RumbleOn, Inc. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by RumbleOn, Inc. (formerly Ridenow Group, Inc.) on August 20, 2021. The filing discloses the entry into a new material definitive agreement and the termination of a prior agreement regarding the company's floor plan financing.
Key Financial Metrics and Obligations
- New Credit Facility: Entered into a $25,000,000 floor plan line of credit (AFC Credit Line) with Automotive Finance Corporation.
- Interest Rate: Variable rate based on the Wall Street Journal prime rate plus 2.75% (minimum prime rate of 3.5%), compounded daily.
- Default Interest: 15% per annum, compounded daily, upon an Event of Default.
- Collateral: $3,000,000 cash collateral provided; secured by a lien on Purchase Money Inventory, titles, and other assets.
- Guarantors: Obligations are guaranteed by RumbleOn, Inc. and its subsidiary, RumbleOn Dealers, Inc.
- Repayment Terms: Due on demand; specific inventory obligations due within 48 hours of disposition.
Material Changes
The company is replacing its existing floor plan line of credit with NextGear Capital, Inc. (dated October 30, 2018). The NextGear agreement and associated corporate guaranty are scheduled to be closed out and terminated on or about August 27, 2021.
Outlook, Risks, and Contingencies
The filing does not provide specific financial guidance or management commentary regarding future performance. Key risks identified include the "on demand" nature of the debt, which allows the lender to call the loan without notice, and the significant increase in interest rates to 15% in the event of a default. The company has incurred a direct financial obligation secured by its inventory and cash collateral.
Investor Verification Checklist
- Verify the total outstanding balance on the terminated NextGear Capital facility to assess net debt impact.
- Confirm the current prime rate to calculate the effective interest cost of the new $25 million facility.
- Review the company's liquidity position to ensure the $3 million cash collateral requirement does not strain working capital.
- Monitor the timeline for the termination of the NextGear agreement to ensure no overlap in obligations.