UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
 
 
x

 
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
For the Quarterly Period Ended June 30, 2019
or

o

 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from                    to                    .
Commission file number 001-37427
HORIZON GLOBAL CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
(State or other jurisdiction of
incorporation or organization)
 
47-3574483
(IRS Employer
Identification No.)
2600 W. Big Beaver Road, Suite 555
Troy, Michigan 48084
(Address of principal executive offices, including zip code)
(248) 593-8820
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
HZN
 
New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x     No  o .
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x     No  o .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  o
 
Accelerated filer  x
 
Non-accelerated filer  o
 
Smaller reporting company  o
 
Emerging growth company  x
 
 
 
 
 
 
 
 
 
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. Yes  x No  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o     No  x
As of August 2, 2019 , the number of outstanding shares of the Registrant’s common stock, was 25,320,912 shares.


HORIZON GLOBAL CORPORATION
Index
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


1

Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made and give our current expectations or forecasts of future events. These forward-looking statements can be identified by the use of forward-looking words, such as “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” or other comparable words, or by discussions of strategy that may involve risks and uncertainties.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties which could materially affect our business, financial condition or future results including, but not limited to, risks and uncertainties with respect to: the Company’s leverage; liabilities imposed by the Company’s debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions including the impact of any tariffs, quotas or surcharges; the Company’s accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company’s business and industry; the Company’s ability to regain compliance with the New York Stock Exchange’s continued listing standards and maintain such compliance; the Company’s ability to successfully complete the sale of its Asia-Pacific segment; the success of the Company’s action plan, including the actual amount of savings and timing thereof; the success of our business improvement initiatives in Europe-Africa, including the amount of savings and timing thereof; the Company’s exposure to product liability claims from customers and end users, and the costs associated therewith; the Company’s ability to meet its covenants in the agreements governing its debt, including the contractually obligated prepayment on its first lien term loan, or obtain any amendments or waivers thereto; and other risks that are discussed in Item 1A, “ Risk Factors ” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . The risks described in our Annual Report and elsewhere in this report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.
The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We caution readers not to place undue reliance on the statements, which speak only as of the date of this report. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as otherwise required by law.
We disclose important factors that could cause our actual results to differ materially from our expectations implied by our forward-looking statements under Item 2, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations, ” and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other conditions, results of operations, prospects and ability to service our debt.



2

PART I. FINANCIAL INFORMATION

Item 1 .  Condensed Consolidated Financial Statements

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)


 
June 30,
2019

December 31,
2018
 
 
(unaudited)
 
 
Assets
 

 

Current assets:
 

 

Cash and cash equivalents
 
$
16,760


$
27,650

Receivables, net of allowance for doubtful accounts of approximately $4.4 million and $5.1 million at June 30, 2019 and December 31, 2018, respectively.
 
137,660


108,340

Inventories
 
177,830


173,690

Prepaid expenses and other current assets
 
9,250


9,690

Total current assets
 
341,500

 
319,370

Property and equipment, net
 
97,830


102,280

Operating lease right-of-use assets
 
72,220

 
—

Goodwill
 
12,700


12,660

Other intangibles, net
 
71,900


78,050

Deferred income taxes
 
2,510

 
2,690

Other assets
 
6,080


6,300

Total assets
 
$
604,740

 
$
521,350

Liabilities and Shareholders' Equity
 

 

Current liabilities:
 

 

Short-term borrowings and current maturities, long-term debt
 
$
166,760


$
13,860

Accounts payable
 
111,800


123,130

Short-term operating lease liabilities
 
13,190

 
—

Accrued liabilities
 
71,250


65,820

Total current liabilities
 
363,000

 
202,810

Long-term debt
 
238,780


350,650

Deferred income taxes
 
13,160


14,150

Long-term operating lease liabilities
 
59,020

 
—

Other long-term liabilities
 
19,100


19,960

Total liabilities
 
693,060

 
587,570

Contingencies (See Note 12)
 


 


Shareholders' deficit:
 
 
 
 
Preferred stock, $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: None
 
—

 
—

Common stock, $0.01 par: Authorized 400,000,000 shares; 26,003,240 shares issued and 25,316,734 outstanding at June 30, 2019, and 25,866,747 shares issued and 25,180,241 outstanding at December 31, 2018.
 
250

 
250

Common stock warrants exercisable for 6,554,150 shares issued and outstanding at June 30, 2019; none issued and outstanding at December 31, 2018
 
10,720

 
—

Paid-in capital
 
161,920

 
160,990

Treasury stock, at cost: 686,506 shares at June 30, 2019 and December 31, 2018
 
(10,000
)
 
(10,000
)
Accumulated deficit
 
(255,900
)
 
(222,720
)
Accumulated other comprehensive income
 
7,770

 
7,760

Total Horizon Global shareholders' deficit
 
(85,240
)
 
(63,720
)
Noncontrolling interest
 
(3,080
)
 
(2,500
)
Total shareholders' deficit
 
(88,320
)
 
(66,220
)
Total liabilities and shareholders' equity
 
$
604,740

 
$
521,350

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited—dollars in thousands, except share and per share data)

 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net sales
 
$
223,160

 
$
233,340

 
$
432,820

 
$
450,150

Cost of sales
 
(179,110
)
 
(185,770
)
 
(356,690
)
 
(364,130
)
Gross profit
 
44,050

 
47,570

 
76,130

 
86,020

Selling, general and administrative expenses
 
(37,010
)
 
(55,740
)
 
(78,540
)
 
(103,920
)
Impairment of goodwill and intangible assets
 
—

 
(55,700
)
 
—

 
(99,130
)
Net gain (loss) on dispositions of property and equipment
 
10

 
(270
)
 
1,470

 
(380
)
Operating profit (loss)
 
7,050

 
(64,140
)
 
(940
)
 
(117,410
)
Other income (expense), net
 
400

 
(6,610
)
 
(5,210
)
 
(7,730
)
Interest expense
 
(15,430
)
 
(6,190
)
 
(26,370
)
 
(12,140
)
Loss before income tax
 
(7,980
)
 
(76,940
)
 
(32,520
)
 
(137,280
)
Income tax (expense) benefit
 
(160
)
 
9,780

 
(1,240
)
 
12,360

Net loss
 
(8,140
)
 
(67,160
)
 
(33,760
)
 
(124,920
)
Less: Net loss attributable to noncontrolling interest
 
(60
)
 
(230
)
 
(580
)
 
(480
)
Net loss attributable to Horizon Global
 
$
(8,080
)
 
$
(66,930
)
 
$
(33,180
)
 
$
(124,440
)
Net loss per share attributable to Horizon Global:
 
 
 
 
 
 
 
 
Basic
 
$
(0.32
)
 
$
(2.68
)
 
$
(1.31
)
 
$
(4.98
)
Diluted
 
$
(0.32
)
 
$
(2.68
)
 
$
(1.31
)
 
$
(4.98
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
25,282,791

 
25,017,725

 
25,235,704

 
24,990,573

Diluted
 
25,282,791

 
25,017,725

 
25,235,704

 
24,990,573



The accompanying notes are an integral part of these condensed consolidated financial statements.

4

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited—dollars in thousands)

 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net loss
 
$
(8,140
)
 
$
(67,160
)
 
$
(33,760
)
 
$
(124,920
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Foreign currency translation and other
 
80

 
(6,880
)
 
1,290

 
(3,720
)
Derivative instruments
 
(210
)
 
790

 
(1,280
)
 
2,320

Total other comprehensive income (loss), net of tax
 
(130
)
 
(6,090
)
 
10

 
(1,400
)
Total comprehensive loss
 
(8,270
)
 
(73,250
)
 
(33,750
)
 
(126,320
)
Less: Comprehensive loss attributable to noncontrolling interest
 
(60
)
 
(310
)
 
(580
)
 
(550
)
Comprehensive loss attributable to Horizon Global
 
$
(8,210
)
 
$
(72,940
)
 
$
(33,170
)
 
$
(125,770
)


The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited—dollars in thousands)
 
 
Six months ended
June 30,
 
 
2019
 
2018
Cash Flows from Operating Activities:
 
 
 
 
Net loss
 
$
(33,760
)
 
$
(124,920
)
Adjustments to reconcile net loss to net cash used for operating activities:
 
 
 
 
Net (gain) loss on dispositions of property and equipment
 
(1,470
)
 
380

Depreciation
 
9,320

 
8,240

Amortization of intangible assets
 
3,460

 
4,140

Impairment of goodwill and intangible assets
 
—

 
99,130

Amortization of original issuance discount and debt issuance costs
 
9,900

 
3,870

Deferred income taxes
 
(30
)
 
(1,850
)
Non-cash compensation expense
 
940

 
1,210

Paid-in-kind interest
 
4,370

 
—

Increase in receivables
 
(32,330
)
 
(40,450
)
(Increase) decrease in inventories
 
(10,630
)
 
530

(Increase) decrease in prepaid expenses and other assets
 
(940
)
 
1,510

(Decrease) increase in accounts payable and accrued liabilities
 
(360
)
 
12,590

Other, net
 
2,770

 
260

Net cash used for operating activities
 
(48,760
)
 
(35,360
)
Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(6,630
)
 
(7,790
)
Net proceeds from sale of business
 
4,970

 
—

Net proceeds from disposition of property and equipment
 
1,580

 
140

Net cash used for investing activities
 
(80
)
 
(7,650
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on credit facilities
 
14,100

 
2,630

Repayments of borrowings on credit facilities
 
(840
)
 
(8,670
)
Proceeds from Second Lien Term Loan, net of issuance costs
 
35,520

 
—

Repayments of borrowings on First Lien Term Loan, inclusive of transaction costs
 
(10,090
)
 
(3,940
)
Proceeds from ABL Revolving Debt, net of issuance costs
 
60,340

 
66,110

Repayments of borrowings on ABL Revolving Debt
 
(72,080
)
 
(13,510
)
Proceeds from issuance of Series A Preferred Stock
 
5,340

 
—

Proceeds from issuance of Warrants
 
5,380

 
—

Other, net
 
(10
)
 
(210
)
Net cash provided by financing activities
 
37,660

 
42,410

Effect of exchange rate changes on cash
 
290

 
(80
)
Cash and Cash Equivalents:
 
 
 
 
Decrease for the period
 
(10,890
)
 
(680
)
At beginning of period
 
27,650

 
29,570

At end of period
 
$
16,760

 
$
28,890

Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
11,750

 
$
7,550

Cash paid for taxes
 
$
4,950

 
$
3,770

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited—dollars in thousands)

 
 
Common
Stock
 
Common Stock Warrants
 
Paid-in
Capital
 
Treasury Stock
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total Horizon Global Shareholders’ Deficit
 
Noncontrolling Interest
 
Total Shareholders’ Deficit
Balance at January 1, 2019
 
$
250

 
$
—

 
$
160,990

 
$
(10,000
)
 
$
(222,720
)
 
$
7,760

 
$
(63,720
)
 
$
(2,500
)
 
$
(66,220
)
Net loss
 
—

 
—

 
—

 
—

 
(25,100
)
 
—

 
(25,100
)
 
(520
)
 
(25,620
)
Other comprehensive income, net of tax
 
—

 
—

 
—

 
—

 
—

 
140

 
140

 
—

 
140

Shares surrendered upon vesting of employees; share based payment awards to cover tax obligations
 
—

 
—

 
(10
)
 
—

 
—

 
—

 
(10
)
 
—

 
(10
)
Non-cash compensation expense
 
—

 
—

 
350

 
—

 
—

 
—

 
350

 
—

 
350

Issuance of Warrants
 
—

 
5,380

 
—

 
—

 
—

 
—

 
5,380

 
—

 
5,380

Balance at March 31, 2019
 
250


5,380


161,330


(10,000
)

(247,820
)

7,900


(82,960
)

(3,020
)

(85,980
)
Net Loss
 
—

 
—

 
—

 
—

 
(8,080
)
 
—

 
(8,080
)
 
(60
)
 
(8,140
)
Other comprehensive income, net of tax
 
—

 
—

 
—

 
—

 
—

 
(130
)
 
(130
)
 
—

 
(130
)
Non-cash compensation expense
 
—

 
—

 
590

 
—

 
—

 
—

 
590

 
—

 
590

Issuance of Warrants
 
 
 
5,340

 
 
 
 
 
 
 
 
 
5,340

 
 
 
5,340

Balance at June 30, 2019
 
$
250


$
10,720


$
161,920


$
(10,000
)

$
(255,900
)

$
7,770


$
(85,240
)

$
(3,080
)

$
(88,320
)
 
 
Common
Stock
 
Common Stock Warrants
 
Paid-in
Capital
 
Treasury Stock
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total Horizon Global Shareholders’ Equity
 
Noncontrolling Interest
 
Total Shareholders’ Equity
Balance at January 1, 2018
 
$
250

 
$
—

 
$
159,490

 
$
(10,000
)
 
$
(17,860
)
 
$
10,010

 
$
141,890

 
$
(1,490
)
 
$
140,400

Net loss
 
—

 
—

 
—

 
—

 
(57,510
)
 
—

 
(57,510
)
 
(250
)
 
(57,760
)
Other comprehensive income, net of tax
 
—

 
—

 
—

 
—

 
—

 
4,680

 
4,680

 
10

 
4,690

Shares surrendered upon vesting of employees; share based payment awards to cover tax obligations
 
—

 
—

 
(200
)
 
—

 
—

 
—

 
(200
)
 
—

 
(200
)
Non-cash compensation expense
 
—

 
—

 
720

 
—

 
—

 
—

 
720

 
—

 
720

Balance at March 31, 2018
 
250


—


160,010


(10,000
)

(75,370
)

14,690

 
89,580

 
(1,730
)
 
87,850

Net loss
 
—

 
—

 
—

 
—

 
(66,930
)
 
—

 
(66,930
)
 
(230
)
 
(67,160
)
Other comprehensive income, net of tax
 
—

 
—

 
—

 
—

 
—

 
(6,010
)
 
(6,010
)
 
(80
)
 
(6,090
)
Shares surrendered upon vesting of employees; share based payment awards to cover tax obligations
 
—

 
—

 
(10
)
 
—

 
—

 
—

 
(10
)
 
—

 
(10
)
Non-cash compensation expense
 
—

 
—

 
490

 
—

 
—

 
—

 
490

 
—

 
490

Balance at June 30, 2018
 
$
250

 
$
—

 
$
160,490

 
$
(10,000
)
 
$
(142,300
)
 
$
8,680

 
$
17,120

 
$
(2,040
)
 
$
15,080


The accompanying notes are an integral part of these condensed consolidated financial statements.


