Note 5 – Debt

Amended Credit Agreement

The Company, together with certain direct and indirect subsidiaries, have an outstanding Credit Agreement (the “Credit Agreement”) with a consortium of lenders and Bank of America, N.A., as administrative agent. The Credit Agreement was most recently amended on December 15, 2016 (the “Amended Credit Agreement”). As a result of such amendment, the aggregate principal amount available for borrowing under the secured revolving credit facility increased from $250,000 to $350,000.

All subsidiary borrowers and guarantors participating in the Amended Credit Agreement have entered into a related pledge and security agreement. The security agreement grants a security interest to the lenders in substantially all of the personal property of subsidiaries designated as borrowers to secure their respective obligations under the Amended Credit Agreement, including the stock and membership interests of specified subsidiaries (limited to 66% of the stock in the case of certain non-US subsidiaries). The Amended Credit Agreement restricts the amount of dividend payments the Company can make to shareholders. As of September 30, 2017, Gentherm had approximately $221 available to borrow under the U.S. Revolving Note, net of outstanding letters of credit totaling $330.

The Amended Credit Agreement requires the Company to maintain a minimum Consolidated Interest Coverage Ratio and Consolidated Leverage Ratio, each defined therein.

Under the Amended Credit Agreement, U.S. Dollar denominated loans bear interest at either a base rate (“Base Rate Loans”) or Eurocurrency rate (“Eurocurrency Rate Loans”), plus a margin (“Applicable Rate”). The rate for Base Rate Loans is equal to the highest of the Federal Funds Rate (1.06% at September 30, 2017) plus 0.50%, Bank of America’s prime rate (4.25% at September 30, 2017), or a one month Eurocurrency rate (0.00% at September 30, 2017) plus 1.00%. The rate for Eurocurrency Rate Loans denominated in U.S. Dollars is equal to the London Interbank Offered Rate (1.23% at September 30, 2017). All loans denominated in a currency other than the U.S. Dollar must be Eurocurrency Rate Loans. Interest is payable at least quarterly.

The Applicable Rate varies based on the Consolidated Leverage Ratio reported by the Company. As long as the Company is not in default of the terms and conditions of the Amended Credit Agreement, the lowest and highest possible Applicable Rate is 1.25% and 2.00%, respectively, for Eurocurrency Rate Loans and 0.25% and 1.00%, respectively, for Base Rate Loans.

The Company also has two fixed interest rate loans with the German Investment Corporation (“DEG”), a subsidiary of KfW Banking Group, a Germany government-owned development bank:

Note 5 – Debt – Continued

DEG China Loan

The first DEG loan, a loan we used to fund capital investments in China (the “DEG China Loan”), is subject to semi-annual principal payments that began March, 2015 and end September, 2019. Under the terms of the DEG China Loan, the Company must maintain a minimum Debt-to-Equity Ratio, Current Ratio and Debt Service Coverage Ratio, as defined by the DEG China Loan agreement, based on the financial statements of Gentherm’s wholly owned subsidiary, Gentherm Automotive Systems (China) Ltd.

DEG Vietnam Loan

The Company’s second fixed interest rate loan agreement with DEG was used to finance the construction and set up of the Vietnam production facility (“DEG Vietnam Loan”). The DEG Vietnam Loan is subject to semi-annual principal payments beginning November, 2017 and ending May, 2023. Under the terms of the DEG Vietnam Loan, the Company must maintain a minimum Current Ratio, Equity Ratio and Enhanced Equity Ratio, as defined by the DEG Vietnam Loan agreement, based on the financial statements of Gentherm’s wholly owned subsidiary, Gentherm Vietnam Co. Ltd.

The following table summarizes the Company’s debt at September 30, 2017 and at December 31, 2016.

	September 30, 2017						December 31, 2016
	Interest Rate			Principal Balance			Principal Balance
Credit Agreement:
Revolving Note (U.S. Dollar Denominations)		2.99	%	$	129,000		$	154,000
DEG China Loan		4.25	%		1,891			2,525
DEG Vietnam Loan		5.21	%		15,000			15,000
Total debt					145,891			171,525
Current portion					(3,445	)		(2,092	)
Long-term debt, less current maturities				$	142,446		$	169,433

The scheduled principal maturities of our debt as of September 30, 2017 are as follows:

Year	Revolving Note (U.S. Dollar)		DEG China Note		DEG Vietnam Note		Total
Remainder of 2017	$	—	$	—	$	1,250	$	1,250
2018		—		945		2,500		3,445
2019		—		946		2,500		3,446
2020		—		—		2,500		2,500
2021		129,000		—		2,500		131,500
2022		—		—		2,500		2,500
Thereafter		—		—		1,250		1,250
Total	$	129,000	$	1,891	$	15,000	$	145,891

Principal outstanding under the Revolving Note will be due and payable in full on March 17, 2021. As of September 30, 2017, we were in compliance, in all material respects, with all terms as outlined in the Amended Credit Agreement, DEG China Loan and DEG Vietnam Loan.