Rush Enterprises ups revolving credit agreement to up to $850 million

By Tali Rackner

Norfolk, Va., Sept. 21 – Rush Enterprises, Inc. entered into a second amended and restated credit agreement to increase commitments to up to $850 million from $750 million, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into the amendment on Sept. 15 with GE Capital Commercial Inc. as administrative agent and collateral agent.

Under the credit agreement, the lenders agreed to make up to $850 million of revolving credit loans to finance the company’s purchase of new and used vehicle inventory for sale by the company and to finance working capital needs.

The revolving credit loans consist of $640 million of revolving A loans, $100 million of revolving B loans and $110 million of revolving C loans. However, the revolving B loans cannot be made unless there is no more availability for revolving A loans, and the revolving C loans cannot be made unless there is no more availability for revolving A or B loans, the filing noted.

The expanded revolving loans will be used to finance the company's purchase of new and used vehicle inventory and to finance working capital needs. Loans to purchase used inventory are limited to $150 million.

Interest continues to be equal to three-month Libor plus 203 basis points, payable monthly.

In addition, the company must pay the lenders a monthly working capital fee of 0.35% per year multiplied by the amount of voluntary prepayments of new and used inventory loans. There is also a delinquency charge on late payments of 1.5% per month or, at the option of the agent, 5% of the past due amount.

The credit agreement expires on July 11, 2016.

GE Capital has the right to terminate the credit agreement at any time upon 120 days written notice. The company may also terminate the credit agreement at any time, but it must pay a prepayment fee of $300,000.

Certain financial covenants require the company to maintain a maximum ratio of consolidated total liabilities to total net worth of 3.5 times and a minimum ratio of consolidated adjusted EBITDAR to consolidated fixed charges of 1.2 times.

Rush Enterprises owns and operates a network of commercial vehicle dealerships. It is based in New Braunfels, Texas.

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