CarParts.com (NASDAQ: PRTS) adds $25M asset-based revolving credit facility
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
CarParts.com, Inc. entered into a new asset-based revolving credit facility with First Business Specialty Finance, LLC, providing up to $25,000,000 in borrowing capacity secured by substantially all company assets. Availability is limited by a borrowing base tied to cash, receivables, and inventory, and borrowings bear interest at 1‑month Term SOFR plus 3.25% per year, with potential rate reductions if the company achieves specified Fixed Charge Coverage Ratios in its audited results.
The facility matures on March 31, 2028 and auto-renews annually unless terminated, but early termination requires a prepayment premium of $750,000 if before June 15, 2027 or $500,000 thereafter. The agreement includes customary negative covenants, financial maintenance requirements if liquidity falls below $15,000,000 or availability below $7,500,000, and standard events of default that allow acceleration and secured creditor remedies. In connection with this transaction, the company terminated its prior revolving credit facility with JPMorgan Chase Bank, which had no amounts outstanding at termination.
Positive
- None.
Negative
- None.
Insights
CarParts.com replaces its revolving credit line with a $25M asset-based facility carrying standard covenants and fees.
The company has arranged an asset-based revolving credit facility of up to $25,000,000, secured by substantially all assets and governed by a borrowing base tied to cash, receivables, and inventory. Pricing is floating at 1‑month Term SOFR plus 3.25%, with modest step-downs if the Fixed Charge Coverage Ratio exceeds defined thresholds.
The facility runs to March 31, 2028 with automatic one-year renewals, but early termination triggers a prepayment premium of up to $750,000. Covenants restrict additional debt, dividends, stock repurchases, asset sales, and affiliate transactions, and add a minimum Fixed Charge Coverage Ratio of 1.10x when liquidity falls below specified levels.
The prior JPMorgan Chase revolving credit facility was terminated with no outstanding balance, so this appears to be a refinancing of liquidity backstop rather than an immediate cash inflow. Future disclosures in company filings may provide detail on actual utilization of the new line and any impact from covenant tests as the facility seasons.
8-K Event Classification
4 items: 1.01, 1.02, 2.03, 9.01
4 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 1.02
Termination of a Material Definitive Agreement
Business
A significant contract was terminated, which may affect business operations or revenue.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Credit facility size: $25,000,000
Interest margin: SOFR + 3.25% per annum
Maturity date: March 31, 2028
+5 more
8 metrics
Credit facility size
$25,000,000
Maximum principal under new asset-based revolver
Interest margin
SOFR + 3.25% per annum
Spread over 1‑month Term SOFR on borrowings
Maturity date
March 31, 2028
Initial term of the revolving credit facility
Early termination fee (before Jun 15, 2027)
$750,000
Prepayment premium for early termination before June 15, 2027
Early termination fee (on/after Jun 15, 2027)
$500,000
Prepayment premium for termination on or after June 15, 2027
Liquidity covenant trigger (cash + availability)
$15,000,000
Below this, FCCR minimum 1.10x applies
Availability covenant trigger
$7,500,000
Below this, FCCR minimum 1.10x applies
Fixed Charge Coverage Ratio
Not less than 1.10 to 1.0
Maintenance covenant when liquidity triggers are hit
Key Terms
asset-based revolving credit facility, borrowing base, Fixed Charge Coverage Ratio, Event of Default, +2 more
6 terms
asset-based revolving credit facility financial
"providing for an asset-based revolving credit facility in an aggregate maximum principal amount of up to $25,000,000"
A loan arrangement where a lender agrees to make funds available up to a set limit that a borrower can draw, repay, and draw again, with the amount available tied to the value of specific assets (like inventory, receivables, or equipment) pledged as collateral. It matters to investors because it provides flexible working capital while limiting risk exposure: the company can fund growth or cover shortfalls quickly, but borrowing capacity can shrink if asset values fall.
borrowing base financial
"the amount available under a “borrowing base” calculated primarily by reference to the Company’s cash and cash equivalents, accounts receivables, and inventory"
A borrowing base is the amount a lender will allow a company to borrow based on the value of assets the company offers as security, typically things like accounts receivable and inventory. It matters to investors because it sets a practical ceiling on short-term financing and influences a company’s liquidity and risk: if the borrowing base falls, the company may lose access to cash or be forced to sell assets, which can affect operations and share value.
