Short Term Borrowings and Credit Lines |
9 Months Ended |
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Sep. 30, 2020 | |
| Debt Disclosure [Abstract] | |
| Short-Term Borrowings and Credit Lines |
NOTE 4—SHORT-TERM BORROWINGS AND CREDIT LINES
At the beginning of 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. In April 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 1.00% 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%. In addition, the restated credit agreement requires the Company to comply with certain financial covenants. If the Company is in default, it is required to comply with certain restrictions on dividend payments and stock repurchases. In connection with the restated agreement, the Company entered into a collateral agreement under which the obligations of the Company were 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. Effective July 10, 2020, the Company entered into a first amendment (the "first amendment") to its restated credit agreement. The first amendment provides for
suspensions of and adjustments to the financial covenants beginning on July 1, 2020 through December 31, 2020 (the "covenant suspension period") as follows: (i) the funded debt ratio no longer needs to be maintained during the covenant suspension period, (ii) the interest coverage ratio no longer needs to be maintained during the covenant suspension period, and (iii) the Company must maintain liquidity (inclusive of unrestricted and unencumbered cash-on-hand of the Company and its subsidiaries and, with certain limitations, availability under the revolving credit facilities provided for in the restated credit agreement) of not less than $200.0 million as of each calendar month end during the covenant suspension period. In addition, the minimum LIBOR floors were revised to be 0.50% in the case of both Revolving A and Revolving B loans. The first amendment also provides for a letter of credit facility and contains modifications to certain other negative covenants, including a change to the negative indebtedness covenant to allow for up to $350 million in additional unsecured indebtedness. In connection with the first amendment, the Company amended and restated the collateral agreement, originally dated April 15, 2020 to provide for a pledge by the Company and Columbia Brands USA, LLC of 65% of their equity interests in foreign subsidiaries. At September 30, 2020, the Company was in compliance with all associated covenants, and there was no balance outstanding under these lines and facility.
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$22.4 million) at September 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 September 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$36.2 million at September 30, 2020. Borrowings under the €25.8 million line accrue interest at a base rate of 185 basis points plus 200 basis points. Borrowings under the €4.4 million and €0.6 million lines each accrue interest at 75 basis points. As of September 30, 2020, there was no balance outstanding under these facilities.
At the beginning of the third quarter of 2020, the Company’s Japanese subsidiary had 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. During the third quarter of 2020, the overdraft facility with a maximum borrowing of ¥300.0 million was modified to increase the maximum borrowing to ¥1.5 billion. The combined maximum borrowings of the two lines were approximately US$21.2 million at September 30, 2020. Borrowings under the ¥1.5 billion overdraft facility accrue interest at the Tokyo Interbank Offered Rate plus 0.50 basis points and borrowings under the US$7.0 million overdraft facility accrue interest at 200 basis points. As of September 30, 2020, there was no balance outstanding under these facilities.
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 September 30, 2020. Borrowings under the overdraft facility accrue interest at the Korea three month CD rate plus 200 basis points. As of September 30, 2020, there was no balance outstanding under this overdraft facility.
At the beginning of the third quarter of 2020, the Company’s Chinese subsidiary had 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 September 30, 2020. Borrowings under the facility accrue interest on advances of RMB at 4.15%, advances of USD based on LIBOR plus 2.0% per annum or overdrafts of RMB based on 110% of the PBOC rate. In September 2020, the Company's Chinese subsidiary entered into an unsecured and uncommitted line of credit, guaranteed by the Company that provides for borrowings up to a maximum of RMB140.0 million. Borrowings under the facility accrue interest at the one year loan prime rate less 10 basis points. The combined available borrowings of the two lines were approximately US$40.5 million at September 30, 2020. As of September 30, 2020, there was no balance outstanding under these facilities.
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