RAIL

Business Context and Reporting Period

Company: Freightcar America, Inc. (RAIL)
Filing Type: Form 8-K (Current Report)
Date of Report: February 12, 2025 (Event Date); Signed February 18, 2025
Context: The Company entered into a material definitive agreement to establish a new asset-backed credit facility to support its operations.

Key Financial Metrics and Debt Structure

Debt Facility: Asset-backed credit facility with Bank of America, N.A. as agent.
Maximum Aggregate Principal: Up to $35.0 million.
Facility Composition: Revolving loans and a sub-facility for letters of credit.
Interest Rates:

• Term SOFR + 1.50% to 2.00% per annum.
• Base Rate + 0.50% to 1.00% per annum.

Collateral: Continuing lien on all assets of the Loan Parties and a pledge of equity interests in direct and indirect material subsidiaries.
Borrowing Base: Availability is limited by specific percentages of eligible accounts receivable (90% investment grade, 85% non-investment grade) and inventory (parts and railcars, ranging from 70% to 85% depending on valuation method).

Material Changes and Terms

Term and Maturity:

• Standard Term: Ends February 12, 2030.
• Conditional Maturity: If Term Loan Obligations are not repaid or refinanced by October 1, 2028, the term ends October 2, 2028.

Covenants: Includes affirmative and negative covenants with limitations on indebtedness, liens, and investments.
Events of Default: Customary events of default apply.
Comparison: This filing represents a new financing arrangement; no prior period financial metrics (revenue, profit, cash flow) are provided in this specific 8-K document.

Outlook, Risks, and Management Commentary

Management Action: The Company executed the agreement to secure liquidity via an asset-backed structure, indicating a reliance on working capital assets (receivables and inventory) for funding.
Risks and Contingencies:

• Liquidity Constraints: Borrowing availability is strictly tied to the value of eligible assets and subject to reserves established by the Agent.
• Refinancing Risk: The facility has a potential early maturity date in 2028 if specific refinancing or repayment conditions are not met.
• Covenant Compliance: The Company must adhere to limitations on additional indebtedness and liens.

Unusual Items: None reported in this filing.

Investor Verification Checklist

• Verify the current utilization of the $35.0 million facility and the specific borrowing base calculations.
• Review the full text of the Loan and Security Agreement (Exhibit 10.1) for detailed covenant thresholds.
• Monitor the Company's ability to refinance or repay obligations by the October 1, 2028, conditional deadline.
• Assess the impact of the new interest rate structure (SOFR + margin) on future interest expense.
• Confirm the status of the pledged equity interests in subsidiaries under the Pledge Agreement (Exhibit 10.2).