15. FINANCING AGREEMENTS

Lines of Credit - Trading Credit Facility

On December 21, 2021, the Company entered into a three-year committed facility provided by a syndicate of financial institutions (the “Trading Credit Facility”), with a total current revolving commitment of up to $350.0 million and with a termination date of December 21, 2024. In September 2023, this Trading Credit Facility was amended to add a new lender, a new subsidiary loan party and guarantor and modify certain terms and conditions of the Trading Credit Facility, including increasing the incremental facility feature to $190 million, eliminating provisions whereby lenders under certain conditions could require repayment of all obligations outstanding under the Trading Credit Facility within 10 days on demand, and updating the maturity date to September 20, 2025. As a result, the Trading Credit Facility was reclassified to long-term during the three months ended September 30, 2023.

The Trading Credit Facility is secured by substantially all of the Company’s assets on a first priority basis and is guaranteed by all of the Company's subsidiaries, with the exception of AMCF. The Trading Credit Facility currently bears interest at the daily SOFR rate plus an applicable margin of 236 basis points. As of March 31, 2024, the interest rate on our Trading Credit Facility was approximately 7.7% and the daily SOFR rate was approximately 5.3%.

The Trading Credit Facility provides the Company with the liquidity to buy and sell billions of dollars of precious metals annually. We routinely use funds drawn under the Trading Credit Facility to purchase metals from our suppliers and for operating cash flow purposes. Our CFC subsidiary also uses the funds drawn under the Trading Credit Facility to finance certain of its lending activities.

Borrowings totaled $290.0 million and $235.0 million at March 31, 2024 and June 30, 2023, respectively. The amounts available under the respective lines of credit are determined at the end of each week and at each month end following a specified borrowing base formula. The Company is able to access additional credit as needed to finance operations, subject to the overall limits of the borrowing facilities and lender approval of the borrowing base calculation. Based on the month end borrowing bases in effect, the availability under the Trading Credit Facility, after taking into account current borrowings, totaled $60.0 million and $115.0 million as determined on March 31, 2024 and June 30, 2023, respectively. As of March 31, 2024 and June 30, 2023, the remaining unamortized balance of loan costs was approximately $3.7 million and $2.4 million, respectively.

The Trading Credit Facility contains various covenants, all of which the Company was in compliance with as of March 31, 2024.

Interest expense related to the Company’s Trading Credit Facility totaled $6.3 million and $5.1 million which represents 63.9% and 54.8% of the total interest expense recognized for the three months ended March 31, 2024 and 2023, respectively. The Trading Credit Facility carried a daily weighted-average effective interest rate of 8.56% and 7.46% for the three months ended March 31, 2024 and 2023, respectively.

Interest expense related to the Company’s Trading Credit Facility totaled $18.0 million and $11.1 million which represents 60.1% and 49.0% of the total interest expense recognized for the nine months ended March 31, 2024 and 2023, respectively. The Trading Credit Facility carried a daily weighted-average effective interest rate of 8.48% and 6.79% for the nine months ended March 31, 2024 and 2023, respectively.

Notes Payable - AMCF Notes

In September 2018, AM Capital Funding, LLC (“AMCF”), a wholly-owned subsidiary of CFC, completed an issuance of Secured Senior Term Notes (collectively, the "AMCF Notes"): Series 2018-1, Class A (the “Class A Notes”) in the aggregate principal amount of $72.0 million and Secured Subordinated Term Notes, Series 2018-1, Class B (the “Class B Notes”) in the aggregate principal amount of $28.0 million. The Class A Notes bore interest at a rate of 4.98% and the Class B Notes bore interest at a rate of 5.98%. The AMCF Notes were repaid in full in December 2023.

For the three months ended March 31, 2024 and 2023, interest expense related to the AMCF Notes (including loan amortization costs) totaled $0.0 million and $1.4 million, which represents 0.0% and 14.7% of the total interest expense recognized by the Company, respectively. For the three months ended March 31, 2024 and 2023, the AMCF Notes' weighted-average effective interest rate was 5.88% and 5.88%, respectively.

For the nine months ended March 31, 2024 and 2023, interest expense related to the AMCF Notes (including loan amortization costs) totaled $2.5 million and $4.3 million, which represents 8.3% and 19.0% of the total interest expense recognized by the Company, respectively. For the nine months ended March 31, 2024 and 2023, the AMCF Notes' weighted-average effective interest rate was 5.88% and 5.88%, respectively.

Notes Payable — Related Party

See Note 14.

Liabilities on Borrowed Metals

The Company recorded liabilities on borrowed metals with market values totaling $26.2 million as of March 31, 2024, with corresponding metals totaling $0.0 million and $26.2 million included in precious metals held under financing arrangements and inventories, respectively, on the condensed consolidated March 31, 2024 balance sheet. The Company recorded liabilities on borrowed metals with market values totaling $21.6 million as of June 30, 2023 with corresponding metals totaling $0.0 million and $21.6 million included in precious metals held under financing arrangements and inventories, respectively, on the condensed consolidated June 30, 2023 balance sheet.

For the three months ended March 31, 2024 and 2023, the interest expense related to liabilities on borrowed metals totaled $0.5 million and $0.5 million, which represents 4.9% and 4.9% of the total interest expense recognized by the Company, respectively. For the nine months ended March 31, 2024 and 2023, the interest expense related to liabilities on borrowed metals totaled $1.4 million and $1.3 million, which represents 4.7% and 5.9% of the total interest expense recognized by the Company, respectively.

Advanced Pool Metals

The Company borrows precious metals from its suppliers and customers under short-term agreements using other precious metals from its inventory as collateral. The Company has the ability to sell the metals advanced. These arrangements can be settled by repayment in similar metals or in cash. Once the obligation is settled, the metals held as collateral are released back to the Company.

Liabilities on Borrowed Metals — Other

Liabilities may also arise from: (i) unallocated metal positions held by customers in the Company’s inventory, (ii) amounts due to suppliers for the use of their consigned inventory, and (iii) shortages in unallocated metal positions held by the Company in the supplier’s inventory. Unallocated or pool metal represents an unsegregated inventory position that is due on demand, in a specified physical form, based on the total ounces of metal held in the position. Amounts due under these arrangements require delivery either in the form of precious metals or in cash.

Product Financing Arrangements

The Company has agreements with third-party financial institutions which allow the Company to transfer its gold and silver inventory at an agreed-upon price, which is based on the spot price. Such agreements allow the Company to repurchase this inventory upon demand at an agreed-upon price based on the spot price on the repurchase date. The third-party charges a monthly fee as a percentage of the market value of the outstanding obligation; such monthly charges are classified in interest expense. These transactions do not qualify as sales, and therefore have been accounted for as financing arrangements and are reflected in the condensed consolidated balance sheet as product financing arrangements. The obligation is stated at the amount required to repurchase the outstanding inventory. Both the product financing obligation and the underlying inventory (which is entirely restricted) are carried at fair value, with changes in fair value recorded as a component of cost of sales in the condensed consolidated statements of income. Such obligations totaled $510.2 million and $335.8 million as of March 31, 2024 and June 30, 2023, respectively.

For the three months ended March 31, 2024 and 2023, the interest expense related to product financing arrangements totaled $2.9 million and $2.0 million, which represents 29.2% and 22.2% of the total interest expense recognized by the Company, respectively. For the nine months ended March 31, 2024 and 2023, the interest expense related to product financing arrangements totaled $7.4 million and $4.9 million, which represents 24.6% and 21.7% of the total interest expense recognized by the Company, respectively.