Note F - Debt Facilities

3 Months Ended

Jul. 31, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

F – Debt Facilities

A summary of debt facilities is as follows:

(In thousands)	July 31, 2023			April 30, 2023
Revolving line of credit	$	-		$	168,516
Debt issuance costs		(1,035	)		(1,285	)
Revolving line of credit, net	$	(1,035	)	$	167,231
Non-recourse notes payable - 2022 Issuance	$	90,710		$	134,137
Non-recourse notes payable - 2023-1 Issuance		282,677			338,777
Non-recourse notes payable - 2023-2 Issuance		343,004			-
Debt issuance costs		(4,602	)		(1,547	)
Non-recourse notes payable, net	$	711,789		$	471,367
Total debt	$	710,754		$	638,598

Revolving Line of Credit

At July 31, 2023, the Company and its subsidiaries have $600.0 million of permitted borrowings under a revolving line of credit. The revolving credit facilities are collateralized primarily by finance receivables and inventory, are cross collateralized and contain a guarantee by the Company. Interest is payable monthly under the revolving credit facilities with a scheduled maturity date of September 29, 2024. The credit facilities provide for four pricing tiers for determining the applicable interest rate, based on the Company’s consolidated leverage ratio for the preceding fiscal quarter. The current applicable interest rate under the credit facilities is generally SOFR plus 2.75%, with a minimum of 2.25% or for non-SOFR amounts the base rate of 8.50% at July 31, 2023 and 8.25% at April 30, 2023. The credit facilities contain various reporting and performance covenants including (i) maintenance of certain financial ratios and tests, (ii) limitations on borrowings from other sources, (iii) restrictions on certain operating activities and (iv) restrictions on the payment of dividends or distributions (see note B).

The Company had no outstanding borrowings under its revolving line of credit at July 31, 2023 as it was paid off with the funding of the 2023-2 non-recourse notes payable. However, $1 million of amortized debt issuance costs is being reflected at the period end, which would have normally netted against the carrying balance. The Company was in compliance with the covenants at July 31, 2023. The amount available to be drawn under the credit facilities is a function of eligible finance receivables and inventory; based upon eligible finance receivables and inventory at July 31, 2023, the Company had additional availability of approximately $159.0 million under the revolving credit facilities.

Non-Recourse Notes Payable

The Company has issued three separate series of asset-backed non-recourse notes (known as the “2022 Issuance”, “2023-1 Issuance” and “2023-2 Issuance”). The 2022 Issuance consists of $400.0 million in principal amount of non-recourse asset-back notes issued in four classes with a weighted average fixed coupon rate of 5.14% per annum. The 2023-1 Issuance consists of $400.2 million in principal amount of non-recourse asset-back notes issued in four classes with a weighted average fixed coupon rate of 8.68% per annum, and the 2023-2 Issuance consists of $360.3 million in principal amount of non-recourse asset-back notes issued in two classes with a weighted averaged fixed coupon rate of 8.80% per annum. All three issuances are collateralized by auto loans directly originated by the Company. Credit enhancement for the non-recourse notes payable consists of overcollateralization, a reserve account funded with an initial amount of not less than 2.0% of the pool balance, excess interest on the auto finance receivables, and in some cases, the subordination of certain payments to noteholders of less senior classes of notes. The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the related auto finance receivables. Notes payable related to the term securitization transactions accrue interest predominately at fixed rates and have scheduled maturities through April 20, 2029, January 22, 2030, and June 20, 2030, respectively, but may mature earlier, depending upon repayment rate of the underlying auto finance receivables.