7
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


1 . General
Nature of operations and basis of presentation. Horizon Global Corporation (“Horizon,” “Horizon Global,” “we,” or the “Company”) is a global designer, manufacturer and distributor of a wide variety of high quality, custom-engineered towing, trailering, cargo management and other related accessories. These products are designed to support original equipment manufacturers (“OEMs”) and original equipment servicers (“OESs”) (collectively, “OEs”), aftermarket and retail customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. The Company groups its business into operating segments by the region in which sales and manufacturing efforts are focused. The Company’s operating segments are Horizon Americas , Horizon Europe-Africa , and Horizon Asia-Pacific . See Note  16 , “ Segment Information ,” for further information on each of the Company’s operating segments.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. It is management’s opinion that these financial statements contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. Results of operations for interim periods are not necessarily indicative of results for the full year.
2 . New Accounting Pronouncements
Accounting pronouncements recently adopted
In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, “Compensation - Stock Compensation (Topic 718)” (“ASU 2018-07”). ASU 2018-07 expands the scope of Accounting Standard Codification (“ASC”) 718 to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. ASU 2018-07 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. The Company adopted ASU 2018-07 on January 1, 2019, and there was no impact on the Company’s condensed consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also modifies the accounting for components excluded from the assessment of hedge effectiveness, eases documentation and assessment requirements and modifies certain disclosure requirements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted and should be applied on a modified retrospective basis. The Company adopted ASU 2017-12 on January 1, 2019, and there was no impact on the Company’s condensed consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which supersedes the lease requirements in “Leases (Topic 840).” The objective of this update is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. Under this guidance, lessees are required to recognize on the balance sheet a lease liability and a right-of-use (“ROU”) asset for all leases, with the exception of short-term leases with terms of twelve months or less. The lease liability represents the lessee’s obligation to make lease payments arising from a lease and will be measured as the present value of the lease payments. The ROU asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs.
The Company has elected the package of practical expedients, excluding the lease term hindsight, as permitted by the transition guidance. The Company has made an accounting policy election to exempt leases with an initial term of twelve months or less from balance sheet recognition. Instead, short-term leases will be expensed over the lease term.
The Company adopted the standard on January 1, 2019, by applying the modified retrospective method without restatement of comparative periods' financial information, as permitted by the transition guidance. The standard had a material impact on the Company’s condensed consolidated balance sheet, but did not have an impact on its condensed consolidated statements of operations

8
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

and cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the Company’s accounting for finance leases remained substantially unchanged.
See Note 11 “ Leases, ” for the impact of the adoption which resulted in the recognition of ROU assets and corresponding lease liabilities.
3 . Revenues
Revenue Recognition
The following tables present the Company’s net sales disaggregated by major sales channel as follows:
 
 
Three Months Ended June 30, 2019
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Horizon
Asia-Pacific
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
23,670

 
$
45,910

 
$
5,610

 
$
75,190

Automotive OES
 
1,810

 
16,030

 
14,380

 
32,220

Aftermarket
 
28,850

 
20,080

 
5,150

 
54,080

Retail
 
33,180

 
—

 
2,150

 
35,330

Industrial
 
6,930

 
860

 
3,280

 
11,070

E-commerce
 
14,480

 
580

 
—

 
15,060

Other
 
—

 
210

 
—

 
210

Total
 
$
108,920

 
$
83,670

 
$
30,570

 
$
223,160

 
 
Three Months Ended June 30, 2018
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Horizon
Asia-Pacific
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
19,950

 
$
47,360

 
$
6,120

 
$
73,430

Automotive OES
 
1,660

 
12,890

 
16,260

 
30,810

Aftermarket
 
31,710

 
24,410

 
6,300

 
62,420

Retail
 
34,580

 
—

 
2,080

 
36,660

Industrial
 
10,300

 
—

 
3,660

 
13,960

E-commerce
 
9,570

 
1,270

 
—

 
10,840

Other
 
310

 
4,910

 
—

 
5,220

Total
 
$
108,080

 
$
90,840

 
$
34,420

 
$
233,340



9
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

 
 
Six Months Ended June 30, 2019
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Horizon
Asia-Pacific
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
43,910

 
$
94,830

 
$
12,370

 
$
151,110

Automotive OES
 
3,420

 
29,330

 
27,600

 
60,350

Aftermarket
 
53,000

 
36,370

 
10,910

 
100,280

Retail
 
61,620

 
—

 
4,870

 
66,490

Industrial
 
16,210

 
1,560

 
6,810

 
24,580

E-commerce
 
26,260

 
1,100

 
—

 
27,360

Other
 
—

 
2,650

 
—

 
2,650

Total
 
$
204,420

 
$
165,840

 
$
62,560

 
$
432,820

 
 
Six Months Ended June 30, 2018
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Horizon
Asia-Pacific
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
40,000

 
$
94,280

 
$
12,510

 
$
146,790

Automotive OES
 
2,530

 
27,380

 
29,980

 
59,890

Aftermarket
 
58,230

 
45,200

 
13,040

 
116,470

Retail
 
66,730

 
—

 
5,190

 
71,920

Industrial
 
20,520

 
—

 
7,230

 
27,750

E-commerce
 
15,590

 
2,590

 
—

 
18,180

Other
 
700

 
8,450

 
—

 
9,150

Total
 
$
204,300

 
$
177,900

 
$
67,950

 
$
450,150

During the three and six months ended June 30, 2019 and 2018 , adjustments to estimates of variable consideration for previously recognized revenue were insignificant. At June 30, 2019 and December 31, 2018 , total opening and closing balances of contract assets and deferred revenue were not material.
4 . Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the six months ended June 30, 2019 are summarized as follows:
 
 
Horizon Americas
 
Horizon
Asia-Pacific
 
Total
 
 
(dollars in thousands)
Balance at December 31, 2018
 
$
4,500

 
$
8,160

 
$
12,660

Foreign currency translation
 
30

 
10

 
40

Balance at June 30, 2019
 
$
4,530

 
$
8,170

 
$
12,700


10
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

The gross carrying amounts and accumulated amortization of the Company’s other intangibles are summarized below.
 
 
June 30, 2019
 
December 31, 2018
Intangible Category by Useful Life
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
 
 
(dollars in thousands)
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
Customer relationships, 2 – 20 years
 
$
174,200

 
$
(131,030
)
 
$
177,910

 
$
(127,740
)
Technology and other, 3 – 15 years
 
21,260

 
(15,540
)
 
21,000

 
(15,910
)
Trademark/Trade names, 1 – 8 years
 
730

 
(280
)
 
730

 
(250
)
Total finite-lived intangible assets
 
196,190

 
(146,850
)
 
199,640

 
(143,900
)
Trademark/Trade names, indefinite-lived
 
22,560

 
—

 
22,310

 
—

Total other intangible assets
 
$
218,750

 
$
(146,850
)
 
$
221,950

 
$
(143,900
)
On March 1, 2019, the Company entered into an agreement of sale of certain business assets in its Europe-Africa operating segment, via a share and asset sale (the “Sale”). Under the terms of the Sale, effective March 1, 2019, the Company disposed of certain non-automotive business assets that operated using the Terwa brand for $5.5 million , which included a $0.5 million note receivable. The Sale resulted in a $3.6 million loss recorded in Other expense, net in the condensed consolidated statements of operations, including a $3.0 million reduction of net intangibles related to customer relationships.
Amortization expense related to intangible assets as included in the accompanying condensed consolidated statements of operations is summarized as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Technology and other, included in cost of sales
 
$
270

 
$
290

 
$
720

 
$
560

Customer relationships and Trademark/Trade names, included in selling, general and administrative expenses
 
1,120

 
1,620

 
2,740

 
3,580

Total amortization expense
 
$
1,390

 
$
1,910

 
$
3,460

 
$
4,140

5 . Inventories
Inventories consist of the following components:
 
 
June 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Finished goods
 
$
104,480

 
$
103,090

Work in process
 
19,420

 
19,660

Raw materials
 
53,930

 
50,940

Total inventories
 
$
177,830

 
$
173,690


11
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

6 . Property and Equipment, Net
Property and equipment, net consists of the following components:
 
 
June 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Land and land improvements
 
$
460

 
$
460

Buildings
 
24,010

 
21,440

Machinery and equipment
 
162,660

 
161,750

 
 
187,130

 
183,650

Less: Accumulated depreciation
 
89,300

 
81,370

Property and equipment, net
 
$
97,830

 
$
102,280

Depreciation expense included in the accompanying condensed consolidated statements of operations is as follows:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Depreciation expense, included in cost of sales
 
$
4,460

 
$
3,810

 
$
8,380

 
$
7,600

Depreciation expense, included in selling, general and administrative expense
 
590

 
300

 
940

 
640

Total depreciation expense
 
$
5,050

 
$
4,110

 
$
9,320

 
$
8,240

7 . Accrued and Other Long-term Liabilities

Accrued liabilities consist of the following components:
 
 
June 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Customer claims
 
$
16,110

 
$
14,160

Accrued compensation
 
14,250

 
10,230

Customer incentives
 
12,740

 
10,100

Accrued professional services
 
4,260

 
4,770

Restructuring
 
3,980

 
7,530

Deferred purchase price
 
3,260

 
3,400

Short-term tax liabilities
 
1,260

 
1,930

Cross currency swap
 
—

 
1,610

Other
 
15,390

 
12,090

Total accrued liabilities
 
$
71,250

 
$
65,820



12
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Other long-term liabilities consist of the following components:
 
 
June 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Long-term tax liabilities
 
$
6,490

 
$
6,270

Restructuring
 
2,200

 
2,580

Deferred purchase price
 
250

 
30

Other
 
10,160

 
11,080

Total other long-term liabilities
 
$
19,100

 
$
19,960


8 . Long-term Debt
The Company’s long-term debt consists of the following:
 
 
June 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
ABL Facility
 
$
51,190

 
$
61,570

First Lien Term Loan
 
187,000

 
190,520

Second Lien Term Loan
 
53,170

 
—

Convertible Notes
 
125,000

 
125,000

Bank facilities, capital leases and other long-term debt
 
31,790

 
18,990

 
 
448,150

 
396,080

Less:
 
 
 
 
Unamortized debt issuance costs and original issuance discount on First Lien Term Loan
 
6,750

 
7,380

Unamortized debt issuance costs and discount on Second Lien Term Loan
 
14,720

 
—

Unamortized debt issuance costs and discount on Convertible Notes
 
21,140

 
24,190

Current maturities, long-term debt
 
166,760

 
13,860

Long-term debt
 
$
238,780

 
$
350,650

ABL Facility
In February 2019, the Company amended its existing revolving credit facility (the “ABL Facility”) to permit the Company to enter into the Senior Term Loan Agreement (as defined below) and make certain indebtedness, asset sale, investment and restricted payment baskets covenants more restrictive.
In March 2019, the Company amended the ABL Facility to permit the Company to enter into the Second Lien Term Loan Agreement (as defined below) and provide for certain other modifications of the ABL Facility. In particular, the ABL Facility was modified to (a) increase the interest rate by 1.0% , (b) reduce the total facility size to $90.0 million and (c) limit the ability to add debt in the future.
The ABL Facility consists of (i) a U.S. sub-facility, in an aggregate principal amount of up to $85.0 million (subject to availability under a U.S.-specific borrowing base) (the “U.S. Facility”), (ii) a Canadian sub-facility, in an aggregate principal amount of up to $2.0 million (subject to availability under a Canadian-specific borrowing base) (the “Canadian Facility”), and (iii) a U.K. sub-facility in an aggregate principal amount of up to $3.0 million (subject to availability under a U.K.-specific borrowing base) (the “U.K. Facility”). The ABL Facility also includes a $20.0 million U.S. letter of credit sub-facility. All facilities under the ABL

13
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Facility mature on June 30, 2020 and are presented in “short-term borrowings and current maturities, long-term debt” in the accompanying June 30, 2019 condensed consolidated balance sheet.
The Company incurred debt issuance costs of approximately $1.4 million in connection with the March 2019 amendment of the ABL Facility. These debt issuance costs will be amortized into interest expense over the contractual term of the loan. The Company recognized $0.4 million and $0.5 million of amortization of debt issuance costs for the three and six months ended June 30, 2019 , respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2018 , respectively which are included in the accompanying condensed consolidated statements of operations. There were $1.6 million and $0.8 million of unamortized debt issuance costs included in other assets in the accompanying condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018 , respectively.
There was $51.2 million and $61.6 million outstanding under the ABL Facility as of June 30, 2019 and December 31, 2018 , respectively, with a weighted average interest rate of 6.4% and 4.4% , respectively. Total letters of credit issued under the ABL Facility at June 30, 2019 and December 31, 2018 were $5.0 million and $3.4 million , respectively. The Company had $27.4 million and $10.3 million of availability under the ABL Facility as of June 30, 2019 and December 31, 2018 , respectively.
First Lien Term Loan (formerly “Term Loan”)
In February 2019, the Company amended and restated the existing Term Loan Agreement to permit the Company to enter into the Senior Term Loan Agreement and tightened certain indebtedness, asset sale, investment and restricted payment baskets.
In March 2019, the Company amended the existing Term Loan Agreement (“Sixth Term Amendment”) (the “First Lien Term Loan Agreement”) to permit the Company to enter into the Second Lien Term Loan Agreement; amend certain financial covenants to provide for relief based on the Company’s 2018 and 2019 budget, and make certain other affirmative and negative covenants more restrictive.
Pursuant to the Sixth Term Amendment, the prior net leverage covenant ratio was eliminated and replaced with a first lien leverage covenant starting with the 12-month period ending September 2019 as follows:
September 30, 2019: 8.25 :1.00
December 31, 2019: 6.25 :1.00
March 31, 2020: 5.50 :1.00
June 30, 2020: 5.00 :1.00
September 30, 2020 and each fiscal quarter ending thereafter: 4.75 :1.00
The Sixth Term Amendment also added a fixed charge coverage covenant starting with fiscal quarter ending March 31, 2020, a minimum liquidity covenant of $15.0 million starting March 31, 2019, and a maximum capital expenditure covenant of $15.0 million for 2019 and $25.0 million annually thereafter. The interest rate on the First Lien Term Loan Agreement was also amended to add 3.0% paid-in-kind interest in addition to the existing cash pay interest.
On May 7, 2019, the Company entered into the Seventh Amendment to Credit Agreement (the “Seventh Term Amendment”) to amend the First Lien Term Loan Agreement, which extended its $100.0 million prepayment requirement from on or before March 31, 2020, to on or before May 15, 2020.
Debt issuance costs of approximately $5.6 million were incurred in connection with the Sixth Term Amendment. In accordance with ASC 470-50, “Modifications and Extinguishments,” the Company recorded approximately $0.7 million of issuance costs in selling, general and administrative expense in the accompanying condensed consolidated statements of operations during the six months ended June 30, 2019 and capitalized approximately $4.9 million of debt issuance costs that will be amortized into interest expense over the contractual term of the loan using the effective interest method. Debt issuance costs incurred in connection with the Seventh Term Amendment were immaterial.
The Company recorded approximately $0.5 million and $3.5 million of unamortized debt issuance costs to interest expense for the three and six months ended June 30, 2019 , respectively, due to the extinguishment of debt for certain lenders in the loan syndicate in connection with the Sixth and Seventh Term Amendments.

14
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

The Company recognized approximately $2.0 million and $2.8 million of amortization of debt issuance and discount cost for the three and six months ended June 30, 2019 , respectively, and $0.4 million and $0.8 million for the three and six months ended June 30, 2018 , respectively, which is included in the accompanying condensed consolidated statements of operations. The Company recognized $1.9 million of paid-in-kind interest on the First Lien Term Loan for the six months ended June 30, 2019. The Company had an aggregate principal amount outstanding of $187.0 million and $190.5 million as of June 30, 2019 and December 31, 2018 , respectively, under the First Lien Term Loan bearing interest at 8.3% and 8.8% , respectively.
All of the indebtedness under the First Lien Term Loan is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors.
Senior Term Loan Agreement
In February 2019, the Company entered into a Credit Agreement (the “Senior Term Loan Agreement”) with Cortland Capital Markets Services LLC, as administrative agent and collateral agent, and the lenders party thereto. The Senior Term Loan Agreement provided for a short-term loan facility in the aggregate principal amount of $10.0 million , all of which was borrowed by the Company. Certain of the lenders under the Company’s First Lien Term Loan Agreement were the lenders under the Senior Term Loan Agreement.
The Senior Term Loan Agreement required the Company to obtain additional financing in amounts and on terms acceptable to the lenders. The Senior Term Loan Agreement was repaid on March 15, 2019, in conjunction with the additional financing further detailed below. The Company incurred debt issuance costs of approximately $0.5 million in connection with the Senior Term Loan Agreement, which were recorded to selling, general and administrative expense within the accompanying condensed consolidated statements of operations.
Second Lien Term Loan Agreement
In March 2019, the Company entered into a Credit Agreement (the “Second Lien Term Loan Agreement”) with Cortland Capital Markets Services LLC, as administrative agent and collateral agent, and Corre Partners Management L.L.C., as representative of the lenders, and the lenders party thereto. The Second Lien Term Loan Agreement provides for a term loan facility in the aggregate principal amount of $51.0 million and matures on September 30, 2021. The interest on the Second Lien Term Loan may be paid, at the Company’s election, in cash, at the customary eurocurrency rate plus a margin of 10.50% per annum, or in-kind, at the customary eurocurrency rate plus a margin of 11.50% . The Second Lien Term Loan Agreement is secured by a second lien on substantially the same collateral as the First Lien Term Loan and is subject to various affirmative and negative covenants including a secured net leverage ratio tested quarterly, commencing with the fiscal quarter ending on December 31, 2019, which shall not exceed (x) 6.75 to 1.00 as of the last day of any fiscal quarter ending on or prior to June 30, 2020 and (y) 5.25 to 1.00 as of the last day of any fiscal quarter ending on or after September 30, 2020.
The proceeds, net of applicable fees, of the Second Lien Term Loan Agreement were used to repay all amounts outstanding under the Senior Term Loan Agreement and to provide additional liquidity and working capital for the Company.
Pursuant to the Second Lien Term Loan Agreement, the Company was required to issue 6.25 million detachable warrants to purchase common stock of the Company, which can be exercised on a cashless basis over a five -year term with an exercise price of $1.50 per share. 3,601,902 warrants were issued in March 2019, and the Company also issued 90,667 shares of Series A Preferred Stock in the interim that were convertible into additional warrants upon receipt of shareholder approval of the issuance of such additional warrants and the shares of common stock issuable upon exercise thereof. Upon receipt of such shareholder approval on June 25, 2019, the 90,667 shares of Series A Preferred Stock were converted into 2,952,248 warrants.
In accordance with guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”), the (i) Second Lien Term Loan; (ii) Series A Preferred Stock, and (iii) warrants are all freestanding instruments and proceeds were allocated to each instrument on March 15, 2019 on a relative fair value basis: (i) $40.3 million ; (ii) $5.3 million and (iii) $5.4 million , respectively.
The Series A Preferred Stock was not within the scope of ASC 480-10 and did not meet the criteria for liability classification. The Series A Preferred Stock was classified as temporary equity as of March 31, 2019, as the Series A Preferred Stock was entitled to receive two times its liquidation value in cash upon occurrence of a liquidation or deemed liquidation event, which is outside the control of the Company. After receipt of shareholder approval at the Company’s annual meeting of shareholders on June 25, 2019, the Series A Preferred Stock was automatically converted into 2,952,248 warrants and $5.3 million was reclassified to Common

