ALLIANCE ENTERTAINMENT HOLDING CORP Debt Disclosure

Note 8: Revolving Credit Facility

 

On December 21, 2023, the Company entered into a new credit facility with White Oak Commercial Finance, LLC, which will mature on December 21, 2026. The facility is a $120 million asset-based revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit facility bear interest at the 30-day SOFR rate, subject to a floor of 2%, plus a margin ranging from 4.00% to 4.25%, depending on the Company’s utilization and consolidated fixed charge coverage ratio. The 30-day SOFR rates as of June 30, 2025, and June 30, 2024, were 4.35% and 5.29%, respectively. The effective interest rates at June 30, 2025, and June 30, 2024, were 9.2% and 9.5%, respectively.

 

On June 30, 2025, the Company entered into an amendment to its Credit Facility with White Oak, which reduced the applicable interest rate margin from a range of 4.5% – 4.75% to a range of 4.0% – 4.25%, effective immediately. The Company expects the reduction in the applicable interest rate range to decrease its interest expense in future periods.

 

If the Company reduces or terminates the commitments under the Revolving Credit Facility before its maturity, it will incur an early termination fee of 1% if done between December 21, 2024, and August 21, 2025. As of August 21, 2025, the Company is no longer subject to any early termination fees.

 

Availability under the Revolving Credit Facility is determined by the Company’s borrowing base calculation, as defined in the credit agreement relating to this facility. The Company also incurs a commitment fee of 0.25% for unused credit line with fees for the fiscal year ended June 30, 2025, and June 30, 2024, of $0.22 million and $0.15 million, respectively. Availability as of June 30, 2025, was approximately $54 million with an outstanding revolver balance of approximately $57 million. Availability as of June 30, 2024, was $44 million with an outstanding revolver balance of $73 million.

 

The maximum borrowings under the Revolving Credit Facility are determined by a formula based on eligible accounts receivable and inventory, subject to lender discretion. The facility includes standard representations and warranties, events of default, and financial reporting requirements, including maintaining a fixed charge coverage ratio of at least 1.1 to 1.0 on a trailing twelve-month basis. The facility also imposes covenants restricting the Company’s ability to incur additional indebtedness, grant liens, pay dividends, make unpermitted investments, or materially change its business operations. The facility is secured by a first-priority security interest in the Company’s and its subsidiaries’ cash, accounts receivable, and related assets.

 

The Company was in compliance with its covenants as of June 30, 2025 and 2024. Revolving Credit Facility, net consists of the following at:

 Schedule of Revolver Balance

($ in thousands)		June 30, 2025				June 30, 2024
Outstanding Balance		$	57,257			$	72,979
Less: Deferred Finance Costs			(1,988	)			(3,392	)
Revolving Credit Facility, Net		$	55,269			$	69,587

 

During the years ended June 30, 2025, and 2024, the Company had interest expenses of $7.2 million and $11.2 million, respectively, and amortization of deferred finance costs of $1.4 million and $0.9 million, respectively.