CREDIT FACILITY AND NOTES PAYABLE

6 Months Ended

Sep. 30, 2021

CREDIT FACILITY AND NOTES PAYABLE [Abstract]

CREDIT FACILITY AND NOTES PAYABLE

8. CREDIT FACILITY AND NOTES PAYABLE

CREDIT FACILITY

Throughout the current fiscal year and until October 12, 2021, ePlus Technology, inc. and certain of its subsidiaries (the “Borrowers”), which are part of our technology segment, financed their operations, in addition to funds generated from operations, with a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). This facility provided short-term capital for our technology segment. There were two components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component.

Under the WFCDF credit facility, there was an aggregate limit for the two components, except during a temporary uplift, of $275 million. We could elect to temporarily increase the aggregate limit to $350 million for a period of not less than 30 days, provided that all such periods not exceed 150 days in the aggregate in any calendar year. Additionally, the WFCDF credit facility had a limit on the accounts receivable component of $100 million. WFCDF charged us an interest rate equal to two percent (2.00%) plus the greater of one month LIBOR or seventy-five hundredths of one percent (0.75%).

As of September 30, 2021, the limit of the two components of the credit facility was $350 million as result of our election to temporarily uplift the aggregate limit.

Our borrowing availability under the credit facility varied, based upon the value of the receivables and inventory of the Borrowers. We had outstanding balances of $145.9 million and $98.7 million under the floor plan component as of September 30, 2021, and March 31, 2021, respectively. This component is presented as part of as accounts payable – floorplan. Under the accounts receivable component, we had $29 million as of September 30, 2021 and no outstanding balance as of March 31, 2021. This component is presented as part of recourse notes payable – current. The fair value of the outstanding balances under the WFCDF credit facility were approximately equal to their carrying value as of September 30, 2021, and March 31, 2021.

The WFCDF credit facility was secured by the assets of the Borrowers. Additionally, the credit facility required a guaranty of $10.5 million by ePlus inc.

The WFCDF credit facility restricted the ability of the Borrowers to pay dividends to ePlus inc. unless their available borrowing met certain thresholds. As of September 30, 2021, and March 31, 2021, their available borrowing met the threshold such that there were no restricted net assets of ePlus Technology, inc.

The credit facility required that financial statements of the Borrowers be provided within 45 days of each quarter and 90 days of each fiscal year end and required that other operational reports be provided on a regular basis. Either party could terminate with 90 days’ written notice.

On October 13, 2021, we entered into a First Amended and Restated Credit Agreement by and among the Borrowers, WFCDF, as administrative agent thereunder, various banks and other financial institutions (including WFCDF) who are parties thereto as lenders (collectively, the “Lenders”) and others, pursuant to which, among other things, the Lenders established for the benefit of the Borrowers a discretionary senior secured floorplan facility in the aggregate principal amount of up to $375 million, together with a sublimit for a revolving credit facility for up to $100 million (collectively, the “2021 Credit Facility”).

The loss of the 2021 Credit Facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment and as an operational function of our accounts payable process.

RECOURSE NOTES PAYABLE

Recourse notes payable consist of borrowings that, in the event of default, the lender has recourse against us. As of September 30, 2021, we had $44.9 million in recourse borrowings which includes $29.0 million outstanding under our revolving credit facility with WFCDF, and $15.9 million arising from one installment payment arrangement. Our payments under this installment agreement are due quarterly in amounts that are correlated to the payments due to us from a customer under a related notes receivable. We discounted our payments to calculate our payable balance using an interest rate of 3.50% as of both September 30, 2021, and March 31, 2021.

NON-RECOURSE NOTES PAYABLE

Non-recourse notes payable consists of borrowings that, in the event of a default by a customer, the lender generally only has recourse against the customer, and the assets serving as collateral, but not against us. As of September 30, 2021, and March 31, 2021, we had $25.4 million and $56.1 million, respectively, of non-recourse borrowings that were collateralized by investments in notes and leases. Principal and interest payments are generally due monthly in amounts that are approximately equal to the total payments due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for our non-recourse notes payable was 3.59% and 3.35%, as of September 30, 2021, and March 31, 2021, respectively.