15
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

stock warrants within Shareholders’ equity in the June 30, 2019 condensed consolidated balance sheet. The warrants also do not meet the criteria for liability classification under ASC 480. However, the warrants meet the definition of a derivative under ASC 815, are determined to be indexed to the Company’s common stock and meet the requirements for equity classification pursuant to ASC 815-40.
The Company determined the fair value of the Second Lien Term Loan using a discount rate build up approach. The fair values of the Series A Preferred Stock and warrants were determined using an option pricing method. The debt discount of $10.7 million created by the relative fair value allocation of the equity component is being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the loan.
Debt issuance costs of approximately $3.8 million and original issuance discount of approximately $1.0 million were incurred in connection with entry into the Second Lien Term Loan Agreement. The debt issuance and original issuance discount costs will be amortized into interest expense over the contractual term of the loan using the effective interest method. The Company had total unamortized debt issuance and discount costs of $14.7 million , all of which are recorded as a reduction of the debt balance on the Company’s accompanying condensed consolidated balance sheet as of June 30, 2019 . The Company recognized $2.5 million of paid-in-kind interest on its Second Lien Term Loan for the six months ended June 30, 2019.
Convertible Notes
In February 2017, the Company completed a public offering of 2.75% Convertible Senior Notes (the “Convertible Notes”) in an aggregate principal amount of $125.0 million . Interest is payable on January 1 and July 1 of each year, beginning on July 1, 2017. The Convertible Notes are convertible into 5,005,000 shares of the Company’s common stock, based on an initial conversion price of $24.98 per share. The Convertible Notes will mature on July 1, 2022 unless earlier converted.
Upon conversion by the holders, the Company may elect to settle such conversion in shares of its common stock, cash, or a combination thereof. Because the Company may elect to settle conversion in cash, the Company separated the Convertible Notes into their liability and equity components by allocating the issuance proceeds to each of those components in accordance with ASC 470-20, “Debt-Debt with Conversion and Other Options.” The Company first determined the fair value of the liability component by estimating the value of a similar liability that does not have an associated equity component. The Company then deducted that amount from the issuance proceeds to arrive at a residual amount, which represents the equity component. The Company accounted for the equity component as a debt discount (with an offset to paid-in capital in excess of par value). The debt discount created by the equity component is being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the Convertible Notes ending on July 1, 2022.
In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges”) in privately negotiated transactions with certain of the underwriters or their affiliates (in this capacity, the “option counterparties”). The Convertible Note Hedges provide the Company with the option to acquire, on a net settlement basis, 5,005,000  shares of its common stock, which is equal to the number of shares of common stock that notionally underlie the Convertible Notes, at a strike price of  $24.98 , which corresponds to the conversion price of the Convertible Notes. The Convertible Note Hedges have an expiration date that is the same as the maturity date of the Convertible Notes, subject to earlier exercise. The Convertible Note Hedges have customary anti-dilution provisions similar to the Convertible Notes. The Convertible Note Hedges have a default settlement method of net-share settlement but may be settled in cash or shares, depending on the Company’s method of settlement for conversion of the corresponding Convertible Notes. If the Company exercises the Convertible Note Hedges, the shares of common stock it will receive from the option counterparties to the Convertible Note Hedges will cover the shares of common stock that it would be required to deliver to the holders of the converted Convertible Notes in excess of the principal amount thereof. The aggregate cost of the Convertible Note Hedges was $29.0 million (or $7.5 million net of the total proceeds from the Warrants sold, as discussed below), before the allocation of issuance costs of approximately $0.7 million . The Convertible Note Hedges are accounted for as equity transactions in accordance with ASC 815-40 , “Derivatives and Hedging-Contracts in Entity’s own Equity.”
In connection with the issuance of the Convertible Notes, the Company also sold net-share-settled warrants (the “Warrants”) in privately negotiated transactions with the option counterparties for the purchase of up to 5,005,000 shares of its common stock at a strike price of $29.60 per share, for total proceeds of  $21.5 million , before the allocation of $0.6 million of issuance costs. The Company also recorded the Warrants within shareholders’ equity in accordance with ASC 815-40. The Warrants have customary anti-dilution provisions similar to the Convertible Notes. As a result of the issuance of the Warrants, the Company will experience dilution to its diluted earnings per share if its average closing stock price exceeds $29.60  for any fiscal quarter. The Warrants expire

16
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

on various dates from October 2022 through February 2023 and must be net-settled in shares of the Company’s common stock. Therefore, upon exercise of the Warrants, the Company will issue shares of its common stock to the purchasers of the Warrants that represent the value by which the price of the common stock exceeds the strike price stipulated within the particular warrant agreement.
Covenant and Liquidity Matters
The First Lien Term Loan requires a prepayment of $100.0 million on or before May 15, 2020. The ABL Facility matures on June 30, 2020, and as of June 30, 2019, had an outstanding balance of $51.2 million . As of today, the Company does not have the cash or liquidity to make the required First Lien Term Loan prepayment or pay off the balance of the ABL Facility at maturity. If the Company cannot generate sufficient cash to make the aforementioned payments as they become due and or meet its financial covenants under the Company’s credit agreements, it would result in an event of default. Such a default, if not cured, would allow the lenders to accelerate the maturity of the debt, making it due and payable at that time, which would result in a cross default of other debt obligations.
In an effort to address the aforementioned risks, on June 7, 2019, the Company announced that it was going to pursue various alternatives to reduce debt. In conjunction with evaluating all possible strategic alternatives, the board created an ad hoc committee of select directors to oversee the process and engaged an investment bank to assist therewith. To that end, the Company initiated a formal process to explore the sale of its Horizon Asia-Pacific operating segment as an option to raise the funds necessary to comply with the prepayment obligation under the First Lien Term Loan. The proceeds anticipated from said sale are expected to be sufficient to fund the required prepayment. The Company is in active discussions with potential buyers and believes it is probable that the Company will complete the transaction prior to the required May 15, 2020 prepayment obligation date.
The Company is in compliance with all of its financial covenants as of June 30, 2019 .
Bank facilities
There were $16.1 million and $2.9 million outstanding under the Company’s Australian loan agreement as of June 30, 2019 and December 31, 2018 , respectively.
9 . Derivative Instruments
Foreign Currency Exchange Rate Risk
As of June 30, 2019 , the Company was party to forward contracts to hedge changes in foreign currency exchange rates with notional amounts of approximately $13.9 million . The Company uses foreign currency forward contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain payments for contract manufacturing in its lower-cost manufacturing facilities. The foreign currency forward contracts hedge currency exposure between the Mexican peso and the U.S. dollar and between the Australian dollar and the U.S. dollar and mature at specified monthly settlement dates through December 2019. At inception, the Company designated the foreign currency forward contracts as cash flow hedges. Upon the performance of contract manufacturing or purchase of certain inventories the Company de-designates the foreign currency forward contract.
On August 16, 2017, the Company’s Australian subsidiary entered into a cross currency swap arrangement to hedge changes in foreign currency exchange rates. As of June 30, 2019 , the notional amount of the cross currency swap was approximately $2.2 million . The Australian subsidiary uses the cross currency swap to mitigate the risk associated with fluctuations in currency rates related to a non-U.S. functional currency intercompany loan of NZ $10.0 million . The floating-to-floating cross currency swap hedges currency exposure between the New Zealand dollar and the Australian dollar and matures on June 30, 2020. The Australian subsidiary makes quarterly principal payments of NZ $0.8 million , plus interest at the three-month Bank Bill Benchmark Rate in New Zealand plus a margin of 0.3% per annum, in exchange for A $0.8 million , plus interest at the three-month BBSY in Australia per annum. At inception, the cross currency swap was not designated as a hedging instrument.

17
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Financial Statement Presentation
The fair value carrying amount of the Company’s derivative instruments were recorded as follows:
 
 
 
 
Asset / (Liability) Derivatives
 
 
Balance Sheet Caption
 
June 30,
2019
 
December 31,
2018
 
 
 
 
(dollars in thousands)
Derivatives designated as hedging instruments
 
 
 
 
 
 
Foreign currency forward contracts
 
Prepaid expenses and other current assets
 
$
670

 
$
1,910

Cross currency swap
 
Accrued liabilities
 
—

 
(2,480
)
Total derivatives designated as hedging instruments
 
 
 
670

 
(570
)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
Foreign currency forward contracts
 
Prepaid expenses and other current assets
 
180

 
290

Cross currency swap
 
Accrued liabilities
 
(70
)
 
(90
)
Total derivatives de-designated as hedging instruments
 
 
 
110

 
200

Total derivatives
 
 
 
$
780

 
$
(370
)
The following table summarizes the amount of gain recognized in AOCI on derivatives (net of tax):
 
Amount of Gain Recognized in AOCI on Derivatives (net of tax)
 
As of June 30,
 
As of December 31,
 
2019
 
2018
 
(dollars in thousands)
Derivatives classified as cash flow hedges:
Foreign currency forward contracts
$
680

 
$
1,870

Cross currency swap
$
—

 
$
90

The following tables summarize the amounts reclassified from AOCI into earnings:
 
 
Three months ended June 30,
 
 
2019
2018
 
 
Cost of sales
 
Interest expense
 
Cost of sales
 
Interest expense
 
 
(dollars in thousands)
Total Amounts of Expense Line Items Presented in the Statement of Operations in Which the Effects of Cash Flow Hedges are Recorded
 
$
(179,110
)
 
$
(15,430
)
 
$
(185,770
)
 
$
(6,190
)
Amount of Gain Reclassified from AOCI into Earnings
 
 
Derivatives classified as cash flow hedges:
 
 
Foreign currency forward contracts
 
$
630

 
$
—

 
$
80

 
$
—

Cross currency swap
 
$
—

 
$
—

 
$
—

 
$
6,290


18
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

 
 
Six months ended June 30,
 
 
2019
2018
 
 
Cost of sales
 
Interest expense
 
Cost of sales
 
Interest expense
 
 
(dollars in thousands)
Total Amounts of Expense Line Items Presented in the Statement of Operations in Which the Effects of Cash Flow Hedges are Recorded
 
$
(356,690
)
 
$
(26,370
)
 
$
(364,130
)
 
$
(12,140
)
Amount of Gain Reclassified from AOCI into Earnings
 
 
Derivatives classified as cash flow hedges:
 
 
 
 
 
 
 
 
Foreign currency forward contracts
 
$
1,410

 
$
—

 
$
210

 
$
—

Cross currency swap
 
$
—

 
$
900

 
$
—

 
$
3,220

The following table summarizes the gain or loss recognized in earnings for derivatives not designated as hedging instruments:
 
 
Gain (Loss) Recognized in Earnings
 
Location of Gain (Loss) Recognized in Earnings
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
 
 
(dollars in thousands)
 
 
Derivatives not designated as hedging instruments:
Foreign currency forward contracts
 
$
60

 
$
(60
)
 
$
(160
)
 
$
20

 
Cost of sales
Cross currency swap
 
$
30

 
$
120

 
$
20

 
$
(60
)
 
Other income (expense), net
Over the next 12 months , the Company expects to reclassify approximately $0.6 million of pre-tax deferred gains, related to the foreign currency forward contracts, from AOCI to cost of sales as contract manufacturing and inventory purchases are settled.
Fair Value Measurements
The fair value of the Company’s derivatives are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. The Company’s derivatives are recorded at fair value in its condensed consolidated balance sheets and are valued using pricing models that are primarily based on market observable external inputs, including spot and forward currency exchange rates, benchmark interest rates, and discount rates consistent with the instrument’s tenor, and consider the impact of the Company’s own credit risk, if any. Changes in counterparty credit risk are also considered in the valuation of derivative financial instruments. Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 are shown below:
 
 
Frequency
 
Asset / (Liability)
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
 
 
 
(dollars in thousands)
June 30, 2019
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
 
Recurring
 
$
850

 
$
—

 
$
850

 
$
—

Cross currency swaps
 
Recurring
 
$
(70
)
 
$
—

 
$
(70
)
 
$
—

December 31, 2018
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
 
Recurring
 
$
2,200

 
$
—

 
$
2,200

 
$
—

Cross currency swaps
 
Recurring
 
$
(2,570
)
 
$
—

 
$
(2,570
)
 
$
—


19
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

10 . Restructuring
The Company’s restructuring activities are undertaken as necessary to execute management’s strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve productivity improvements and net cost reductions. The Company's restructuring charges consist primarily of employee costs (principally severance and/or termination benefits) and facility closure and other costs.
To the extent these programs involve voluntary separations, no liabilities are generally recorded until offers to employees are accepted. If employees are involuntarily terminated, a liability is generally recorded at the communication date. Estimates of restructuring charges are based on information available at the time such charges are recorded. Related charges are recorded in cost of sales and selling, general and administrative expenses.
The following table provides a summary of the Company’s consolidated restructuring liabilities and related activity for each type of exit cost as of and for the six months ended June 30, 2019 :

 
 
Employee Costs
 
Facility Closure and Other Costs
 
Total
 
 
(dollars in thousands)
Balance at January 1, 2019
 
$
4,990

 
$
5,120

 
$
10,110

Payments and other (1)
 
(2,940
)
 
$
(990
)
 
(3,930
)
Balance at June 30, 2019
 
$
2,050

 
$
4,130

 
$
6,180

(1) Other consists primarily of changes in the liability balance due to foreign currency translation.
The $6.2 million restructuring liability at June 30, 2019 includes $4.0 million of accrued liabilities and $2.2 million of other long-term liabilities.

20
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

11 . Leases

The Company leases certain facilities, automobiles and equipment under non-cancellable operating leases. Our leases have remaining lease terms of one year to thirteen years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Most leases include one or more options to renew. The exercise of lease renewal options is typically at the Company’s sole discretion; therefore, the majority of renewals to extend the lease terms are not included in the Company’s ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise, the Company includes the renewal period in the lease term. The Company combines lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.

As most of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company has a centrally managed treasury function; therefore, based on the applicable lease terms and the current economic environment, the Company applies a portfolio approach by reporting segment for determining the incremental borrowing rate.

Operating lease cost was $ 5.8 million and $11.1 million for the three and six months ended June 30, 2019, respectively. Operating cash flows from operating leases were $4.4 million and $9.8 million for the three and six months ended June 30, 2019, respectively. ROU assets obtained in exchange for operating lease obligations were $14.5 million and $15.6 million for the three and six months ended June 30, 2019, respectively. The weighted average remaining term of these leases was approximately 6.6 years and the weighted average discount rate used to measure lease liabilities was approximately 8.2% .

