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Credit Facilities and Long-Term Debt
 6 Months Ended
Jun. 30, 2024
Credit Facilities and Long-Term Debt [Abstract]  
Credit Facilities and Long-Term Debt
Note 9.   Credit Facilities and Long-Term Debt

Total debt outstanding is summarized as follows:

 
  
June 30,
2024
    
December 31,
2023
  
 
  
(In thousands)
  
Credit facility – term loan due 2027
   $
 90,000     $
 92,500  
Credit facility – revolver due 2027
    118,000       63,500  
Other
    
192
      
211
  
Total debt
  
$
208,192
    
$
156,211
  
 
                
Current maturities of debt
  
$
5,030
    
$
5,029
  
Long-term debt
    
203,162
      
151,182
  
Total debt
  
$
208,192
    
$
156,211
  

Term Loan and Revolving Credit Facility

In June 2022, the Company entered into a five-year Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (the “Credit Agreement”) which matures on June 1, 2027. The Credit Agreement provides for a $500 million credit facility comprised of a $100 million term loan facility (the “Term A-1 Loan”) and a $400 million multi-currency revolving credit facility available in U.S. dollars, euros, British pound sterling, Swiss francs, Canadian dollars and other currencies as agreed to by the administrative agent and the lenders (the “revolving facility”). The revolving facility has a $25 million sub-limit for the issuance of letters of credit and a $25 million sub-limit for the borrowing of swingline loans.

Borrowings under the Credit Agreement were used to repay all outstanding borrowings under the 2015 Credit Agreement, and are used for other general corporate purposes of the Company and its subsidiaries.  The Term A-1 Loan amortizes in quarterly installments of 1.25% in each of the first four years, and quarterly installments of 2.5% in the fifth year.  The Company may request up to two one-year extensions of the maturity date.

The Company may, upon the agreement of one or more then existing lenders or of additional lenders not currently party to the Credit Agreement, increase the revolving facility or obtain incremental term loans by an aggregate amount not to exceed (x) the greater of (i) $168 million or (ii) 100% of consolidated EBITDA (as defined in the Credit Agreement) for the four fiscal quarters ended most recently before such date, plus (y) any voluntary prepayment of term loans, plus (z) any amount that, after giving effect to the increase, the pro forma First Lien Net Leverage Ratio (as defined in the Credit Agreement) does not exceed 2.5 to 1.0.

Term loan and revolver facility borrowings in U.S. dollars bear interest, at the Company’s election, at a rate per annum equal to Term Secured Overnight Financing Rate ("SOFR") plus 0.10% plus a margin, or an alternate base rate plus a margin, where the alternate base rate is the greater of the prime rate, the federal funds effective rate plus 0.50%, and one-month Term SOFR plus 1.10%. The Term A-1 Loan was made at one-month Term SOFR. The margin for benchmark borrowings ranges from 1.0% to 2.0%, and the margin for alternate base rate borrowings ranges from 0% to 1.0%, in each case, based on the total net leverage ratio of the Company and its restricted subsidiaries.  The Company may select interest periods of one, three or six months for Term SOFR borrowings.  Interest is payable at the end of the selected interest period, but no less frequently than quarterly.

The Company’s obligations under the Credit Agreement are guaranteed by its material domestic subsidiaries (each, a “Guarantor”), and secured by a first priority perfected security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions.  The collateral security described above also secures certain banking services obligations and interest rate swaps and currency or other hedging obligations of the Company owing to any of the then existing lenders or any affiliates thereof.  The Company entered into an interest rate swap agreement with Wells Fargo Bank, N.A., Co-Syndication Agent and lender concurrently with the Credit Agreement.

Outstanding borrowings at June 30, 2024 under the Credit Agreement were $208 million, consisting of current borrowings of $5 million and long-term debt of $203 million; while outstanding borrowings at December 31, 2023 were $156 million, consisting of current borrowings of $5 million and long-term debt of $151 million.  Letters of credit outstanding under the Credit Agreement were $2.3 million at both June 30, 2024 and December 31, 2023.

