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Note 8 - Bank Debt

6 Months Ended

Jun. 30, 2024

8. BANK DEBT

The Company is party to a Credit Agreement with JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”).

The Company entered into a sixth amendment to the Credit Agreement on June 12, 2023. The most significant change in the amended Credit Agreement was the discontinued use of LIBOR as a reference rate, with the adoption of the Federal Reserve Bank of New York's Secured Overnight Financing Rate (SOFR) as the primary reference rate. This change was anticipated and aligns with the US Dollar LIBOR panel ceasing on June 30, 2023.

The Company entered into a seventh amendment to the Credit Agreement on November 27, 2023. The Seventh Amendment to the Credit Agreement, among other things, (a) extends the maturity date of the underlying credit facility from June 1, 2024 to June 1, 2027, (b) increases the maximum annual amount that the Company and its subsidiaries may pay in dividends or other restricted payments to $2,000,000 from $1,250,000, and (c) permits the repurchase by the Company and its subsidiaries of up to $7,000,000 of Company equity prior to June 30, 2024, subject to compliance with certain financial covenants under the Credit Agreement.

The revolving facility under the Credit Agreement includes a $3 million sublimit for the issuance of letters of credit thereunder. Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or SOFR (previously LIBOR) plus applicable margins of (i) (0.25%) for Prime Rate loans and (ii) 1.75% for SOFR (previously LIBOR) loans. The Credit Agreement includes a commitment fee on the unused portion of the revolving facility of 0.25% per annum payable quarterly.

The obligations of the Company and other borrowers under the Credit Agreement are secured by a blanket lien on all the assets of the Company and its subsidiaries. The Credit Agreement also includes customary representations and warranties and applicable reporting requirements and covenants. The financial covenants under the Credit Agreement include a minimum fixed charge coverage ratio, a maximum senior funded debt to EBITDA ratio and a maximum total funded debt to EBITDA ratio.

On May 16, 2024, North 52nd Properties LLC (the “Purchaser”), a subsidiary of Crawford United Corporation (the “Company”), purchased certain real property located in Phoenix, Arizona (the “Real Property”) for $6.9 million (the “Purchase Price”) from Loudermilk, Inc. and its affiliate. The Real Property is utilized by the Company’s subsidiary, CAD Enterprises, Inc. (“CAD”), and was previously leased by CAD. The Company exercised its option to purchase the Real Property, which was independently appraised at a value substantially in excess of the Purchase Price. The purchase of the Real Property was financed with a loan of approximately $5.9 million by MidFirst Bank (the “Lender”) to the Purchaser made pursuant to a Loan Agreement dated May 16, 2024 by and between the Purchaser and the Lender (the “Loan Agreement”). The loan is secured by the Real Property and guaranteed by the Company and CAD, accrues interest at an annual rate of 7.14%, and is payable in monthly installments until the May 16, 2034 maturity date. The Loan Agreement provides for customary covenants and events of default, including covenants which require the Company to maintain a fixed charge coverage ratio of not less than 1.2x and a tangible net worth of not less than $10 million, each as of the end of any fiscal year. If the loan is repaid within the next five years, it may be subject to a prepayment premium as further described in the Loan Agreement. The Company entered into an eighth amendment to the Credit Agreement on May 16, 2024, which adopted amendments necessary to permit the purchase of the Real Property and the financing of the purchase pursuant to the Loan Agreement.

Bank debt balances consist of the following:

	*June 30,*		*December 31,*
	*2024*		*2023*
Term debt	$	5,858,964	$	-
Revolving debt		9,880,664		5,112,187
Total Bank debt		15,739,628		5,112,187
Less: current portion		136,775		-
Non-current bank debt		15,602,853		5,112,187
Less: unamortized debt costs		76,107		15,515
Net non-current bank debt	$	15,526,746	$	5,096,672

The Company had $20.1 million and $24.9 million available to borrow on the revolving credit facility at June 30, 2024 and December 31, 2023, respectively. The increase in borrowings on the revolving credit facility during the period ended June 30, 2024 is related to the acquisition of Heany Industries for $6.6 million.