Maturities of lease liabilities were as follows as of June 30, 2019 :

Years ending December 31,
 
Operating Leases
 
 
(dollars in thousands)
2019
 
$
10,800

2020
 
17,600

2021
 
15,650

2022
 
12,230

2023
 
9,310

2024 and thereafter
 
30,470

Total lease payments
 
96,060

Less imputed interest
 
(23,850
)
Present value of lease liabilities
 
$
72,210



21
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Minimum payments for operating leases having initial or remaining non-cancellable lease terms in excess of one year at December 31, 2018 under ASC 840 are summarized below:

December 31,
 
Minimum Payments
 
 
(dollars in thousands)
2019
 
$
15,820

2020
 
14,790

2021
 
12,590

2022
 
7,900

2023
 
4,830

Thereafter
 
13,090

Total
 
$
69,020



12 . Contingencies
During the fourth quarter of 2018, the Company was notified by two OEM customers of potential claims related to product sold by Horizon Europe-Africa arising from potentially faulty components provided by a supplier. The claims resulted from the failure of products not functioning to specifications, but the claims do not allege any damage and only seek replacement of the product. One of the claims has since resulted in a recall campaign while the manner in which the other claim will be resolved is pending. The Company performed an assessment of the facts and circumstances for all asserted and unasserted claims and considered all factors including the Company’s recall insurance. Based on this assessment, the Company determined the probable range of the liability to be between $16.8 million and $20.0 million , with no amount within that range a better estimate than any other amount. As a result, the Company initially recorded a liability of $16.8 million and an asset of $11.1 million , which resulted in a $4.3 million charge during the six months ended June 30, 2019 . As of June 30, 2019 , the liability is $13.3 million due to ongoing replacement costs of potentially faulty components and is presented in “accrued liabilities” and the asset balance of $9.6 million is presented in “prepaid expenses and other current assets” in the accompanying June 30, 2019 condensed consolidated balance sheet. The asset recorded represents the amount the Company believes is probable of recovery and has appropriate legal basis for recovery in accordance with its recall insurance policy, which is further demonstrated by the initial recovery of $1.5 million of incurred costs related to the claim. The Company will continue its efforts to seek a reasonable commercial resolution, but we cannot give any assurances that the final resolution of the claims, if adverse to the Company, will not have a material adverse effect to its financial position, results of operations or cash flows.
13 . Loss per Share
Basic loss per share is computed using net loss attributable to Horizon Global and the number of weighted average shares outstanding. Diluted loss per share is computed using net loss attributable to Horizon Global and the number of weighted average shares outstanding, adjusted to give effect to the assumed exercise of outstanding stock options and warrants, vesting of restricted shares outstanding, and conversion of the Convertible Notes.

22
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

The following table sets forth the reconciliation of the numerator and the denominator of basic loss per share attributable to Horizon Global and diluted loss per share attributable to Horizon Global:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands, except share and per share data)
Numerator:
 
 
 
 
 
 
 
 
Net loss attributable to Horizon Global
 
$
(8,080
)
 
$
(66,930
)
 
$
(33,180
)
 
$
(124,440
)
Denominator:
 
 
 
 
 
 
 
 
Weighted average shares outstanding, basic
 
25,282,791

 
25,017,725

 
25,235,704

 
24,990,573

Dilutive effect of stock-based awards
 
—

 
—

 
—

 
—

Weighted average shares outstanding, diluted
 
25,282,791

 
25,017,725

 
25,235,704

 
24,990,573

 
 
 
 
 
 
 
 
 
Basic loss per share attributable to Horizon Global
 
$
(0.32
)
 
$
(2.68
)
 
$
(1.31
)
 
$
(4.98
)
Diluted loss per share attributable to Horizon Global
 
$
(0.32
)
 
$
(2.68
)
 
$
(1.31
)
 
$
(4.98
)
Due to net losses for the three and six months ended June 30, 2019 and 2018 , the effect of certain dilutive securities were excluded from the computation of weighted average diluted shares outstanding as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Number of options
 
55,389

 
308,348

 
65,181

 
321,341

Exercise price of options
 
$9.20 - $11.29

 
$9.20 - $11.29

 
$9.20 - $11.29

 
$9.20 - $11.29

Restricted stock units
 
1,259,552

 
835,560

 
868,263

 
737,865

Convertible Notes
 
5,005,000

 
5,005,000

 
5,005,000

 
5,005,000

Convertible Notes warrants
 
5,005,000

 
5,005,000

 
5,005,000

 
5,005,000

Second Lien Term Loan warrants
 
3,764,113

 
—

 
2,210,855

 
—

For purposes of determining diluted loss per share, the Company has elected a policy to assume that the principal portion of the Convertible Notes, as described in Note 8 , “ Long-term Debt ,” is settled in cash and the conversion premium is settled in shares. Therefore, the Company has adopted a policy of calculating the diluted loss per share effect of the Convertible Notes using the treasury stock method. As a result, the dilutive effect of the Convertible Notes is limited to the conversion premium, which is reflected in the calculation of diluted loss per share as if it were a freestanding written call option on the Company’s shares. Using the treasury stock method, the Warrants issued in connection with the issuance of the Convertible Notes are considered to be dilutive when they are in the money relative to the Company’s average common stock price during the period. The Convertible Note Hedges purchased in connection with the issuance of the Convertible Notes are always considered to be anti-dilutive and therefore do not impact the Company’s calculation of diluted loss per share.

14 . Equity Awards
Description of the Plan
Horizon employees and non-employee directors participate in the Horizon Global Corporation 2015 Equity and Incentive Compensation Plan (as amended and restated, the “Horizon 2015 Plan”). The Horizon 2015 Plan authorizes the Compensation Committee of the Horizon Board of Directors to grant stock options (including “incentive stock options” as defined in Section 422

23
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

of the U.S. Internal Revenue Code), restricted shares, restricted stock units, performance shares, performance stock units, cash incentive awards, and certain other awards based on or related to our common stock to Horizon employees and non-employee directors. No more than 4.4 million Horizon common shares may be delivered under the Horizon 2015 Plan.
Stock Options

The following table summarizes Horizon stock option activity from December 31, 2018 to June 30, 2019 :

 
 
Number of Stock Options
 
Weighted Average Exercise Price
 
Average  Remaining Contractual Life (Years)
 
Aggregate Intrinsic Value
Outstanding at December 31, 2018
 
92,967

 
$
10.40

 

 
 
Granted
 
—

 
—

 

 
 
Exercised
 
—

 
—

 
 
 
 
Canceled, forfeited
 
(39,646
)
 
10.31

 
 
 
 
Expired
 
—

 
—

 
 
 
 
Outstanding at June 30, 2019
 
53,321

 
$
10.43

 
6.1
 
$
—

As of June 30, 2019 , the unrecognized compensation cost related to stock options is immaterial. For the three and six months ended June 30, 2019 and 2018 , the stock-based compensation expense recognized by the Company related to stock options was immaterial. There was no aggregate intrinsic value of the outstanding options at June 30, 2019 . Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
Restricted Shares
During the first six months of 2019 , the Company granted an aggregate of 1,438,924 restricted stock units and performance stock units to certain key employees. The total grants consisted of: (i) 265,194 time-based restricted stock units that vest on May 15,2020; (ii) 5,000 time-based restricted stock units that vest on May 15, 2021; (iii) 411,373 time-based restricted stock units that vest on March 19, 2022 and (iv) 757,357 market-based performance stock units that vest on March 19, 2022 (the “2019 PSUs”).
During 2018, the Company granted an aggregate of 477,963 restricted stock units and performance stock units to certain key employees and non-employee directors. The total grants consisted of: (i) 5,680 time-based restricted stock units that vested on July 1, 2018; (ii) 43,799 time-based restricted stock units that vest ratably on (1) March 1, 2019, (2) March 1, 2020 and (3) March 1, 2021; (iii) 101,204 time-based restricted stock units that vest ratably on (1) March 1, 2019, (2) March 1, 2020, (3) March 1, 2021 and (4) March 1, 2022; (iv) 145,003 market-based performance stock units that vest on March 1, 2021 (the “2018 PSUs”); (v) 43,416 time-based restricted stock units that vest on March 1, 2021; (vi) 17,575 time-based restricted stock units that vest on May 8, 2019; (vii) 84,210 time-based restricted stock units that vested on May 15, 2018; (viii) 11,404 time-based restricted stock units that vest on May 15, 2020; (ix) 14,472 time-based restricted stock units that vest on August 1, 2020; (x) 8,400 time-based restricted stock units that vest on October 1, 2020, and (xi) 2,800 time-based restricted stock units that vest on December 3, 2020.
The performance criteria for the market-based performance stock units is based on the Company’s total shareholder return (“TSR”) relative to the TSR of the common stock of a pre-defined industry peer group. For the 2019 PSUs, TSR is measured over a period beginning January 1, 2019 and ending December 31, 2021. For the 2018 PSUs, TSR is measured over a period beginning January 1, 2018 and ending December 31, 2020. TSR is calculated as the Company’s average closing stock price for the 20 -trading days at the end of the performance period plus Company dividends, divided by the Company’s average closing stock price for the 20 -trading days prior to the start of the performance period. Depending on the performance achieved, the amount of shares earned can vary from  0%  of the target award to a maximum of  200%  of the target award. The Company estimated the grant-date fair value of the awards subject to a market condition using a Monte Carlo simulation model, using the following weighted-average assumptions: risk-free interest rate of  2.43% and 2.34%  for the 2019 PSUs and 2018 PSUs, respectively, and annualized volatility of  84.1% and 37.4% for the 2019 PSUs and 2018 PSUs, respectively. Due to the lack of adequate stock price history of Horizon common stock during 2018, the volatility was based on the median of the peer group. In 2019, the Company had sufficient historical data that was used to calculate the volatility. The grant date fair value of the p erformance stock units wer e $3.69 and $7.08 for the 2019 PSUs and 2018 PSUs, respectively.

24
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

The grant date fair value of r estricted stock units is expensed over the vesting period. Restricted stock unit fair values are based on the closing trading price of the Company’s common stock on the date of grant. Changes in the number of restricted shares outstanding for the period ended June 30, 2019 were as follows:
 
 
Number of Restricted Shares
 
Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018
 
419,928

 
$
9.75

Granted
 
1,438,924

 
3.45

Vested
 
(141,803
)
 
7.19

Canceled, forfeited
 
(208,634
)
 
4.17

Outstanding at June 30, 2019
 
1,508,415

 
$
4.35

As of June 30, 2019 , there was $4.9 million in unrecognized compensation costs related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.2 years.
The Company recognized approximately $0.6 million and $1.0 million of stock-based compensation expense related to restricted shares during the three and six months ended June 30, 2019 , respectively, and approximately $0.5 million and $1.2 million during the three and six months ended June 30, 2018 . Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
15 . Shareholders’ Equity
Preferred Stock
The Company is authorized to issue 100,000,000 shares of preferred stock, par value of $0.01 per share. There were no preferred shares outstanding at June 30, 2019 or December 31, 2018 .
Common Stock
The Company is authorized to issue 400,000,000 shares of common stock, par value of $0.01 per share. At June 30, 2019 , there were 26,003,240 shares of common stock issued and 25,316,734 shares of common stock outstanding. At December 31, 2018 , there were 25,866,747 shares of common stock issued and 25,180,241 shares of common stock outstanding.
Common Stock Warrants
In connection with the Second Lien Term Loan the Company entered into in March 2019, the Company became obligated to issue 6.25 million detachable warrants to purchase common stock of the Company, which can be exercised on a cashless basis over a five year term with an exercise price of $1.50 per share.
The Company also issued 90,667 shares of Series A Preferred Stock in March 2019 in connection with the Second Lien Term Loan that were convertible into additional warrants upon receipt of shareholder approval of the issuance of such additional warrants and the shares of common stock issuable upon exercise thereof. The Series A Preferred Stock was presented as Temporary equity in the March 31, 2019 condensed consolidated balance sheet. Upon receipt of such shareholder approval on June 25, 2019, the 90,667 shares of Series A Preferred Stock were converted into 2,952,248 warrants. See Note 8 , “ Long-term Debt ,” for additional information. As of June 30, 2019, warrants to purchase 6,554,150 shares of common stock were issued and remain outstanding.

25
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Accumulated Other Comprehensive Income (“AOCI”)
Changes in AOCI by component, net of tax, for the six months ended June 30, 2019 are summarized as follows:
 
 
Derivative Instruments
 
Foreign Currency Translation
 
Total
 
 
(dollars in thousands)
Balance at January 1, 2019
 
$
1,960

 
$
5,800

 
$
7,760

Net unrealized gains arising during the period (a)
 
970

 
1,290

 
2,260

Less: Net realized gains reclassified to net loss (b)
 
2,250

 
—

 
2,250

Net current-period change
 
(1,280
)
 
1,290

 
10

Balance at June 30, 2019
 
$
680

 
$
7,090

 
$
7,770

__________________________
(a) Derivative instruments, net of income tax expense of $0.0 million . See Note 9 , “ Derivative Instruments ,” for further details.
(b) Derivative instruments, net of income tax expense of $0.0 million . See Note 9 , “ Derivative Instruments ,” for further details.
Changes in AOCI by component, net of tax, for the six months ended June 30, 2018 are summarized as follows:
 
 
Derivative Instruments
 
Foreign Currency Translation
 
Total
 
 
(dollars in thousands)
Balance at January 1, 2018
 
$
(390
)
 
$
10,400

 
$
10,010

Net unrealized gains (losses) arising during the period (a)
 
5,060

 
(3,650
)
 
1,410

Less: Net realized losses reclassified to net loss (b)
 
2,740

 
—

 
2,740

Net current-period change
 
2,320

 
(3,650
)
 
(1,330
)
Balance at June 30, 2018
 
$
1,930

 
$
6,750

 
$
8,680

__________________________
(a) Derivative instruments, net of income tax expense of $1.0 million . See Note 9 , “ Derivative Instruments ,” for further details.
(b) Derivative instruments, net of income tax expense of $0.7 million . See Note 9 , “ Derivative Instruments ,” for further details.
16 . Segment Information
The Company groups its business into operating segments by the region in which sales and manufacturing efforts are focused, which are grouped on the basis of similar product, market and operating factors. Each operating segment has discrete financial information evaluated regularly by the Company’s chief operating decision maker in determining resource allocation and assessing performance. The Company reports the results of its business in three operating segments: Horizon Americas , Horizon Europe-Africa , and Horizon Asia-Pacific . Horizon Americas is comprised of the Company’s North American and South American operations. Horizon Europe-Africa is comprised of the European and South African operations, while Horizon Asia-Pacific is comprised of the Australia, Thailand, and New Zealand operations. See below for further information regarding the types of products and services provided within each operating segment.
Horizon Americas - A market leader in the design, manufacture and distribution of a wide variety of high-quality, custom engineered towing, trailering and cargo management products and related accessories. These products are designed to support OEMs, OESs, aftermarket and retail customers in the agricultural, automotive, construction, industrial, marine, military, recreational vehicle, trailer and utility end markets. Products include brake controllers, cargo management, heavy-duty towing products, jacks and couplers, protection/securing systems, trailer structural and electrical components, tow bars, vehicle roof racks, vehicle trailer hitches and additional accessories.
Horizon Europe‑Africa - With a product offering similar to Horizon Americas , Horizon Europe-Africa focuses its sales and manufacturing efforts in the Europe and Africa regions of the world.

26
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Horizon Asia‑Pacific - With a product offering similar to Horizon Americas , Horizon Asia-Pacific focuses its sales and manufacturing efforts in the Asia-Pacific region of the world.
Segment activity is as follows:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Horizon Americas
 
$
108,920

 
$
108,080

 
$
204,420

 
$
204,300

Horizon Europe-Africa
 
83,670

 
90,840

 
165,840

 
177,900

Horizon Asia-Pacific
 
30,570

 
34,420

 
62,560

 
67,950

Total
 
$
223,160

 
$
233,340

 
$
432,820

 
$
450,150

Operating Profit (Loss)
 
 
 
 
 
 
 
 
Horizon Americas
 
$
9,490

 
$
2,570

 
$
7,990

 
$
(2,540
)
Horizon Europe-Africa
 
1,580

 
(55,690
)
 
(1,610
)
 
(100,780
)
Horizon Asia-Pacific
 
4,400

 
4,670

 
9,780

 
9,060

Corporate
 
(8,420
)
 
(15,690
)
 
(17,100
)
 
(23,150
)
Total
 
$
7,050

 
$
(64,140
)
 
$
(940
)
 
$
(117,410
)
17 . Income Taxes
At the end of each interim reporting period, the Company makes an estimate of the annual effective income tax rate. Tax items included in the annual effective income tax rate are pro-rated for the full year and tax items discrete to a specific quarter are included in the effective income tax rate for that quarter. Effective tax rates vary from period to period as separate calculations are performed for those countries where the Company's operations are profitable and whose results continue to be tax-effected and for those countries where full deferred tax valuation allowances exist and are maintained. In determining the estimated annual effective tax rate, the Company analyzes various factors, including but not limited to, forecasts of projected annual earnings, taxing jurisdictions in which the pretax income and/or pretax losses will be generated, available tax planning strategies and estimated domestic tax impacts attributable to the 2017 Tax Cuts and Jobs Act (the “Tax Act”).
The effective income tax rate was (2.0)% and (3.81)% for the three and six months ended June 30, 2019 , respectively. For the three and six months ended June 30, 2018 , the effective income tax rates were 12.7% and 9.0% respectively. The lower 2019 effective tax rate is attributable to the valuation allowance recorded in the U.S. at year end 2018 , which resulted in no income tax benefit recognized for jurisdictional pretax losses.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance is necessary. Full valuation allowances against deferred tax assets in the U.S. and applicable foreign countries will be maintained until sufficient positive evidence exists to reduce or eliminate them. The factors considered by management in its determination of the probability of the realization of the deferred tax assets include, but are not limited to, recent historical financial results, historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences, tax planning strategies and projected future impacts attributable to the Tax Act. If, based upon the weight of available evidence, it is more likely than not the deferred tax assets will not be realized, a valuation allowance is recorded. As of June 30, 2019 , the Company believes that it is more likely than not that the recorded deferred tax assets will be realized. The Company has recently experienced pre-tax losses. If the Company continues to experience losses, management may determine a valuation allowance against certain of its deferred tax assets is necessary.

