SCHEDULE: RumbleOn Directors Provide $6.67M Subordinated Loans

RumbleOn, Inc. directors William Coulter and Mark Tkach committed to provide $6.67 million in high-interest subordinated loans to prepay existing debt.

Summary

• William Coulter and Mark Tkach, along with related entities, collectively beneficially own 13,649,337 shares of RumbleOn, Inc. Class B Common Stock, representing 35.9% of the outstanding shares as of August 1, 2025.
• On August 10, 2025, Mr. Tkach and Mr. Coulter each committed to provide $3,333,334 in subordinated loans to RumbleOn, Inc., totaling $6,666,668.
• The purpose of these loans is to prepay outstanding principal amounts under an existing term loan credit agreement with Oaktree Fund Administration, LLC.
• The subordinated loans will bear interest at 13.0% per annum, payable semi-annually in-kind by increasing the principal amount, and will mature 36 months after funding.
• On June 4, 2025, both Mr. Coulter and Mr. Tkach were granted 61,728 restricted stock units (RSUs) each, which will vest on June 4, 2026.

Sentiment

Score: 4

Explanation: While insider financing shows commitment, the high interest rate (13.0%) and the in-kind payment structure of the subordinated loans suggest the company is facing financial challenges or has limited access to more favorable capital, which is a negative signal. The use of funds to prepay existing debt could be a positive, but the terms of the new debt are concerning.

Positives

• Key directors are providing direct financial support to the company, demonstrating confidence and commitment.
• The new subordinated loans will be used to prepay existing debt, potentially improving the company's debt structure or reducing immediate obligations under the Credit Agreement.
• The RSU grants align director incentives with shareholder value.

Negatives

• The need for subordinated loans from directors suggests potential challenges in securing traditional financing or managing existing debt obligations.
• The 13.0% interest rate on the subordinated loans is high, indicating a significant cost of capital for the company.
• Interest on the subordinated loans is payable in-kind, meaning the principal amount will increase, potentially leading to a larger debt burden over time.

Risks

• High cost of capital due to the 13.0% interest rate on the new subordinated loans.
• Increased debt burden over time as interest on the subordinated loans is paid in-kind, increasing the principal.
• Reliance on insider financing (subordinated loans from directors) may signal underlying financial distress or limited access to external capital markets.
• The subordinated nature of the new loans means they would be repaid after other senior debt in a liquidation scenario, increasing risk for these lenders (and by extension, the company's overall financial health if it struggles).

Future Outlook

The company expects to use the aggregate gross proceeds from the $6,666,668 subordinated loans to prepay outstanding principal amounts owed under its existing term loan credit agreement. The restricted stock units granted to directors are set to vest on June 4, 2026.

Industry Context

This filing primarily concerns internal financing and beneficial ownership structure, rather than broader industry trends. The high-interest subordinated loans from directors might suggest a challenging financing environment for the company within its specific sector, potentially indicating a lack of attractive external financing options or a need for quick capital injection to manage existing debt.

Comparison to Industry Standards

• The filing does not provide sufficient information to compare the company's financial results or debt structure to specific global benchmarks or comparable companies/projects.
• The 13.0% interest rate on the subordinated loans is notably high, which is generally above typical corporate borrowing rates for established companies, suggesting a higher risk profile or specific financial needs.

Corporate Governance

Related Party Transactions

• William Coulter and Mark Tkach, who are directors of RumbleOn, Inc., are providing $6,666,668 in subordinated loans to the company.
• Mr. Coulter and Mr. Tkach also received grants of 61,728 restricted stock units each from the company.

Stakeholder Impact

• Shareholders: The high-interest subordinated loans could dilute future equity value if converted or if the company struggles to repay, and the in-kind interest increases the debt burden. However, the insider financing provides immediate capital and shows director confidence.
• Creditors: The new loans are subordinated, meaning existing creditors under the Credit Agreement maintain their priority. The prepayment of existing debt could be beneficial for the company's overall debt profile, but the high cost of the new debt is a concern.

Next Steps

• Funding of the $6,666,668 subordinated loans by Mr. Tkach and Mr. Coulter by September 5, 2025.
• Vesting of 61,728 restricted stock units for Mr. Coulter and Mr. Tkach on June 4, 2026.
• Maturity of the subordinated loans 36 months after their funding date.

Key Dates

Recommendation

The filing reveals a mixed bag. On one hand, the commitment of significant capital from key directors (Coulter and Tkach) demonstrates strong insider confidence and provides immediate liquidity to prepay existing debt. This could be seen as a positive signal of stability and commitment. On the other hand, the terms of this new financing—a high 13.0% interest rate and in-kind payment structure—suggest that the company may be facing challenges in securing more favorable external financing or managing its existing debt obligations. This high cost of capital and the increasing principal amount due to in-kind interest payments represent a significant financial burden. Given these offsetting factors, a "hold" recommendation is appropriate. Investors should monitor the company's ability to improve its financial health and reduce its reliance on high-cost insider financing, while acknowledging the positive signal of director commitment.

Keywords

RumbleOn, RUM, SEC filing, Schedule 13D, beneficial ownership, subordinated loans, director loans, restricted stock units, RSU, debt prepayment, corporate finance, insider ownership