Nicholas Financial entered an amendment to its existing $250 million credit facility, with Bank of America as agent.

The lenders made the following commitments to the revolver:

  • $90 million from Bank of America
  • $35 million from First Tennessee Bank
  • $60 million from Wells Fargo
  • $40 million from BMO Harris

The amendment provides for a temporary adjustment to the calculation of the availability under the credit facility, effective December 30, 2016 through June 30, 2017.

The interest rate was temporarily increased by 50 basis points (0.5%) on borrowings outstanding during the period. An additional event of default was added that would be triggered if the sum of the percentages of accounts that were more than 30 days past due, accounts that were charged off and the value of repossessed vehicles held as assets exceeds a specified monthly threshold.

The company negotiated this amendment due to greater than anticipated weakness in portfolio collections and subsequent charge-offs in October and November of 2016. The company’s continued portfolio weakness has been exacerbated by greater than anticipated difficulties in implementing a centralized collection model beginning October 1, 2016. Due to the difficulty of predicting future delinquencies and subsequent charge-offs, the company viewed the execution of this amendment as a prudent step to ensure the availability of its credit line during the six months ending June 30, 2017.

Nicholas Financial is a consumer finance company that specializes in purchasing and servicing auto loans made by franchised and independent auto dealers, via a network of company owned and operated branch offices.