27
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

18 . Other Income (Expense), Net

Other income (expense), net consists of the following components:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Loss on sale of business
 
$
—

 
$
—

 
$
(3,630
)
 
$
—

Foreign currency gain / (loss)
 
730

 
(1,200
)
 
(600
)
 
(520
)
Customer pay discounts
 
(410
)
 
(510
)
 
(920
)
 
(790
)
Accretion arising from lease recovery
 
(30
)
 
(80
)
 
(70
)
 
(150
)
Brazil acquisition indemnification asset
 
—

 
(320
)
 
—

 
(1,120
)
Brink acquisition termination fees
 
—

 
(4,500
)
 
—

 
(5,130
)
Other
 
110

 
—

 
10

 
(20
)
Total
 
$
400

 
$
(6,610
)
 
$
(5,210
)
 
$
(7,730
)

Item 2 .    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition contains forward-looking statements regarding industry outlook and our expectations regarding the performance of our business. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under the heading “Forward-Looking Statements,” at the beginning of this report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the Company’s reports on file with the Securities and Exchange Commission, as well as our Annual Report on Form 10-K for the year ended December 31, 2018 (See Item 1A. Risk Factors).
Overview
Horizon Global Corporation (“Horizon,” “Horizon Global,” “we,” or the “Company”), headquartered in Troy, Michigan, is a leading designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products on a global basis, primarily serving the automotive aftermarket, retail and original equipment manufacturers (“OEMs”) and original equipment servicers (“OESs”) (collectively, “OEs”) channels. The Company supports its customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets primarily through a regional service model.
Horizon Global reports its business in three operating segments: Horizon Americas, Horizon Europe-Africa and Horizon Asia-Pacific. See Note 16 , Segment Information included in Part I, Item 1, “ Notes to Condensed Consolidated Financial Statements ,” within this quarterly report on Form 10-Q for further description of the Company’s operating segments.
Critical factors affecting our ability to succeed include: our ability to realize the expected economic benefits of the changes made to our manufacturing and distribution footprint and management team during 2018 and 2019; our ability to quickly and cost-effectively introduce new products; our ability to continue to integrate acquired companies or products that have historically supplemented existing product lines, add new distribution channels and expand our geographic coverage and realize desired operating efficiencies; and our ability to manage our cost structure more efficiently via supply base management, internal sourcing and/or purchasing of materials, selective outsourcing and/or purchasing of support functions, working capital management, and leverage of our administrative functions. If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.
We report shipping and handling expenses associated with Horizon Americas ’ distribution network as an element of selling, general and administrative expenses in our consolidated statements of operations. As such, gross margins for Horizon Americas may not be comparable to those of Horizon Europe-Africa and Horizon Asia-Pacific , which primarily rely on third-party distributors, for which all costs are included in cost of sales.

28
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Segment Information and Supplemental Analysis
The following table summarizes financial information for our operating segments for the three months ended June 30, 2019 (“Q2 2019”) and 2018 (“Q2 2018”):
 
 
Three months ended June 30,
 
Change
 
Constant Currency Change
 
 
2019
 
As a Percentage of Net Sales
 
2018
 
As a Percentage of Net Sales
 
$
 
%
 
$
 
%
 
 
(dollars in thousands)
 
 
 
 
Net Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
108,920

 
48.8
 %
 
$
108,080

 
46.3
 %
 
$
840

 
0.8
%
 
$
1,010

 
0.9
%
Horizon Europe-Africa
 
83,670

 
37.5
 %
 
90,840

 
38.9
 %
 
(7,170
)
 
(7.9
%)
 
(1,860
)
 
(2.0
%)
Horizon Asia-Pacific
 
30,570

 
13.7
 %
 
34,420

 
14.8
 %
 
(3,850
)
 
(11.2
%)
 
(2,150
)
 
(6.2
%)
Total
 
$
223,160

 
100.0
 %
 
$
233,340

 
100.0
 %
 
$
(10,180
)
 
(4.4
%)
 
$
(3,000
)
 
(1.3
%)
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
26,890

 
24.7
 %
 
$
26,920

 
24.9
 %
 
$
(30
)
 
(0.1
%)
 
$
10

 
—
%
Horizon Europe-Africa
 
9,410

 
11.2
 %
 
12,200

 
13.4
 %
 
(2,790
)
 
(22.9
%)
 
(2,040
)
 
(16.7
%)
Horizon Asia-Pacific
 
7,750

 
25.4
 %
 
8,450

 
24.5
 %
 
(700
)
 
(8.3
%)
 
(390
)
 
(4.6
%)
Total
 
$
44,050

 
19.7
 %
 
$
47,570

 
20.4
 %
 
$
(3,520
)
 
(7.4
%)
 
$
(2,420
)
 
(5.1
%)
Selling, General and Administrative Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
17,450

 
16.0
 %
 
$
24,270

 
22.5
 %
 
$
(6,820
)
 
(28.1
%)
 
$
(6,780
)
 
(27.9
%)
Horizon Europe-Africa
 
7,800

 
9.3
 %
 
11,990

 
13.2
 %
 
(4,190
)
 
(34.9
%)
 
(3,880
)
 
(32.4
%)
Horizon Asia-Pacific
 
3,340

 
10.9
 %
 
3,790

 
11.0
 %
 
(450
)
 
(11.9
%)
 
(260
)
 
(6.9
%)
Corporate (1)
 
8,420

 
3.8
 %
 
15,690

 
6.7
 %
 
(7,270
)
 
(46.3
%)
 
N/A

 
N/A

Total
 
$
37,010

 
16.6
 %
 
$
55,740

 
23.9
 %
 
$
(18,730
)
 
(33.6
%)
 
$
(10,920
)
 
(14.0
%)
Operating Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
9,490

 
8.7
 %
 
$
2,570

 
2.4
 %
 
$
6,920

 
269.3
%
 
$
6,920

 
269.3
%
Horizon Europe-Africa
 
1,580

 
1.9
 %
 
(55,690
)
 
(61.3
)%
 
57,270

 
(102.8
%)
 
57,880

 
(103.9
%)
Horizon Asia-Pacific
 
4,400

 
14.4
 %
 
4,670

 
13.6
 %
 
(270
)
 
(5.8
%)
 
(160
)
 
(3.4
%)
Corporate (1)
 
(8,420
)
 
(3.8
)%
 
(15,690
)
 
(6.7
)%
 
7,270

 
(46.3
%)
 
N/A

 
N/A

Total
 
$
7,050

 
3.2
 %
 
$
(64,140
)
 
(27.5
)%
 
$
71,190

 
(111.0
%)
 
$
64,640

 
(10.2
%)
(1) Corporate calculated as a percentage of total net sales.



29

Results of Operations Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Consolidated net sales decreased $10.2 million , or 4.4% , to $223.2 million in Q2 2019 , as compared with $233.3 million in Q2 2018 . As noted in the following segment results discussions, revenue decreased in Horizon Europe-Africa and Horizon Asia-Pacific compared to the prior-year period. The decrease in net sales of $7.2 million in Horizon Europe-Africa and $3.9 million in Horizon Asia-Pacific were attributable to $5.3 million and $1.7 million of unfavorable currency translation in Horizon Europe-Africa and Horizon Asia-Pacific, respectively, reflecting the strengthening of the U.S. dollar against several currencies, primarily the Euro and Australian dollar. After adjusting for currency translation impacts, Horizon Europe-Africa and Horizon Asia-Pacific sales were down primarily attributable to lower volumes in the automotive OEM and aftermarket sales channels, partially offset by higher volumes in E-commerce and automotive OEM sales channels in Horizon Americas and automotive OES sales volumes in Horizon Europe-Africa.
Gross profit margin (gross profit as a percentage of net sales) was 19.7% and 20.4% for Q2 2019 and Q2 2018 , respectively. As noted in the following segment results discussions, negatively impacting gross profit margin were lower gross profit in all segments, primarily related to unfavorable input costs, driven by increased commodity and freight costs and tariffs, as well as a shift in revenue mix from higher margin retail and aftermarket sales to lower margin OEM sales.
Operating margin (operating profit (loss) as a percentage of net sales) was 3.2% and (27.5)% in Q2 2019 and Q2 2018 , respectively. Operating loss improved by $71.2 million to an operating profit of $7.1 million in Q2 2019 , from an operating loss of $64.1 million in Q2 2018 , primarily attributable to a prior-year period goodwill impairment charge of approximately $55.7 million in Horizon Europe-Africa. In addition, selling, general and administrative (“SG&A”) expenses decreased $18.7 million due to realized savings from prior-year restructuring and business rationalization projects.
Other income (expense), net increased $7.0 million to $0.4 million in Q2 2019 , as compared to $(6.6) million in 2018 , primarily attributable to financing costs in connection with the pursuit of the Brink Group acquisition, which was expected to close in Q2 2018; however, the parties to the acquisition agreement mutually agreed to terminate the transaction.
Interest expense increased $9.2 million to $15.4 million in Q2 2019 , compared to $6.2 million in Q2 2018 . Interest expense increased because of $50.0 million of additional borrowings on our term loan in July 2018 and $51.0 million of additional borrowings on a second term loan in March 2019, as well as an increase in LIBOR, which impacts the Company’s floating rate indebtedness. In addition, as a result of our Q2 2019 term loan debt amendment, the Company recorded a $0.5 million charge to interest expense related to the expensing of prior capitalized debt fees.
The effective income tax rate for Q2 2019 and 2018 was (2.0)% and 12.7% , respectively. The lower effective income tax rate in Q2 2019 is driven by a decrease in tax benefits related to the year-end 2018 recognition of certain jurisdictional valuation allowances including the U.S., offset by certain aspects of U.S. tax reform, resulting in estimated 2019 tax expense.
Net loss attributable to Horizon Global was $8.1 million in Q2 2019 , an improvement of $58.9 million , from a net loss of $66.9 million in Q2 2018 . The decrease in net loss was the result of a $71.2 million decrease in operating loss, partially offset by higher interest expense.
See below for a discussion of operating results by segment.
Horizon Americas .      
Net sales by sales channel, in thousands, for Horizon Americas during Q2 2019 and Q2 2018 are as follows:
 
 
Three months ended June 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
23,670

 
$
19,950

 
$
3,720

 
18.6
 %
Automotive OES
 
1,810

 
1,660

 
150

 
9.0
 %
Aftermarket
 
28,850

 
31,710

 
(2,860
)
 
(9.0
)%
Retail
 
33,180

 
34,580

 
(1,400
)
 
(4.0
)%
Industrial
 
6,930

 
10,300

 
(3,370
)
 
(32.7
)%
E-commerce
 
14,480

 
9,570

 
4,910

 
51.3
 %
Other
 
—

 
310

 
(310
)
 
N/A

Total
 
$
108,920

 
$
108,080

 
$
840

 
0.8
 %

30

Net sales increased 0.8% in Q2 2019 , compared to Q2 2018 . Net sales in the retail and aftermarket channels decreased 4.0% and 9.0% , respectively, due to lower shipping volumes in these channels attributable to a softening in demand at the start of the U.S. selling season, which was offset by a 51.3% increase in E-commerce sales as a result of improved fill rates. In total, net sales increased as a result of $4.0 million of 2019 pricing increases. The price increases were implemented to offset increased steel and other material costs and higher import tariffs, which took effect during 2018. The pricing increases were offset by $1.6 million of lower sales volumes and $1.1 million of increased sales returns and allowances.
Horizon Americas ’ gross profit remained consistent at $26.9 million , or 24.7% of net sales, in Q2 2019 , compared with $26.9 million , or 24.9% of net sales, in Q2 2018 . The consistent gross profit margin reflects the changes in sales detailed above. In addition, gross profit was impacted by the following:
–
$3.8 million unfavorable manufacturing variances and absorption; and
–
$3.2 million unfavorable input costs primarily related to higher commodity, freight and tariff costs; partially offset by
–
$4.0 million favorable current year pricing increases; and
–
$3.6 million of additional costs incurred in the prior-year period related to restructuring and footprint rationalization projects primarily related to the distribution center move to Kansas City.
SG&A decreased $6.8 million to $17.5 million , or 16.0% of net sales, in Q2 2019 , as compared to $24.3 million , or 22.5% of net sales, in Q2 2018 . The decrease in SG&A expenses was attributable to the following:
–
$1.8 million benefit related to synergies and cost savings from prior year organizational restructuring efforts;
–
$4.5 million of additional costs incurred in the prior year related to restructuring and footprint rationalization projects primarily related to the distribution center move to Kansas City; and
–
$0.7 million reduction in advertising and marketing expenses.
Horizon Americas ’ operating profit increased $6.9 million to $9.5 million , or 8.7% of net sales, in Q2 2019 , compared to an operating profit of $2.6 million , or 2.4% of net sales, in Q2 2018 . Operating profit and operating margin increased primarily due to the cost savings realized from the impacts of prior-year period business reorganization projects and ongoing operational improvement projects.
Horizon Europe-Africa .     
Net sales by sales channel, in thousands, for Horizon Europe-Africa during Q2 2019 and Q2 2018 are as follows:
 
 
Three months ended June 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
45,910

 
$
47,360

 
$
(1,450
)
 
(3.1
)%
Automotive OES
 
16,030

 
12,890

 
3,140

 
24.4
 %
Aftermarket
 
20,080

 
24,410

 
(4,330
)
 
(17.7
)%
Industrial
 
860

 
—

 
860

 
N/A

E-commerce
 
580

 
1,270

 
(690
)
 
(54.3
)%
Other
 
210

 
4,910

 
(4,700
)
 
(95.7
)%
Total
 
$
83,670

 
$
90,840

 
$
(7,170
)
 
(7.9
)%
Net sales decreased by $7.2 million , or 7.9% , to $83.7 million in Q2 2019 , compared to $90.8 million in Q2 2018 . Net sales were impacted by $5.3 million of unfavorable foreign currency translation, primarily driven by the weakening of the euro in relation to the U.S. dollar. After adjusting for currency translation impacts, Horizon Europe-Africa net sales were down $1.9 million primarily related to a $1.5 million decrease related to the Company’s divestiture of a non-automotive business during Q1 2019 and lower sales volumes in the aftermarket channel, partially offset by $1.6 million of 2019 pricing increases.
Horizon Europe-Africa ’s gross profit decreased by $2.8 million to $9.4 million , or 11.2% of net sales, in Q2 2019 , from $12.2 million , or 13.4% of net sales, in Q2 2018 . The decrease in gross profit margin reflects the changes in sales detailed above. In addition, gross profit was impacted by the following:
–
$0.7 million unfavorable input costs primarily related to higher commodity costs;
–
$0.6 million increase in personnel costs due to warranty claim work during Q2 2019;

31

–
$0.8 million unfavorable currency exchange due to the weakening of the euro in relation to the U.S. dollar; and
–
unfavorable product mix favoring the lower margin percentage yielding OEM channel.
SG&A decreased by $4.2 million to $7.8 million , or 9.3% of net sales, in Q2 2019 , as compared to $12.0 million , or 13.2% of net sales, in Q2 2018 . The decrease in SG&A expenses was primarily attributable to the following:
–
$1.4 million of additional costs incurred in the prior-year period related to restructuring and footprint rationalization projects primarily related to the shift in production to our Braşov, Romania production facility;
–
$0.5 million reduction in intangible amortization due to the write-off of customer relationships in connection with the sale of certain non-automotive business assets; and
–
$1.0 million decrease in legal, sales and marketing and other professional fees.
Horizon Europe-Africa ’s operating loss decreased by $57.3 million to an operating profit of $1.6 million , or 1.9% of net sales, in Q2 2019 , as compared to an operating loss of $55.7 million , or (61.3)% of net sales, in Q2 2018 , as a result of the operating performance discussed above. In addition, operating loss was impacted by the following:
–
$55.7 million goodwill impairment charge recorded in Q2 2018; and
–
$0.6 million unfavorable currency exchange due to the weakening of the euro in relation to the U.S. dollar.
Horizon Asia-Pacific .     
Net sales by sales channel, in thousands, for Horizon Asia-Pacific during Q2 2019 and Q2 2018 are as follows:
 