Fixed Charge Coverage Ratio financial
"a 0.25% reduction if the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) for the prior fiscal year is between 1.10x and 1.25x"
A fixed charge coverage ratio measures how well a company's operating income can cover its fixed, recurring obligations like interest payments and lease costs. Think of it as a safety margin — the higher the number, the more comfortably a business can pay steady bills from its normal earnings, which matters to investors because it signals financial stability, lower default risk, and greater ability to withstand revenue dips.
Event of Default financial
"provided no Event of Default (as defined in the Credit Agreement) is continuing"
An event of default is a specific breach of a loan or bond agreement—such as missed payments or breaking agreed rules—that gives lenders the legal right to act, for example by demanding immediate repayment, seizing collateral, or accelerating other obligations. For investors, it’s a red flag because it can sharply reduce a company’s ability to operate or raise money, like a car lender repossessing a vehicle after missed payments, and often leads to falling share or bond prices.
negative covenants financial
"The Credit Agreement contains customary negative covenants restricting the Company’s and its subsidiaries’ ability to create, incur, assume or become liable for indebtedness"
mandatory prepayments financial
"The Credit Facility is also subject to mandatory prepayments from the net proceeds of certain asset dispositions and sales of equity interests"
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 15, 2026
(Exact name of registrant as specified in its charter)
|
|
|
|
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (424 )
702-1455
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which
registered |
|
|
|
(NASDAQ Capital Market)
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of
the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 |
Entry into a Material Definitive Agreement
|
On June 15, 2026, CarParts.com, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Credit Agreement”) with First Business Specialty Finance, LLC (“FBSF”)
providing for an asset-based revolving credit facility in an aggregate maximum principal amount of up to $25,000,000 (the “Credit Facility”), secured by substantially all of the assets of the Company. Certain of the Company’s subsidiaries will act as
guarantors of the Credit Facility pursuant to a Security Agreement, dated as of June 15, 2026, between FBSF and the subsidiary guarantors party thereto (the “Security Agreement”).
The Credit Facility provides for loans, plus all letter of credit liabilities, up to the lesser of (i) $25,000,000, or (ii) the amount available under a “borrowing base”
calculated primarily by reference to the Company’s cash and cash equivalents, accounts receivables, and inventory.
The loans under the Credit Facility accrue interest at a varying rate equal to the 1 Month Term SOFR published by CME Group Benchmarks Administration Limited plus 3.25% per
annum. The interest rate is subject to reduction upon delivery of annual audited financial statements as follows: (i) a 0.25% reduction if the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) for the prior fiscal year is between 1.10x
and 1.25x (inclusive), or (ii) a 0.50% reduction if the Fixed Charge Coverage Ratio for the prior fiscal year exceeds 1.25x, in each case provided no Event of Default (as defined in the Credit Agreement) is continuing. The Credit Facility matures on
March 31, 2028, and automatically renews for successive one-year periods unless either party provides at least 30 days’ prior written notice of termination.
If the Credit Facility is terminated prior to the maturity date, the Company must pay a prepayment premium equal to (a) if the Credit Facility is terminated prior to June
15, 2027, $750,000 or (b) if the Credit Facility is terminated on or after June 15, 2027, $500,000. The Credit Facility is also subject to mandatory prepayments from the net proceeds of certain asset dispositions and sales of equity interests in the
Company’s subsidiaries.
