectively. Deferred financing costs are related to our revolving credit facility. Deferred financing costs as of March 31, 2020 are being amortized in the amounts of $0.2 million for the remainder of 2020, $0.2 million in 2021, $0.2 million in 2022, and $0.2 million in 2023.