 
Three months ended June 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
5,610

 
$
6,120

 
$
(510
)
 
(8.3
)%
Automotive OES
 
14,380

 
16,260

 
(1,880
)
 
(11.6
)%
Aftermarket
 
5,150

 
6,300

 
(1,150
)
 
(18.3
)%
Retail
 
2,150

 
2,080

 
70

 
3.4
 %
Industrial
 
3,280

 
3,660

 
(380
)
 
(10.4
)%
Total
 
$
30,570

 
$
34,420

 
$
(3,850
)
 
(11.2
)%
Net sales decreased by $3.9 million , or 11.2% , to $30.6 million in Q2 2019 , compared to $34.4 million in Q2 2018 . The decrease is primarily due to unfavorable foreign currency translation of $1.7 million primarily related to the weakening of the Australian dollar in relation to the U.S. dollar. The decrease is also due to $2.4 million of lower sales volumes in the New Zealand automotive OES and aftermarket sales channels.
Horizon Asia-Pacific ’s gross profit decreased by $0.7 million to $7.8 million , or 25.4% of net sales, in Q2 2019 , from $8.5 million , or 24.5% of net sales, in Q2 2018 . The decrease in gross profit margin reflects a $1.0 million decrease from sales volume detailed above. In addition, gross profit was impacted by the following:
–
$0.3 million unfavorable currency exchange due to the weakening of the Australian dollar in relation to the U.S. dollar, partially offset by
–
$0.2 million favorable 2019 pricing increases.
SG&A decreased by $0.5 million to $3.3 million , or 10.9% of net sales, in Q2 2019 , as compared to $3.8 million , or 11.0% of net sales, in Q2 2018 . The decrease in SG&A expenses was primarily attributable to $0.2 million unfavorable currency exchange due to the weakening of the Australian dollar in relation to the U.S. dollar and $0.3 million of lower sales and marketing and incentive compensation costs.
Horizon Asia-Pacific ’s operating profit decreased by $0.3 million to $4.4 million , or 14.4% of net sales, in Q2 2019 , as compared to $4.7 million , or 13.6% of net sales in Q2 2018 . The decrease is primarily related to the decline in sales volumes, partially offset by SG&A decrease detailed above.

32

Corporate Expenses.    Corporate expenses included in operating loss decreased $7.3 million to $8.4 million in Q2 2019 , as compared to $15.7 million in Q2 2018 , primarily attributable to $8.9 million of costs in connection with the termination of the Brink Group acquisition in the prior year, partially offset by an additional $2.1 million in additional professional services expense related to the Company new debt issuance and amendments entered into during the first quarter of 2019.

33

The following table summarizes financial information for our operating segments for the six months ended June 30, 2019 (“Q2 2019 YTD”) and 2018 (“Q2 2018 YTD”):
 
 
Six months ended June 30,
 
Change
 
Constant Currency Change
 
 
2019
 
As a Percentage
of Net Sales
 
2018
 
As a Percentage
of Net Sales
 
$
 
%
 
$
 
%
 
 
(dollars in thousands)
 
 
 
 
Net Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
204,420

 
47.2
 %
 
$
204,300

 
45.4
%
 
$
120

 
0.1
 %
 
$
620

 
0.3
 %
Horizon Europe-Africa
 
165,840

 
38.3
 %
 
177,900

 
39.5
%
 
(12,060
)
 
(6.8
)%
 
460

 
0.3
 %
Horizon Asia-Pacific
 
62,560

 
14.5
 %
 
67,950

 
15.1
%
 
(5,390
)
 
(7.9
)%
 
(1,160
)
 
(1.7
)%
Total
 
$
432,820

 
100.0
 %
 
$
450,150

 
100.0
%
 
$
(17,330
)
 
(3.8
)%
 
$
(80
)
 
—
 %
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
44,800

 
21.9
 %
 
$
45,970

 
22.5
%
 
$
(1,170
)
 
(2.5
)%
 
$
(1,030
)
 
(2.2
)%
Horizon Europe-Africa
 
15,060

 
9.1
 %
 
23,630

 
13.3
%
 
(8,570
)
 
(36.3
)%
 
(7,350
)
 
(31.1
)%
Horizon Asia-Pacific
 
16,270

 
26.0
 %
 
16,420

 
24.2
%
 
(150
)
 
(0.9
)%
 
720

 
4.4
 %
Total
 
$
76,130

 
17.6
 %
 
$
86,020

 
19.1
%
 
$
(9,890
)
 
(11.5
)%
 
$
(7,660
)
 
(8.9
)%
Selling, General and Administrative Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
36,860

 
18.0
 %
 
$
48,270

 
23.6
%
 
$
(11,410
)
 
(23.6
)%
 
$
(11,280
)
 
(23.4
)%
Horizon Europe-Africa
 
18,080

 
10.9
 %
 
25,110

 
14.1
%
 
(7,030
)
 
(28.0
)%
 
(6,010
)
 
(23.9
)%
Horizon Asia-Pacific
 
6,500

 
10.4
 %
 
7,390

 
10.9
%
 
(890
)
 
(12.0
)%
 
(420
)
 
(5.7
)%
Corporate (1)
 
17,100

 
4.0
 %
 
23,150

 
5.1
%
 
(6,050
)
 
(26.1
)%
 
N/A

 
N/A

Total
 
$
78,540

 
18.1
 %
 
$
103,920

 
23.1
%
 
$
(25,380
)
 
(24.4
)%
 
$
(17,710
)
 
(7.4
)%
Operating Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
7,990

 
3.9
 %
 
$
(2,540
)
 
(1.2
%)
 
$
10,530

 
(414.6
)%
 
$
10,530

 
(414.6
)%
Horizon Europe-Africa
 
(1,610
)
 
(1.0
)%
 
(100,780
)
 
(56.6
%)
 
99,170

 
(98.4
)%
 
99,460

 
(98.7
)%
Horizon Asia-Pacific
 
9,780

 
15.6
 %
 
9,060

 
13.3
%
 
720

 
7.9
 %
 
1,100

 
12.1
 %
Corporate (1)
 
(17,100
)
 
(4.0
)%
 
(23,150
)
 
(5.1
%)
 
6,050

 
(26.1
)%
 
N/A

 
N/A

Total
 
$
(940
)
 
(0.2
)%
 
$
(117,410
)
 
(26.1
%)
 
$
116,470

 
(99.2
)%
 
$
111,090

 
(4.6
)%
(1) Corporate calculated as a percentage of total net sales.


34

Results of Operations Six Months Ended June 30, 2019 Compared with Six Months Ended June 30, 2018
Overall, net sales decreased $17.3 million , or 3.8% , to $432.8 million for Q2 2019 YTD , as compared with $450.2 million in Q2 2018 YTD , primarily driven by a decrease in net sales in our Horizon Europe-Africa and Horizon Asia-Pacific operating segments due to unfavorable currency exchange of $12.5 million and $4.2 million, respectively.
Gross profit margin (gross profit as a percentage of sales) approximated 17.6% and 19.1% for Q2 2019 YTD and Q2 2018 YTD , respectively. Negatively impacting gross profit margin were unfavorable input costs, driven by increased commodity costs and tariffs in both our Horizon Americas and Horizon Europe-Africa operating segments.
Operating margin (operating loss as a percentage of sales) approximated (0.2)% and (26.1)% for Q2 2019 YTD and Q2 2018 YTD , respectively. Operating loss decreased $116.5 million to an operating loss of $0.9 million for Q2 2019 YTD , compared to an operating loss of $117.4 million for Q2 2018 YTD , primarily due to the impairment of goodwill and intangible assets totaling approximately $99.1 million in our Horizon Europe-Africa operating segment in the prior-year period. In addition, higher commodity costs in Horizon Americas and Horizon Europe-Africa operating segments negatively impacted operating profit.
Other income (expense), net decreased $2.5 million to $5.2 million for Q2 2019 YTD compared to $7.7 million for Q2 2018 YTD , primarily due to prior-year costs in connection with the termination of the Brink Group acquisition. Partially offset by a $3.6 million loss on sale related to the Company’s divestiture of non-automotive business assets in Europe-Africa in the first quarter of 2019.
Interest expense increased $14.2 million , to $26.4 million , for Q2 2019 YTD , as compared to $12.1 million for Q2 2018 YTD . Interest expense increased because of $50.0 million of additional borrowings on our term loan in July 2018 and $51.0 million of additional borrowings on a second term loan in March 2019, as well as an increase in LIBOR, which impacts the Company’s floating rate indebtedness.
The effective income tax rate for Q2 2019 YTD and Q2 2018 YTD was (3.8)% and 9.0% , respectively. The lower effective income tax rate for Q2 2019 YTD is driven by a decrease in tax benefits related to the year-end 2018 recognition of certain jurisdictional valuation allowances including the U.S., offset by certain aspects of U.S. tax reform, resulting in estimated 2019 tax expense.
Net loss decreased by $91.2 million , to a net loss of $33.8 million for Q2 2019 YTD , compared to net loss of $124.9 million for Q2 2018 YTD . The decrease is attributable to a $116.5 million decrease in operating loss, primarily driven by the impairment of goodwill and intangible assets in the prior-year period.
See below for a discussion of operating results by segment.












35

Horizon Americas .    
Net sales by sales channel, in thousands, for Horizon Americas during Q2 2019 YTD and Q2 2018 YTD are as follows:
 
 
Six months ended June 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
43,910

 
$
40,000

 
$
3,910

 
9.8
 %
Automotive OES
 
3,420

 
2,530

 
890

 
35.2
 %
Aftermarket
 
53,000

 
58,230

 
(5,230
)
 
(9.0
)%
Retail
 
61,620

 
66,730

 
(5,110
)
 
(7.7
)%
Industrial
 
16,210

 
20,520

 
(4,310
)
 
(21.0
)%
E-commerce
 
26,260

 
15,590

 
10,670

 
68.4
 %
Other
 
—

 
700

 
(700
)
 
N/A

Total
 
$
204,420

 
$
204,300

 
$
120

 
0.1
 %

Net sales increased $0.1 million , or 0.1% , to $204.4 million in Q2 2019 YTD , as compared to $204.3 million in Q2 2018 YTD . Net sales in the retail, aftermarket and industrial channels decreased 7.7%, 9.0% and 21.0%, respectively, due to lower shipping volumes attributable to a softening in demand at the start of the U.S. selling season, which was offset by a 68.4% increase in E-commerce sales due to improved fill rates. In total, net sales increased as a result of $5.5 million in 2019 pricing increases, partially offset by $2.5 million of lower sales volumes and $2.3 million of increased sales returns and allowances. The price increases were implemented to offset increased steel and other material costs and higher import tariffs, which took effect during 2018.
Horizon Americas ’ gross profit decreased $1.2 million to $44.8 million , or 21.9% of net sales in Q2 2019 YTD , as compared to $46.0 million , or 22.5% of net sales, in Q2 2018 YTD . Gross profit was impacted by the following:
–
$11.8 million of unfavorable input costs, including higher commodity costs, offset by
–
$5.3 million of additional costs incurred in the prior-year period related to restructuring and footprint rationalization projects primarily related to the distribution center move to Kansas City;
–
$5.5 million of 2019 pricing increases,
–
$1.3 million in lower freight costs and
–
$1.8 million lower personnel costs.
SG&A decreased $11.4 million to $36.9 million , or 18.0% of net sales in Q2 2019 YTD , as compared to $48.3 million , or 23.6% of net sales, in Q2 2018 YTD . The decrease in SG&A expenses was attributable to the following:
–
$11.0 million benefit related to the synergies and cost savings from prior-year organizational restructuring efforts and business footprint rationalization; and
–
$1.2 million of lower sales and marketing costs; partially offset by
–
$1.0 of additional rent expense.
Horizon Americas’ operating profit increased approximately $10.5 million to an operating profit of $8.0 million , or 3.9% of net sales, in Q2 2019 YTD , as compared to an operating loss of $2.5 million , or (1.2)% of net sales, in Q2 2018 YTD . Operating profit and operating margin increased primarily due to decreased SG&A costs related to the synergies and cost savings from prior-year organizational restructuring efforts and business footprint rationalization.

36

Horizon Europe-Africa .   
Net sales by sales channel, in thousands, for Horizon Europe-Africa during Q2 2019 YTD and Q2 2018 YTD are as follows:
 
 
Six months ended June 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
94,830

 
$
94,280

 
$
550

 
0.6
 %
Automotive OES
 
29,330

 
27,380

 
1,950

 
7.1
 %
Aftermarket
 
36,370

 
45,200

 
(8,830
)
 
(19.5
)%
Industrial
 
1,560

 
—

 
1,560

 
N/A

E-commerce
 
1,100

 
2,590

 
(1,490
)
 
(57.5
)%
Other
 
2,650

 
8,450

 
(5,800
)
 
(68.6
)%
Total
 
$
165,840

 
$
177,900

 
$
(12,060
)
 
(6.8
)%

Net sales decreased $12.1 million , or 6.8% , to $165.8 million in Q2 2019 YTD , as compared to $177.9 million in Q2 2018 YTD , primarily due to unfavorable currency exchange of approximately $12.5 million as the euro weakened in relation to the U.S. dollar. After considering currency impact, net sales were relatively flat compared to the prior-year period.
Horizon Europe-Africa ’s gross profit decreased $8.6 million to $15.1 million , or 9.1% of net sales in Q2 2019 YTD , from approximately $23.6 million , or 13.3% of net sales, in Q2 2018 YTD . Gross profit margin was negatively impacted by the following:
–
$4.3 million expense related to customer claims from product sold by Horizon Europe-Africa arising from potentially faulty components provided by a supplier;
–
$1.2 million unfavorable currency exchange due to the weakening of the Euro in relation to the U.S. dollar;
–
$1.3 million unfavorable commodity and freight costs, and
–
$0.8 million additional personnel costs.
SG&A decreased $7.0 million to $18.1 million , or 10.9% of net sales in Q2 2019 YTD , as compared to $25.1 million , or 14.1% of net sales, in Q2 2018 YTD .
–
$1.0 million unfavorable currency exchange due to the weakening of the Euro in relation to the U.S. dollar;
–
$4.4 million of additional costs incurred in the prior-year period related to restructuring and footprint rationalization projects primarily related to the shift in production to our Brasov, Romania production facility; and
–
$0.4 million reduction in legal and other professional fees.
Horizon Europe-Africa ’s operating loss decreased approximately $99.2 million to an operating loss of approximately $1.6 million , or 1.0% of net sales in Q2 2019 YTD , as compared to an operating loss of $100.8 million , or 56.6% of net sales, in Q2 2018 YTD , primarily due to the impairment of goodwill and trademark and trade names of approximately $99.1 million in prior year.








37

Horizon Asia-Pacific .    
Net sales by sales channel, in thousands, for Horizon Asia-Pacific during the six months ended June 30, 2019 and 2018 are as follows:
 
 
Six months ended June 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
12,370

 
$
12,510

 
$
(140
)
 
(1.1
)%
Automotive OES
 
27,600

 
29,980

 
(2,380
)
 
(7.9
)%
Aftermarket
 
10,910

 
13,040

 
(2,130
)
 
(16.3
)%
Retail
 
4,870

 
5,190

 
(320
)
 
(6.2
)%
Industrial
 
6,810

 
7,230

 
(420
)
 
(5.8
)%
Other
 
—

 
—

 
—

 
N/A

Total
 
$
62,560

 
$
67,950

 
$
(5,390
)
 
(7.9
)%

Net sales decreased $5.4 million, or 7.9% , to $62.6 million in Q2 2019 YTD , compared to $68.0 million in Q2 2018 YTD . The decrease is primarily due to unfavorable foreign currency translation of $4.2 million primarily related to the weakening of the Australian dollar in relation to the U.S. dollar and lower sales volumes in the New Zealand automotive OES and aftermarket sales channels.
Horizon Asia-Pacific ’s gross profit decreased $0.1 million to $16.3 million , or 26.0% of net sales in Q2 2019 YTD , from approximately $16.4 million , or 24.2% of net sales in Q2 2018 YTD . The decrease in gross profit was driven by the following:
–
$0.9 million unfavorable currency exchange driven by the weakening Australian and New Zealand dollars in relation to the U.S. dollar, offset by
–
$0.3 million of 2019 pricing increases; and
–
$0.4 million of favorable inventory scrap adjustments in prior-year period.
SG&A decreased $0.9 million, or 12.0%, to $6.5 million , or 10.4% of net sales in Q2 2019 YTD , as compared to $7.4 million , or 10.9% of net sales in Q2 2018 YTD . The decrease is primarily due to decreased SG&A costs related to the synergies and cost savings from prior-year organizational restructuring efforts.
Horizon Asia-Pacific ’s operating profit increased $0.7 million to $9.8 million , or 15.6% of net sales in Q2 2019 YTD , as compared to $9.1 million , or 13.3% of net sales in Q2 2018 YTD , primarily due to decreased SG&A expenses and small 2019 pricing increases.