At June 30, 2024, the weighted average interest rate under our Credit Agreement was 5.7%, which consisted of $208 million in borrowings under Term SOFR, adjusted for the impact of the interest rate swap agreement on $100 million of borrowings. At December 31, 2023, the weighted average interest rate under our Credit Agreement was 5%, which consisted of $156 million in borrowings at 5% under Term SOFR, adjusted for the impact of the interest rate swap agreement on $100 million of borrowings. During the six months ended June 30, 2024, our average daily alternative base rate loan balance was $1 million, compared to a balance of $0.2 million for the six months ended June 30, 2023 and a balance of $0.1 million for the year ended December 31, 2023.

The Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets.  The Credit Agreement also contains customary events of default.

In May 2024, the Company entered into Amendment No. 1 to the Credit Agreement to transition from the Canadian Dollar Offered Rate (“CDOR”) to the Canadian Overnight Repo Rate Average (“CORRA”) for benchmark borrowings denominated in Canadian dollars.

In July 2024, the Company entered into Amendment No. 2 to the Credit Agreement, to provide for a new $125 million term loan (the “Term A-2 Loan”) and the use of funds available under the existing revolving facility to finance the acquisition of AX V Nissens III APS and its subsidiaries (“Nissens Automotive”) and related transaction costs. For additional information on our agreement to acquire Nissens Automotive see Note 19, “Subsequent Event”. The Term A-2 Loan matures five years after it is funded on the closing of the acquisition, and amortizes in quarterly installments of 1.25% in each of the first and second year, quarterly installments of 1.875% in the third year, and quarterly installments of 2.50% in each of the fourth and fifth year.

Polish Overdraft Facility

In November 2023, our Polish subsidiary, SMP Poland sp. z.o.o., further amended its overdraft facility with HSBC Continental Europe (Spolka Akcyjna) Oddzial w Polsce. The overdraft facility, as amended, provides for borrowings under the facility in euros and U.S. dollars. Under the amended terms, the overdraft facility provides for borrowings of up to Polish zloty 30 million (approximately $7.5 million) if borrowings are solely in Polish zloty, or up to 85% of the Polish zloty 30 million limit (approximately $6.4 million) if borrowings are in euros and/or U.S. dollars. The overdraft facility had an original maturity date in March 2024, with automatic three-month renewals until June 2027, subject to cancellation by either party, at its sole discretion, at least 30 days prior to the commencement of the three-month renewal period. The facility automatically renewed in June 2024 to a September 2024 maturity date. Borrowings under the amended overdraft facility will bear interest at a rate equal to (1) the one month Warsaw Interbank Offered Rate (“WIBOR”) + 1.0% for borrowings in Polish zloty, (2) the one month Euro Interbank Offered Rate (“EURIBOR”) + 1.0% for borrowings in euros, and (3) the Mid-Point of the Fed Target Range + 1.25% for borrowings in U.S. dollars.  Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent company.  There were no borrowings outstanding under the overdraft facility at both June 30, 2024 and December 31, 2023.

Maturities of Debt

As of June 30, 2024, maturities of debt through 2027, assuming no prepayments, are as follows (in thousands):

   
Revolving
Credit Facility
    
Term A-1
Loan
   
Polish
Overdraft
Facility and
Other Debt
    
Total
  
Remainder of 2024
  
$
—
    
$
2,500
    
$
14
    
$
2,514
  
2025
    
—
      
5,000
      
31
      
5,031
  
2026
    
—
      
7,500
      
47
      
7,547
  
2027
    
118,000
      
75,000
      
100
      
193,100
  
Total
  
$
118,000
    
$
90,000
    
$
192
    
$
208,192
  
Less: current maturities
    
—
      
(5,000
)
    
(30
)
    
(5,030
)
Long-term debt
  
$
118,000
    
$
85,000
    
$
162
    
$
203,162
  

Deferred Financing Costs

We have deferred financing costs related to our term loan and revolving credit facilities of approximately $1.3 million and $1.6 million as of June 30, 2024 and December 31, 2023, respectively.  Deferred financing costs as of June 30, 2024, assuming no prepayments, are being amortized in the amounts of $0.2 million for the remainder of 2024, $0.5 million in 2025, $0.5 million in 2026 and $0.1 million in 2027.