Short Term Borrowings and Credit Lines
|6 Months Ended|
Jun. 30, 2020
|Debt Disclosure [Abstract]|
|Short-Term Borrowings and Credit Lines||
NOTE 4—SHORT-TERM BORROWINGS AND CREDIT LINES
At the beginning of the 2020, the Company had an unsecured, committed revolving line of credit agreement, maturing on August 1, 2023 with monthly variable commitments available for funding that averaged $50.0 million over the course of a calendar year. In March 2020, the Company entered into a first amendment to its unsecured, committed revolving line of credit agreement to remove the seasonality within the commitment levels and provide $125.0 million in committed borrowing availability through December 31, 2020. Effective April 15, 2020, the Company entered into a second amended and restated credit agreement (the “restated credit agreement”) which amended and restated the committed revolving line of credit agreement. The restated credit agreement provides for (i) a secured, committed revolving line of credit, maturing on August 1, 2023 with a commitment available for funding of $125.0 million (the "Revolving A Loan"), (ii) a secured, committed revolving line of credit, maturing April 13, 2021, with a commitment available for funding of $400.0 million (the "Revolving B Loan", together with the Revolving A Loan, the "Revolving Loans"), and (iii) an uncommitted $100.0 million incremental facility, which may be added to the Revolving B Loan if it is executed on, upon request by the Company to the administrative agent. Advances under the Revolving Loans can be either LIBOR loans or base rate loans. LIBOR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to LIBOR (subject to a LIBOR floor) plus a margin ranging from 2.00% to 2.75% (the "LIBOR Margin"). Base rate loans bear interest on the outstanding principal amount thereof at a rate per annum equal to the LIBOR Margin plus the greater of (i) daily reset one month LIBOR or (ii) in the case of Revolving A Loans, the LIBOR floor; provided that if the lenders are unable to price loans based on LIBOR, base rate loans will bear interest at an interest rate per annum equal to a margin ranging from 1% to 1.75% plus the higher of (A) the rate of interest most recently announced by the administrative agent as its prime rate or (B) the federal funds rate plus 1.50%. During the second quarter, the LIBOR floor in the restated agreement was 0.75% for advances under the Revolving A Loan and 1.00% for advances under the Revolving B Loan. The restated credit agreement requires the Company to comply with certain financial covenants, and provides for certain restrictions on dividend payments and stock repurchases. During the second quarter, the obligations of the Company under the restated credit agreement are secured by all assets of the Company and Columbia Brands USA, LLC, except for intellectual property, real property, equity interests in foreign subsidiaries and certain other exclusions. If the Company is in default, it is required to comply with certain restrictions on dividend payments and stock repurchases. At June 30, 2020, the Company was in compliance with all associated covenants, and there was no balance outstanding under these lines and facility. As disclosed in Note 15, in July 2020, the Company amended its restated credit agreement.
The Company’s Canadian subsidiary has available an unsecured and uncommitted line of credit, which is payable on demand, guaranteed by the Company, and provides for borrowings up to a maximum of CAD$30.0 million (approximately US$22.0 million) at June 30, 2020. The revolving line accrues interest at the Canadian Prime rate for CAD overdraft borrowings or Bankers' Acceptance rate plus 150 basis points for Bankers' Acceptance loans. As of June 30, 2020, there was no balance outstanding under this line of credit.
At the beginning of 2020, the Company's European subsidiary had two separate unsecured and uncommitted lines of credit, guaranteed by the Company, and provides for borrowings up to a maximum of €25.8 million and €5.0 million. In June 2020, the Company's European subsidiary entered into an agreement which replaced the €5.0 million line with a €4.4 million secured, committed line of credit, and a €0.6 million unsecured and uncommitted line of credit. The combined available borrowings of the three lines was approximately US$34.6 million at June 30, 2020. Borrowings under the €25.8 million line accrues interest at a base rate of 185 basis points plus 275 basis points. Borrowings under the €0.6 million and €4.4 million lines accrue interest at 75 basis points. As of June 30, 2020, there was no balance outstanding under these facilities.
The Company’s Japanese subsidiary has available two separate unsecured and uncommitted overdraft facilities guaranteed by the Company providing for borrowing up to a maximum of US$7.0 million and ¥300.0 million (combined approximately US$9.8 million) at June 30, 2020. Borrowings under these overdraft facilities accrue interest at 275.0 basis points and the Tokyo Interbank Offered Rate plus 0.50 basis points, respectively. As of June 30, 2020, the outstanding balance under the ¥300.0 million facility was ¥300.0 million (approximately US
$2.8 million), which was accruing interest at a rate of 0.54% per annum. As of June 30, 2020, there was no balance was outstanding under the US$7.0 million facility.
The Company’s Korea subsidiary has available an unsecured and uncommitted overdraft facility guaranteed by the Company providing for borrowing up to a maximum of US$20.0 million at June 30, 2020. Borrowings under the overdraft facility accrue interest at the Korea three month CD rate plus 275.0 basis points. As of June 30, 2020, there was no balance outstanding under this overdraft facility.
The Company’s Chinese subsidiary has available an unsecured and uncommitted overdraft and clean advance facility guaranteed by the Company providing for borrowings of advances or overdrafts up to a maximum of US$20.0 million at June 30, 2020. Borrowings under the facility accrue interest on advances of RMB based on the People’s Bank of China (“PBOC”) base rate plus 0.85%, advances of USD based on LIBOR plus 1.8% per annum or overdrafts of RMB based on 110% of the PBOC rate. As of June 30, 2020, there was no balance outstanding under this facility.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef