POWER SOLUTIONS INTERNATIONAL, INC.PSIX
POWER SOLUTIONS INTERNATIONAL, INC. Debt Disclosure
Debt
The Company’s outstanding debt consisted of the following:
| (in thousands) | As of December 31, 2024 | As of December 31, 2023 | |||||||||||||||||||||
| Amount | Rate (3) | Amount | Rate (3) | Maturity Date | |||||||||||||||||||
| Short-term financing: | |||||||||||||||||||||||
Revolving Credit Agreement 1 | $ | 95,000 | 6.52% | $ | — | —% | August 30, 2025 | ||||||||||||||||
Credit Agreement 2 | — | —% | 50,000 | 8.71% | March 21, 2025 | ||||||||||||||||||
| Shareholder’s Loan Agreement | 25,000 | 8.49% | — | —% | August 31, 2025 | ||||||||||||||||||
| $25 Million Loan Agreement | — | —% | 25,000 | 9.44% | May 20, 2025 | ||||||||||||||||||
| $50 Million Loan Agreement | — | —% | 50,000 | 9.44% | November 30, 2024 | ||||||||||||||||||
| $30 Million Loan Agreement | — | —% | 19,820 | 9.41% | March 31, 2025 | ||||||||||||||||||
| Total short-term debt | $ | 120,000 | $ | 144,820 | |||||||||||||||||||
| Long-term debt: | |||||||||||||||||||||||
| Finance leases and other debt | 184 | ** | 399 | ** | Various | ||||||||||||||||||
| Total long-term debt and finance leases | 184 | 399 | |||||||||||||||||||||
| Less: Current maturities of long-term debt and finance leases | 130 | 215 | |||||||||||||||||||||
| Long-term debt | $ | 54 | $ | 184 | |||||||||||||||||||
| 1 | Unamortized financing costs and deferred fees on the new Revolving Credit Agreement are not presented in the above table as they are classified in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Unamortized debt issuance costs, were $0.4 million at December 31, 2024. | ||||
| 2 | As of December 31, 2023, unamortized financing costs and deferred fees on the Credit Agreement were not presented in the above table as they are classified in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Unamortized debt issuance costs were $0.2 million as of December 31, 2023. | ||||
| 3 | Includes the weighted average interest rate. | ||||
| ** | Finance lease obligations are a non-cash financing activity. See Note 8. Leases. | ||||
The Company paid $12.6 million and $19.9 million in cash for interest in 2024 and 2023, respectively.
Revolving Credit Agreement and Shareholder’s Loan Agreement
On August 30, 2024, the Company closed on its new Uncommitted Revolving Credit Agreement (the “Revolving Credit Agreement”), with Standard Chartered Bank (“Standard Chartered”) and two other lenders. The Revolving Credit Agreement allows the Company to borrow up to $120.0 million and has a maturity date of August 30, 2025. The Revolving Credit Agreement is subject to customary events of default and covenants, including minimum consolidated EBITDA and Consolidated Interest Coverage Ratio covenants for the third and fourth quarters of 2024 and the first and second quarters of 2025. Borrowings under the Revolving Credit Agreement will incur interest at the applicable Secured Overnight Financing Rate (“SOFR”) plus 2.00% per annum. The obligations under the Revolving Credit Agreement are unconditionally guaranteed, on a joint and several basis, by certain wholly-owned, existing and subsequently acquired or formed direct and indirect subsidiaries of the Company, subject to customary exceptions. The obligations under the Revolving Credit Agreement are secured by substantially all assets of the Company and the Company’s wholly-owned subsidiaries. In addition, the Company paid fees of $0.6 million related to the Revolving Credit Agreement which are deferred and amortized over the term of the Revolving Credit Agreement.
As part of the closing of the Revolving Credit Agreement, the Company made an initial draw in the amount of $100.0 million. The Company utilized the amount drawn under the Revolving Credit Agreement (i) to repay the outstanding balance of approximately $40.0 million under the Company’s Fourth Amended and Restated Uncommitted Revolving Credit Agreement, dated March 22, 2024, by and among the Company and Standard Chartered; and (ii) to prepay approximately $60.0 million under the various shareholder loan agreements between PSI and Weichai. As of December 31, 2024, the Company had $95.0 million outstanding under the Revolving Credit Agreement. See further discussion below.
In connection with the Revolving Credit Agreement, on August 30, 2024, the Company also entered into a new Shareholder’s Loan Agreement (the “SLA”) with Weichai, which allows the Company to borrow up to $105.0 million and expires August 31, 2025. Borrowings under the SLA will incur interest at the applicable SOFR, plus 4.05% per annum. If the interest rate for any loan is lower than Weichai’s borrowing cost, the interest rate for such loan shall be equal to Weichai’s borrowing cost plus
1.0%. The borrowing requests made under the SLA are subject to Weichai’s discretionary approval. The payment of the borrowings under the SLA is subordinated in all respects to the Revolving Credit Agreement with the exception that the Company is allowed to make a single payment of $10.0 million to Weichai. The $60.0 million portion of the initial advance under the Revolving Credit Agreement was applied to pay all principal, interest, and other amounts outstanding under the $30 Million Loan Agreement, the $25 Million Loan Agreement, and the $50 Million Loan Agreement (each as discussed below), except for $25.0 million which is the outstanding principal balance under the SLA as of December 31, 2024.
On March 22, 2024, the Company amended and restated its $130.0 million Third Amended and Restated Uncommitted Revolving Credit Agreement with Standard Chartered. The Fourth Amended and Restated Uncommitted Revolving Credit Agreement (the "Credit Agreement") reduced the borrowing capacity to $50.0 million and extended the maturity date of loans outstanding under its previous credit facility to the earlier of March 21, 2025 or the demand of Standard Chartered. The Credit Agreement was subject to customary events of default and covenants, including minimum consolidated EBITDA and Consolidated Interest Coverage Ratio covenants for the second and third quarters of 2024. Borrowings under the Credit Agreement incurred interest at either the alternate base rate or the SOFR plus applicable rate of 3.45% per annum. In addition, the Company paid fees of $0.1 million related to the Credit Agreement which were deferred and amortized over the term of the Credit Agreement. The Credit Agreement was secured by substantially all of the Company’s assets and provided Standard Chartered the right to demand payment of any and all of the outstanding borrowings and other amounts owed under the Credit Agreement at any point in time prior to the maturity date at Standard Chartered’s discretion. The Company repaid the outstanding balance of $40.0 million and extinguished the Credit Agreement on August 30, 2024.
On March 22, 2024, the Company amended one of the four previous shareholder’s loan agreements with Weichai, to among other things, extend the maturity thereof. The $30 Million Loan Agreement provided the Company with a $30.0 million subordinated loan at the discretion of Weichai and was amended to extend the maturity date to March 31, 2025. Borrowings under the $30 Million Loan Agreement bear interest at an annual rate equal to SOFR plus 4.05% per annum. Further, if the applicable SOFR rate was negative, the interest rate per annum should have been deemed as 4.05% per annum. If the interest rate for any loan was lower than Weichai’s borrowing cost, the interest rate for such loan would have been equal to Weichai’s borrowing cost plus 1.0%. All the amended shareholder loan agreements with Weichai were subject to customary events of default and covenants.
The Company was also previously party to a $130.0 million first Amended Shareholder’s Loan Agreement with Weichai, which was amended and restated in March 2023. This first Amended Shareholder’s Loan Agreement provided the Company with a $130.0 million subordinated loan under which Weichai was obligated to advance funds solely for purposes of repaying outstanding borrowings under Credit Agreement if the Company was unable to pay such borrowings. This first Amended Shareholder’s Loan Agreement was replaced by the new SLA.
The Company was also previously party to a $50 Million Loan Agreement with Weichai, which was amended and restated in November 2023. The $50 Million Loan Agreement provided the Company with a $50.0 million uncommitted facility that was subordinated to the Third Amended and Restated Uncommitted Revolving Credit Agreement and any borrowing requests made under the $50 Million Loan Agreement were subject to Weichai’s discretionary approval. Borrowings under the $50 Million Loan Agreement incurred interest at the applicable SOFR, plus 4.65% per annum and could have been used for general corporate purposes, except for certain legal expenditures which required additional approval from Weichai. Further, if the applicable term SOFR was negative, the interest rate per annum should have been deemed as 4.65% per annum. If the interest rate for any loan was lower than Weichai’s borrowing cost, the interest rate for such loan would have been equal to Weichai’s borrowing cost plus 1.0%. This $50 Million Loan Agreement was replaced by the new SLA.
The Company was also previously party to a $25 Million Loan Agreement with Weichai, which was amended and restated in May 2024. The $25 Million Loan Agreement provided the Company with a $25.0 million subordinated loan. Borrowings under the $25 Million Loan Agreement incurred interest at the applicable SOFR rate, plus 4.05% per annum. Further, if the applicable term SOFR was negative, the interest rate per annum should have been deemed as 4.05% per annum. If the interest rate for any loan under the $25 Million Loan Agreement was lower than Weichai’s borrowing cost, the interest rate for such loan would have been equal to Weichai’s borrowing cost plus 1.0%. This $25 Million Loan Agreement was replaced by the new SLA.
As of December 31, 2024, the Company’s total outstanding debt obligations under the Revolving Credit Agreement, the SLA, and for finance leases and other debt were $120.2 million in the aggregate, and its cash and cash equivalents were $55.3 million. The Company's total accrued interest for the Revolving Credit Agreement and the SLA was $1.2 million as of December 31, 2024. The Company’s total accrued interest for its Credit Agreement and all shareholder loans was $1.9 million as of December 31, 2023. Accrued interest is included within Other Accrued Liabilities on the Consolidated Balance Sheets.
See Item 8., Note 1. Summary of Significant Accounting Policies and Other Information for further discussion of the Company’s going concern considerations.
The below schedule of remaining maturities of long-term debt excludes finance leases (refer to Item 8., Note 8. Leases).
| (in thousands) | ||||||||
| Year Ending December 31, | Maturities of Long-Term Debt | |||||||
| 2025 | $ | 52 | ||||||
| 2026 | 38 | |||||||
| 2027 | — | |||||||
| Total | $ | 90 | ||||||
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.