Corporate Expenses.   Corporate expenses included in operating profit (loss) decreased approximately $6.1 million to $17.1 million for Q2 2019 YTD , from $23.2 million for Q2 2018 YTD . The decrease between years is primarily attributable to approximately $9.8 million of expenses related to the prior-year termination of the Brink Group acquisition and $1.0 million in personnel costs. Partially offsetting the decrease was an additional $3.3 million in additional professional services expense related to the Company new debt issuance and amendments entered into during the first quarter of 2019 and $1.3 million in additional expenses in connection with the pursuit of a sale of the Horizon Asia-Pacific segment.

Liquidity and Capital Resources
Our capital and working capital requirements are funded through a combination of cash flows from operations, cash on hand and various borrowings and factoring arrangements described below, including our asset-based revolving credit facility (“ABL Facility”). We utilize intercompany loans and equity contributions to fund our worldwide operations. See Note 8 , “ Long-term Debt ” included in Part I, Item 1, “ Notes to Condensed Consolidated Financial Statements, ” within this quarterly report on Form 10-Q. As of June 30, 2019 , and December 31, 2018 , there was $16.4 million and $26.1 million , respectively, of cash held at foreign subsidiaries. There may be country specific regulations that may restrict or result in increased costs in the repatriation of these funds.

38

Based on our current and anticipated levels of operations and the condition in our markets and industry, we believe that our cash on hand, cash flow from operations and availability under our ABL Facility will enable us to meet our working capital, capital expenditures, debt service and other funding requirements. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with financial covenants, including borrowing base limitations under our ABL Facility, depends on our future operating performance and cash flow and many factors outside of our control, including the costs of raw materials, the state of the automotive accessories market and financial and economic conditions and other factors. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.
In 2018, the Company experienced a combination of increased distribution costs and constrained shipments from the Americas distribution network primarily resulting from the start-up of its new Kansas City, Kansas aftermarket and retail distribution center. Due to these factors, as well as costs associated with remediating these factors, during the first quarter of 2019, the Company entered into a Senior Term Loan Agreement (“Bridge Loan”) of $10.0 million and a Second Lien Term Loan (“Second Lien Term Loan”) of $51.0 million to repay the Bridge Loan, and amended the First Lien Term Loan (“Sixth Term Amendment”) to amend certain financial covenants to provide for relief based on the Company’s 2018 and 2019 budget and make certain other affirmative and negative covenants more restrictive. In Q2 2019, the Company entered into the Seventh Term Amendment (as defined below) to amend the First Lien Term Loan agreement to extend its $100.0 million prepayment requirement from on or before March 31, 2020, to on or before May 15, 2020. Because of the Sixth and Seventh Term Amendments, the Company is in compliance with all of its financial covenants as of June 30, 2019. Refer to Item 1, “ Condensed Consolidated Financial Statements ,” included within this Quarterly Report on Form 10-Q for additional information.
Cash Flows - Operating Activities
Net cash used for operating activities during Q2 2019  YTD and Q2 2018 YTD was  $48.8 million , and  $35.4 million , respectively. During Q2 2019 YTD, the Company used  $4.5 million  in cash flows, based on the reported net loss of $8.1 million  and after considering the effects of non-cash items related to gains and losses on dispositions of property and equipment, depreciation, amortization of intangible assets, stock compensation, changes in deferred income taxes, amortization of original issuance discount and debt issuance costs, paid-in-kind interest, and other, net. During Q2 2018 YTD, the Company generated  $9.5 million  based on the reported net loss of  $124.9 million  and after considering the effects of similar non-cash items and goodwill impairment.
Changes in operating assets and liabilities used $44.3 million and $25.8 million of cash during Q2 2019 YTD and Q2 2018 YTD, respectively. Increases in accounts receivable resulted in a net use of cash of $32.3 million and $40.5 million during Q2 2019 YTD and Q2 2018 YTD, respectively. The increase in accounts receivable for both periods is a result of the higher sales activity during the second quarter compared to the fourth quarter due to the seasonality of the business.
Changes in inventory resulted in a use of cash of $10.6 million during Q2 2019 YTD and source of cash of approximately $0.5 million during Q2 2018 YTD. The increase in inventory during Q2 2019 YTD was due to softening of demand at the start of the typically strong selling season. The decrease in inventory during Q2 2018 YTD was due to the seasonality of our business.
Changes in accounts payable and accrued liabilities resulted in a use of cash of $0.4 million during Q2 2019 YTD and a source of cash of $12.6 million during Q2 2018 YTD. The use of cash for Q2 2019 YTD compared to the source of cash during Q2 2018 YTD is primarily related to the timing of purchases and vendor payments within the quarter.
Cash Flows - Investing Activities
Net cash used for investing activities during Q2 2019 YTD was $0.1 million and $7.7 million during Q2 2018 YTD. During Q2 2019 YTD, net proceeds from the sale of certain non-automotive business assets were $5.0 million. Q2 2019 YTD saw lower capital expenditure needs as compared to $7.8 million incurred during Q2 2018 YTD for growth, capacity and productivity-related projects, primarily within the Westfalia Group.

39

Cash Flows - Financing Activities
Net cash provided by financing activities was approximately $37.7 million and $42.4 million during the Q2 2019 YTD and Q2 2018 YTD, respectively. During Q2 2019 YTD, net proceeds from borrowings on our Second Lien Term Loan were $35.5 million , net of issuance costs; net repayments on our ABL Facility totaled $11.7 million , while we used cash of $10.1 million for repayments and debt issuance and transaction costs to amend our First Lien Term Loan. During Q2 2018 YTD, net borrowings from our ABL Facility totaled $52.6 million . During Q2 2018 YTD, we used cash of approximately $3.9 million for repayments on our First Lien Term Loan.
Factoring Arrangements
We have factoring arrangements with financial institutions to sell certain accounts receivable under non-recourse agreements. Total receivables sold during the year under the factoring arrangements were approximately $133.2 million and $135.9 million as of June 30, 2019 and 2018 , respectively. We utilize factoring arrangements as part of our business funding to meet the Company’s working capital needs. The costs of participating in these arrangements are immaterial to our results.
Our Debt and Other Commitments
In March 2019, the Company entered into the Sixth Term Amendment to permit the Company to enter into the Second Lien Term Loan Agreement, amend certain financial covenants to provide for relief based on the Company’s 2018 and 2019 budget, and make certain other affirmative and negative covenants more restrictive.

In March 2019, the Company entered into the Second Lien Term Loan Agreement that provides for a term loan facility in the aggregate principal amount of $51.0 million and matures on September 30, 2021. The interest on the Second Lien Term Loan may be paid, at the Company’s election, in cash, at the customary eurocurrency rate plus a margin of 10.50% per annum, or in-kind, at the customary eurocurrency rate plus a margin of 11.50%. The Second Lien Term Loan Agreement is subject to various affirmative and negative covenants including a secured net leverage ratio tested quarterly, commencing with the fiscal quarter ending on December 31, 2019, which shall not exceed (x) 6.75 to 1.00 as of the last day of any fiscal quarter ending on or prior to June 30, 2020 and (y) 5.25 to 1.00 as of the last day of any fiscal quarter ending on or after September 30, 2020.

The Sixth Term Amendment eliminated the prior net leverage covenant ratio in the First Lien Term Loan and replaced it with a first lien leverage covenant starting with the 12-month period ending September 2019 as follows:
September 30, 2019: 8.25:1.00
December 31, 2019: 6.25:1.00
March 31, 2020: 5.50:1.00
June 30, 2020: 5.00:1.00
September 30, 2020 and each fiscal quarter ending thereafter: 4.75:1.00
The Sixth Term Amendment also added a fixed charge coverage covenant starting with fiscal quarter ending March 31, 2020, a minimum liquidity covenant of $15.0 million effective March 31, 2019, and a maximum capital expenditure covenant of $15.0 million for 2019 and $25.0 million annually thereafter. The interest rate on the First Lien Term Loan Agreement is also amended to add 3.0% paid in kind interest in addition to the existing cash pay interest.
On May 7, 2019, the Company entered into the Seventh Amendment to Credit Agreement (the “Seventh Term Amendment”) to amend the First Lien Term Loan Agreement, which extended its $100.0 million prepayment requirement from on or before March 31, 2020, to on or before May 15, 2020.
We and certain of our subsidiaries are party to the ABL Facility, an asset-based revolving credit facility, that provides for $90.0 million of funding on a revolving basis, subject to borrowing base availability. The ABL Facility matures in June 2020 and bears interest on outstanding balances at variable rates as outlined in the agreement.
As of June 30, 2019 , approximately $51.2 million was outstanding on the ABL Facility bearing interest at a weighted average rate of 6.4% and $187.0 million was outstanding on the First Lien Term Loan bearing interest at 8.30%. The Company had $27.4 million of availability under the ABL Facility as of June 30, 2019 .

40

The agreements governing the ABL Facility contain various negative and affirmative covenants and other requirements affecting us and our subsidiaries, including restrictions on incurrence of debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, asset dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The ABL Facility does not include any financial maintenance covenants other than a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing twelve-month basis, which will be tested only upon the occurrence of an event of default or certain other conditions as specified in the agreement.
We are subject to variable interest rates on our First Lien Term Loan and ABL Facility. At June 30, 2019 , one-month LIBOR and three-month LIBOR approximated 2.40% and 2.32%, respectively.
In addition to our long-term debt, we have other cash commitments related to leases. We account for these lease transactions as operating leases and rent expense related thereto for Q2 2019 YTD approximated $11.1 million. We expect to continue to utilize leasing as a financing strategy in the future to meet capital expenditure needs and to reduce debt levels.
The First Lien Term Loan requires a prepayment of $100.0 million on or before May 15, 2020. The ABL Facility matures on June 30, 2020, and as of June 30, 2019, had an outstanding balance of $51.2 million. As of today, the Company does not have the cash or liquidity to make the required First Lien Term Loan prepayment or pay off the balance of the ABL Facility at maturity. If the Company cannot generate sufficient cash to make the aforementioned payments as they become due and or meet its financial covenants under the Company’s credit agreements, it would result in an event of default. Such a default, if not cured, would allow the lenders to accelerate the maturity of the debt, making it due and payable at that time, which would result in a cross default of other debt obligations.
In an effort to address the aforementioned risks, on June 7, 2019, the Company announced that it was going to pursue various alternatives to reduce debt. In conjunction with evaluating all possible strategic alternatives, the board created an ad hoc committee of select directors to oversee the process and engaged an investment bank to assist therewith. To that end, the Company initiated a formal process to explore the sale of its Horizon Asia-Pacific operating segment as an option to raise the funds necessary to comply with the prepayment obligation under the First Lien Term Loan. The proceeds anticipated from said sale are expected to be sufficient to fund the required prepayment. The Company is in active discussions with potential buyers and believes it is probable that the Company will complete the transaction prior to the required May 15, 2020 prepayment obligation date.
The Company is in compliance with all of its financial covenants as of June 30, 2019 .
Refer to Note 8 , “Long-term Debt,” in Part I, Item 1 , “Notes to Condensed Consolidated Financial Statements,” included within this quarterly report on Form 10-Q for additional information.
Credit Rating
We and certain of our outstanding debt obligations are rated by Standard & Poor’s and Moody’s. On June 14, 2019 , Moody’s issued a rating of Caa3 for our $210 million senior secured term loan and a rating of C for our corporate family rating. Moody’s also assigned the Company a stable outlook. On March 21, 2019 , Standard & Poor’s issued a rating of CCC for our $210 million senior secured term loan, a rating of CCC for our corporate credit rating and a rating of CCC- for our Convertible Notes. Standard & Poor’s also assigned the Company a negative outlook.
If our credit ratings were to decline, our ability to access certain financial markets may become limited, our cost of borrowings may increase, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.
Market Risk
We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between such local currencies and the U.S. dollar.
We use derivative financial instruments to manage currency risks associated with our procurement activities denominated in currencies other than the functional currency of our subsidiaries and the impact of currency rate volatility on our earnings. As of June 30, 2019 , we were party to forward contracts and cross currency swaps, to hedge changes in foreign currency exchange rates, with notional amounts of approximately $13.9 million and $2.2 million , respectively. See Note 9 , “ Derivative Instruments ,” included in Part I, Item 1, “ Notes to Condensed Consolidated Financial Statements ,” within this quarterly report on Form 10-Q.

41

We are also subject to interest risk as it relates to our long-term debt. We may in the future use interest rate swap agreements to fix the variable portion of our debt to manage this risk.
Outlook
Our global business remains susceptible to economic conditions that could adversely affect our results. In the near term, the economies that most significantly affect our demand, including the United States, European Union, and Australia, are expected to continue to grow. We have been impacted by recently enacted tariffs on imports from China that continued in Q2 2019. The Company endeavors to recover incremental input costs through pricing actions, but the recoveries generally occur over time. The impact of potential increases in these tariffs during 2019 is uncertain, as well as the potential for recoveries through pricing actions. If geopolitical tensions, particularly in East Asia, escalate, it may affect global consumer sentiment affecting the expected economic growth in the near term. Additionally, we face some slowing of the U.K. aftermarket due to the uncertainty surrounding Brexit.
Due to its historical performance and liquidity needs, during the first quarter of 2019, the Company entered into the Bridge Loan of $10.0 million and the Second Lien Term Loan of $51.0 million to repay the Bridge Loan and entered into the Sixth Term Amendment to amend certain financial covenants to provide for relief based on the Company’s 2018 and 2019 budget and make certain other affirmative and negative covenants more restrictive. In spite of this new financing and amendments to our existing agreements, we remain focused on maintaining liquidity to fund our operations during the year.
The Company is in compliance with all of its financial covenants as of June 30, 2019. Refer to Item 1, “ Condensed Consolidated Financial Statements ,” included within this Quarterly Report on Form 10-Q for additional information.
Over the past year, the Company has undergone significant effort to advance its turnaround via the action plan and other restructuring and business rationalization projects, primarily in the Americas and Europe-Africa. The management changes and business rationalization have allowed us to begin to operate more efficiently and focus on driving operational improvements. We are focused on simplifying our business and unwinding complexity to improve our customer service experience.
While we expect the new leadership in Europe-Africa to enhance the focus on operational improvements, progress is expected to take longer to realize in this segment. We will continue to move forward other initiatives to further improve operating efficiency and increase profitability. In the short term, the costs associated with executing these initiatives, including severance, unrecoverable lease obligations, professional service fees and other incurred costs, may continue to affect our results and cash flows.
We believe the unique global footprint we enjoy in our market space will benefit us as our OE customers continue to demonstrate a preference for stronger relationships with few suppliers. We believe that our strong brand positions, portfolio of product offerings, and existing customer relationships present a long-term opportunity for us and provide leverage to see balanced growth in the OE and aftermarket business.
While a strong global economy offers opportunities for growth and cost leverage, we are committed to delivering on our internal projects to drive margin improvement. We believe our internal projects, if executed well, will have a positive impact on our margins in future periods.
Our strategic priorities are to stabilize the operations in the near term and improve margins, reduce our leverage, and drive top-line growth. We believe those strategic priorities can be realized during 2019.
Impact of New Accounting Standards
See Note  2 , “ New Accounting Pronouncements ,” included in Part I, Item 1, “ Notes to Condensed Consolidated Financial Statements ,” within this quarterly report on Form 10-Q.
Critical Accounting Policies
Our financial statements are prepared in accordance with accounting principles generally accepted within the United States of Americas (“U.S. GAAP”). Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates that affect both the amounts and timing of the recording of assets, liabilities, net sales and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.
During the first quarter of 2019 , the Company adopted the U.S. GAAP provisions of Accounting Standards Codification (“ASC”) 842, “Leases” (“ASC 842”). Refer to Note 2 , “New Accounting Pronouncements” and Note 11 , “Leases” in Part I, Item 1, “Notes to the Condensed Consolidated Financial Statements,” included within this quarterly report on Form 10-Q, related to the impact of the adoption on the Company’s financial statements and accounting policies.

