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Credit Facility
 6 Months Ended
Sep. 30, 2021
Line Of Credit Facility [Abstract]  
Credit Facility

5. Credit Facility

Ares Credit Facility

On March 29, 2019, NF Funding I, a wholly-owned, special purpose financing subsidiary of NFI entered into a senior secured credit facility (the “Ares Credit Facility”) pursuant to a credit agreement with Ares Agent Services, L.P., as administrative agent and collateral agent, and the lenders that are party thereto (the “Ares Credit Agreement”).

Pursuant to the Ares Credit Agreement, the lenders agreed to extend to NF Funding I a line of credit of up to $175,000,000, which was used to purchase motor vehicle retail installment sale contracts from NFI on a revolving basis pursuant to a related receivables purchase agreement between NF Funding I and NFI (the “Receivables Purchase Agreement”). Under the terms of the Receivables Purchase Agreement, NFI sold to NF Funding I the installment sale contracts. NFI serviced the motor vehicle retail installment sale contracts transferred to NF Funding I pursuant to a related servicing agreement (the “Servicing Agreement”).

The availability of funds under the Ares Credit Facility was generally limited to 82.5% of the value of non-delinquent receivables, and outstanding advances under the Ares Credit Facility accrued interest at a rate of LIBOR plus 3.75%. If LIBOR dropped below 1%, the Company still accrued interest at a rate of 1% plus 3.75%. The commitment period for advances under the Ares Credit Facility was three years. At the end of the commitment period, the outstanding balance would convert to a term loan and require monthly principal and interest payments over a four-year amortization period.

In connection with the Ares Credit Facility, NFI guaranteed NF Funding I’s obligations under the Ares Credit Agreement up to 10% of the highest aggregate principal amount outstanding under the Ares Credit Agreement at any time pursuant to a limited guaranty. The Company was also obligated to cover any losses of the lender parties resulting from certain defined “bad acts” of the Company or its subsidiaries, such as fraud, misappropriation of funds or unpermitted disposition of the assets.

 

Pursuant to the related security agreement (the “Security Agreement”), NF Funding I granted a security interest in substantially all of its assets as collateral for its obligations under the Ares Credit Facility. In addition, NFI pledged the equity interests of NF Funding I, as additional collateral.

 

The Ares Credit Agreement and the other loan documents contained customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, and sales of receivables. If an event of default occurred, the lenders could have increased borrowing costs, restricted NF Funding I’s ability to obtain additional advances under the Ares Credit Facility, accelerated all amounts outstanding under the Ares Credit Facility, enforced their interest against collateral pledged under the Ares Credit Facility or enforced their rights under the Company’s guarantees.

 

Once sold to NF Funding I, the assets described above were separate and distinct from the Company’s own assets and were not available to the Company’s creditors in case of the Company’s insolvency, although they are presented on a consolidated basis on the Company’s balance sheet see “Note 11-Variable Interest Entity”.

 

As of September 30, 2021, the Company had aggregate outstanding indebtedness under the Ares Credit Facility of $71.5 million, compared to $88.3 million as of March 31, 2021.

Future maturities of debt as of September 30, 2021 were as follows:

 

(in thousands)

 

 

 

FY2022

 

 

 

$

2,882

 

FY2023

 

 

 

 

18,243

 

FY2024

 

 

 

 

17,883

 

FY2025

 

 

 

 

17,883

 

FY2026

 

 

 

 

17,883

 

 

 

 

 

$

74,774

 

 

As disclosed in Note 14 - Subsequent Events, the Ares Credit Facility was repaid in full on November 5, 2021 using the proceeds from a new credit facility with Wells Fargo Bank, N.A.