West Fargo, N.D. — Titan Machinery Inc. (Nasdaq: TITN), a leading network of full service agricultural and construction equipment stores, announced that it has entered into a new 5 year Amended and Restated Credit Agreement, maturing April 2025, arranged by Bank of America, with a syndicate of lenders consisting of Bank of America, Wells Fargo Bank, Regions Bank, BBVA USA, AgCountry Farm Credit Services, and Sterling National Bank.
The new Amended and Restated Credit Agreement provides for an aggregate $250 million financing commitment by the lenders, consisting of an aggregate floorplan financing commitment of $185 million and an aggregate working capital commitment of $65 million. The floorplan facility may be used to advance up to 85% of the value of eligible new inventory and up to 75% of the value of eligible used inventory, which compares to the previous floorplan facility that allowed for an advance up to 70% of the value of both new and used eligible inventory.
The working capital facility may be used to advance up to 85% of eligible accounts, 75% of the value of eligible rental equipment, 75% of the company's eligible parts inventory, and a percentage of other unencumbered assets such as vehicles and real estate. The working capital advance rates are up to 5% higher than the previous facility and can include assets in the borrowing base that were not allowed under the old facility.
The Amended and Restated Credit Agreement does not obligate the company to maintain financial covenants, except in the event that excess availability is less than 15% of the lower of the borrowing base or the size of the full credit line. If excess availability levels are not met, then the company is required to maintain a fixed charge coverage ratio of at least 1.10:1.00. These terms are similar to those in the previous credit facility but favorably impacted by the increased advanced rates, which adds to the Company's excess availability amount.
The interest rate for loans under the credit facility will be equal to LIBOR (subject to a floor of 0.5%) plus an applicable margin based on the company's excess availability. The initial applicable margin is 1.5%, resulting in an effective initial interest rate of 2.49%.
Mark Kalvoda, chief financial officer said, "We believe this Amended and Restated Credit Agreement validates the strength of our overall financial position and provides ample financial flexibility to support our continued long-term profitable growth. The improved terms and rates of the credit facility lowers our borrowing costs by approximately 50 basis points, while simultaneously increasing our liquidity position through enhanced flexibility, allowing us to meet the needs of our business. We are fortunate to have partnered with such a supportive bank group."
Source: Titan Machinery
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