The Credit Agreement contains customary negative covenants restricting the Company’s and its subsidiaries’ ability to create, incur, assume or become liable for
indebtedness; make certain investments; dispose of assets; pay dividends or repurchase the Company’s stock; create, incur or assume liens; consummate mergers or acquisitions; enter into affiliate transactions; or amend the Company’s organizational
documents.
The Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of
representations and warranties, covenant defaults, cross-acceleration to other debt, and material adverse changes in the Company’s business. If an event of default occurs, FBSF will be entitled to take various actions, including the acceleration of
all amounts due under the Credit Facility and all actions permitted to be taken by a secured creditor. In addition, if the sum of the Company’s cash balance and availability under the Credit Facility is less than $15,000,000, or if the Company’s
availability under the Credit Facility is less than $7,500,000, then the Company must maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.10 to 1.0, tested quarterly on a trailing four-quarter basis.
In connection with entering into the Credit Facility, the Company and JPMorgan Chase Bank terminated the Company’s revolving credit facility with JPMorgan Chase Bank (the
“JPM Credit Facility”). At the time it was terminated, there were no amounts outstanding under the JPM Credit Facility.
The foregoing descriptions of the Credit Agreement and the Security Agreement are subject to and qualified in their entirety by reference to the full text of the Credit
Agreement and Security Agreement, which are filed as Exhibits 10.1 and 10.2, respectively, hereto.
| Item 1.02 |
Termination of a Material Definitive Agreement
|
The information in Item 1.01 regarding the JPM Credit Facility is incorporated into this Item 1.02 by reference.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
|
The information in Item 1.01 regarding the Credit Facility is incorporated into this Item 2.03 by reference.
| Item 9.01. |
Financial Statements and Exhibits.
|
| (d) |
Exhibits.
|
|
Exhibit No.
|
Description
|
|
10.1
|
Loan and Security Agreement dated June 15, 2026, by and between CarParts.com, Inc.,
and First Business Specialty Finance, LLC
|
|
10.2
|
Security Agreement dated June 15, 2026, by and between the subsidiary guarantors
party thereto and First Business Specialty Finance, LLC
|
|
104
|
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
Dated: June 16, 2026
|
CARPARTS.COM, INC.
|
|
|
By:
|
/s/ Mark DiSiena
|
|
|
Name:
|
Mark DiSiena
|
|
|
Title:
|
Interim Chief Financial Officer
|
|
FAQ
What new credit facility did CarParts.com (PRTS) secure?
CarParts.com entered a new asset-based revolving credit facility providing up to $25,000,000 in borrowing capacity. The line is secured by substantially all company assets and sized by a borrowing base tied to cash, receivables, and inventory levels.
What interest rate applies to CarParts.com’s new $25 million credit line?
Borrowings under the new facility accrue interest at 1‑month Term SOFR plus 3.25% per year. The margin may drop by up to 0.50% if the company achieves stronger Fixed Charge Coverage Ratios in its audited financial statements.
When does CarParts.com’s new revolving credit facility mature?
The credit facility matures on March 31, 2028, with automatic one-year renewal periods. Either CarParts.com or the lender can stop auto-renewal by giving at least 30 days’ prior written notice before the current term expires.
Are there early termination fees on CarParts.com’s new credit facility?
Yes. If the facility is terminated before June 15, 2027, CarParts.com owes a $750,000 prepayment premium. For terminations on or after that date, the premium falls to $500,000, adding a cost to refinancing or paying off early.
What financial covenant applies if CarParts.com’s liquidity declines?
If total cash plus facility availability is under $15,000,000 or availability alone under $7,500,000, CarParts.com must maintain a Fixed Charge Coverage Ratio of at least 1.10 to 1.0, tested quarterly on a trailing four-quarter basis.
What happened to CarParts.com’s prior JPMorgan Chase credit facility?
In connection with the new financing, CarParts.com terminated its revolving credit facility with JPMorgan Chase Bank. At the time of termination, there were no amounts outstanding under the JPMorgan facility, indicating it was unused when replaced.