42

Except for accounting policies related to our adoption of ASC 842 in 2019 , there were no material changes to the items that we disclosed as our critical accounting policies in Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” in our Annual Report on Form 10-K for the year ended December 31, 2018 .
Emerging Growth Company
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, establishes a class of company called an “emerging growth company,” which generally is a company whose initial public offering was completed after December 8, 2011 and had total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year. We currently qualify as an emerging growth company.
As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements that are not available to public reporting companies that do not qualify for this classification, including without limitation the following:
▪
An emerging growth company is exempt from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and financial statements, commonly known as an “auditor discussion and analysis.”
▪
An emerging growth company is not required to hold a nonbinding advisory stockholder vote on executive compensation or any golden parachute payments not previously approved by stockholders.
▪
An emerging growth company is not required to comply with the requirement of auditor attestation of management’s assessment of internal control over financial reporting, which is required for other public reporting companies by Section 404 of the Sarbanes-Oxley Act.
▪
An emerging growth company is eligible for reduced disclosure obligations regarding executive compensation in its periodic and annual reports, including without limitation exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures.
▪
A company that is an emerging growth company is eligible for reduced financial statement disclosure in registration statements, which must include two years of audited financial statements rather than the three years of audited financial statements that are required for other public reporting companies.
For as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations available to us as a result of this classification. We will remain an emerging growth company until the earlier of (i) December 31, 2020, the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion (subject to further adjustment for inflation) or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but cannot retain our emerging growth company status indefinitely and will no longer qualify as an emerging growth company on or before December 31, 2020.
Emerging growth companies may elect to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to “opt out” of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to market risk associated with fluctuations in interest rates, commodity prices, insurable risks due to property damage, employee and liability claims, and other uncertainties in the financial and credit markets, which may impact demand for our products.
We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between the

43

local currencies and the U.S. dollar. A 10% change in average exchange rates versus the U.S. dollar would have resulted in an approximate $23.2 million and $25.0 million change to our net sales for the six months ended June 30, 2019 and 2018 , respectively.
We are exposed to market risk from changes in the interest rates on a significant portion of our outstanding debt. Outstanding balances under our First Lien Term Loan, at the Company’s election, bear interest at variable rates based on a margin over defined LIBOR. Based on the amount outstanding on the First Lien Term Loan as of June 30, 2019 and 2018 , a 100 basis point change in LIBOR would result in an approximate $1.9 million and $1.5 million, respectively, to our annual interest expense.
We use derivative financial instruments to manage our currency risks. We are also subject to interest risk as it relates to long-term debt. See Part I, Item 2, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations, ” for details about our primary market risks, and the objectives and strategies used to manage these risks. Also see Note  8 , “ Long-term Debt ,” and Note 9 , “ Derivative Instruments ,” in Part I, Item 1, “ Notes to Condensed Consolidated Financial Statements ,” included within this quarterly report on Form 10-Q for additional information.
Item 4.    Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Evaluation of disclosure controls and procedures
As of June 30, 2019 , an evaluation was carried out by management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) pursuant to Rule 13a-15 of the Exchange Act. The Company’s disclosure controls and procedures are designed only to provide reasonable assurance that they will meet their objectives. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2019 , the Company’s disclosure controls and procedures are effective to provide reasonable assurance that they would meet their objectives.
Changes in internal control over financial reporting
Beginning January 1, 2019, the Company implemented Accounting Standards Update 2016-02, “ Leases (Topic 842)”. Topic 842 had a material impact on the right-of-use assets and corresponding lease liabilities recognized on the Company’s condensed consolidated balance sheets. The Company did modify and add new controls designed to address risks associated with recognizing leases under the new standard. The Company has therefore augmented internal control over financial reporting as follows:
▪
enhanced the risk assessment process to take into account risks associated with the new lease standard; and
▪
added controls that address risks associated with the evaluation of all leases for balance sheet recognition, including the revision of the Company’s lease contract review controls.
There were no other changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2019 , that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

44

PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
We are subject to claims and litigation in the ordinary course of business, but we do not believe that any such claim or litigation is likely to have a material adverse effect on our financial position, results of operations, or cash flows. For additional information regarding legal proceedings, refer to Note 12 , “ Contingencies, ” included in Item 8, “ Financial Statements and Supplementary Data, ” within this quarterly report on Form 10-Q.
Item 1A.    Risk Factors
A discussion of our risk factors can be found in the section entitled “ Risk Factors ,” in our Annual Report on Form 10-K for the year ended December 31, 2018 , which could materially affect our business, financial condition or future results. There have been no significant changes in our risk factors as disclosed in our 2018 Form 10-K.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
The Company’s purchases of its shares of common stock during the second quarter of 2019 were as follows:
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (a)
April 1 - 30, 2019
 
—

 
 
 
—

 
813,494

May 1 - 31, 2019
 
—

 
 
 
—

 
813,494

June 1 - 30, 2019
 
—

 
 
 
—

 
813,494

Total
 
—

 

 
—

 
 
__________________________
(a) The Company has a share repurchase program that was announced in May 2017 to purchase up to 1.5 million shares of the Company’s common stock. At the end of the second quarter of 2019 , 813,494 shares of common stock remains to be purchased under this program. The share repurchase program expires on May 5, 2020.
Item 3.    Defaults Upon Senior Securities
Not applicable.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information

 

45

Item 6.    Exhibits.
Exhibits Index:
3.1
3.2(a)
3.3(b)
10.1(c)
10.2
10.3
10.4
31.1
31.2
32.1
32.2
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.

(a)
 
Incorporated by reference to the Exhibit filed with our Current Report on Form 8-K filed on February 20, 2019 (File No. 001-37427).
(b)
 
Incorporated by reference to the Exhibit filed with our Current Report on Form 8-K filed on March 18, 2019 (File No. 001-37427).
(c)
 
Incorporated by reference to the Exhibit filed with our Quarterly Report on Form 10-Q filed on May 9, 2019 (File No. 001-37427).

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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 thereunto duly authorized.
 
 
HORIZON GLOBAL CORPORATION (Registrant)
 
 
 
 
 
 
 
 
 
/s/ JAMIE PIERSON
 
 
 
 
 
Date:
August 8, 2019
By:
 
Jamie Pierson
Chief Financial Officer


47

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
HORIZON GLOBAL CORPORATION
Horizon Global Corporation (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
A.    The name of the Corporation is Horizon Global Corporation. The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on January 14, 2015, and the Corporation’s Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 22, 2018.
B.    This Amended and Restated Certificate of Incorporation, which amends and restates the Corporation’s current Amended and Restated Certificate of Incorporation in its entirety, was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
C.    The Amended and Restated Certificate of Incorporation of the Corporation shall read in its entirety as follows:
ARTICLE I
Section 1.1 Name . The name of the Corporation is Horizon Global Corporation.
ARTICLE II
Section 2.1 Address . The registered office and registered agent of the Corporation is Corporation Service Company, 251 Little Falls Drive, City of Wilmington, County of New Castle, Delaware 19808.
ARTICLE III
Section 3.1 Purpose . The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (“DGCL”).
ARTICLE IV
Section 4.1 Capitalization . The total number of shares of stock that the Corporation is authorized to issue is 500,000,000 shares, consisting of (i) 400,000,000 shares of common stock, par value $0.01 per share (“Common Stock”); and (ii) 100,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”). The number of authorized shares of any of the Common Stock or the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and no vote of the holders of any of the Common Stock or the Preferred Stock voting separately as a class shall be required therefor.
Section 4.2 Common Stock .
(a) Dividends . Subject to the preferential rights, if any, of the holders of Preferred Stock, the holders of Common Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock.
(b) Voting Rights . At every annual or special meeting of stockholders of the Corporation, every share of Common Stock shall entitle the holder thereof to one vote, in person or by proxy, for each share of Common Stock standing in his or her name on the books of the Corporation; provided that the holders of Common Stock shall have no voting rights with respect to matters reserved (by law or by agreement with the Corporation) solely for any other class of capital stock.
(c) Liquidation, Dissolution or Winding Up . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential amounts, if any, to which the holders of Preferred Stock shall be entitled, the holders of all outstanding shares of Common Stock shall be entitled to receive the remaining assets of the Corporation available for distribution to holders of Common Stock ratably in proportion to the number of shares held by each such stockholder.
Section 4.3 Preferred Stock . The Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock and, with respect to each such series, to



fix the number of shares constituting such series and the designation of such series, the voting powers (full or limited, if any) of the shares of such series, and the preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.
ARTICLE V
Section 5.1 Bylaws . In furtherance and not in limitation of the powers conferred by the DGCL, the Board of Directors is expressly authorized to make, amend, alter and repeal the Bylaws of the Corporation without the assent or vote of the stockholders, in any manner not inconsistent with the laws of the State of Delaware or this Amended and Restated Certificate of Incorporation.
ARTICLE VI
Section 6.1 Board of Directors: Composition . The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than three directors or more than fifteen directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the Board of Directors. At each annual meeting of stockholders of the Corporation, each director (other than those directors, if any, elected by the holders of any series of Preferred Stock pursuant to any certificate of designations relating to any series of Preferred Stock, voting separately as a class) elected at such meeting will serve for a one-year term expiring at the next annual meeting of stockholders and until his or her successor shall have been duly elected and qualified or until his or her earlier death, resignation or removal. Any director elected by the holders of a series of Preferred Stock will be elected for the term set forth in the certificate of designations relating to such series of Preferred Stock.
Section 6.2 Board of Directors: Vacancies . Any newly created directorship on the Board of Directors that results from an increase in the number of directors and any vacancy occurring in the Board of Directors shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.
Section 6.3 Removal of Directors . Subject to the rights of the holders of any series of Preferred Stock pursuant to any certificate of designations relating to any series of Preferred Stock, directors may be removed with or without cause, and only by the affirmative vote of at least a majority in voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting as a single class.
Section 6.4 Preferred Stock Directors . Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article, unless expressly provided by such terms.
Section 6.5 Meetings of Stockholders . Any action required or permitted to be taken by the holders of the Common Stock of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders. Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Chairman of the Board of Directors or the Board of Directors pursuant to a resolution approved by the Board of Directors.
ARTICLE VII
Section 7.1 Limited Liability of Directors . To the extent permitted by Section 102(b)(7) of the DGCL, as the same may be supplemented and amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (a) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL, or (d) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article VII shall not increase the liability of any director of the Corporation for any act or occurrence taking place prior to such repeal or modification, or otherwise adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

- 2 -


ARTICLE VIII
Section 8.1 Indemnification of Directors, Officers or Agents .
(a) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including, without limitation, attorneys’ fees, judgment, fines and amounts paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of such person’s heirs, executors and administrators. The Corporation shall indemnify a director or officer in connection with an action, suit or proceeding (other than an action, suit or proceeding to enforce indemnification rights provided for herein or elsewhere) initiated by such director or officer only if such action, suit or proceeding was authorized by the Board of Directors. The right to indemnification conferred in this Paragraph (a) shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any action, suit or proceeding in advance of its final disposition; provided, however, that, if the DGCL requires, the payment of such expenses incurred by a director or officer in such person’s capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person) in advance of the final disposition of an action, suit or proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such director or officer is not entitled to be indemnified for such expenses under this Article VIII or otherwise.
(b) The Corporation may, to the extent authorized from time to time by the Board of Directors, provide indemnification and the advancement of expenses, to any agent of the Corporation and to any person who is or was serving at the request of the Corporation as a director or officer or agent of another corporation or of a partnership, joint venture, trust or other enterprise, to such extent and to such effect as the Board of Directors shall determine to be appropriate and permitted by applicable law, as the same exists or may hereafter be amended.
(c) The rights to indemnification and to the advancement of expenses conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation or bylaws of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise.
ARTICLE IX
Section 9.1 Insurance . The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or of another corporation or a partnership, joint venture, limited liability company, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
ARTICLE X
Section 10.1 Severability . If any provision or provisions of this Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation.
IN WITNESS WHEREOF, the undersigned has caused this Amended and Restated Certificate of Incorporation to be signed on June 25, 2019.
HORIZON GLOBAL CORPORATION
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: General Counsel & Corporate Secretary

- 3 -


Exhibit 10.2
OMNIBUS CONSENT, WAIVER AND AMENDMENT
This OMNIBUS CONSENT, WAIVER AND AMENDMENT (this “ Consent ”) is dated as of June 6, 2019 and is entered into by and among HORIZON GLOBAL CORPORATION, a Delaware corporation (“ Parent Borrower ”), HORIZON GLOBAL AMERICAS INC., a Delaware corporation (“ Horizon Americas ”) (f/k/a Cequent Performance Products, Inc., a Delaware corporation and successor by merger with Cequent Consumer Products, Inc., an Ohio corporation), CEQUENT UK LIMITED, a company incorporated in England and Wales with company number 08081641 (“ Cequent UK ”), CEQUENT TOWING PRODUCTS OF CANADA LTD., a company formed under the laws of the Province of Ontario (“ Cequent Canada ”, and together with Parent Borrower, Horizon Americas and Cequent UK, collectively, “ Borrowers ”), Horizon Global Company LLC, a Delaware limited liability company (“ Horizon Global ”), the other Persons party to this Consent as Obligors, the financial institutions party to this Consent as Lenders, and BANK OF AMERICA, N.A., a national banking association, in its capacity as agent for itself and the other Secured Parties (“ Agent ”).
RECITALS
WHEREAS, the Borrowers, the other Obligors party hereto, the Agent and the Lenders have entered into that certain Amended and Restated Loan Agreement dated as of December 22, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”);
WHEREAS, the Borrowers and the other Obligors have requested that the Agent and Lenders (i) consent to the dissolution and liquidation of certain Subsidiaries identified on Schedule 1 attached hereto subject to the terms and conditions set forth below (the “ Proposed Reorganization ”); (ii) waive the requirements set forth in Section 8.5 of the Loan Agreement to establish and maintain Agent’s control of, and first priority perfected Lien on, the Deposit Accounts identified on Schedule 2 attached hereto (the “ Westfalia Deposit Accounts ”); (iii) amend the Amended and Restated ABL Guarantee and Collateral Agreement and the Loan Agreement to provide for such limitations and qualifications of each German Domiciled Obligor as set forth herein; and (iv) amend Schedule I {Post-Closing Schedule} to the Seventh Amendment to modify certain post-closing requirements regarding Westfalia-Automotive GmbH;
WHEREAS, subject to the terms of this Consent, the Agent and Lenders have agreed (i) to consent to the Proposed Reorganization; (ii) to waive the requirements set forth in Section 8.5 of the Loan Agreement with respect to the Westfalia Deposit Accounts; (iii) to amend the Amended and Restated ABL Guarantee and Collateral Agreement and the Loan Agreement to provide for certain limitations and qualifications to each German Domiciled Obligor as set forth herein; and (iv) to amend Schedule I {Post-Closing Schedule} to the Seventh Amendment to modify certain post-closing requirements regarding Westfalia-Automotive GmbH as set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the Loan Documents and this Consent, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Initially capitalized terms used but not otherwise defined in this Consent have the respective meanings set forth in the Loan Agreement.
ARTICLE II
RECITALS
The foregoing Recitals are hereby made a part of this Consent.
ARTICLE III
LIMITED CONSENT AND WAIVER UNDER THE LOAN AGREEMENT
3.01 Limited Consent and Waiver .
(a) The Obligors hereby acknowledge that the Proposed Reorganization is not permitted under Section 10.2.3 of the Loan Agreement. The Obligors have therefore requested that the Agent and Lenders consent to the consummation of the Proposed Reorganization. Subject to the occurrence of the Consent Effective Date, the Agent and the Required Lenders party hereto hereby consent to the consummation of the Proposed Reorganization and waive any Events of Default that would have otherwise resulted therefrom so long as (i) the assets, if any, of the entities listed on Schedule 1 , shall be distributed or otherwise transferred to an Obligor that is not listed on Schedule 1 ; and (ii) the Borrowers shall deliver to the Agent, as soon as available, and in any event not later than the next monthly financial statements due under Section 10.1.2(c) of the Loan Agreement after giving effect to any portion of the Proposed Reorganization, an updated organization chart which accurately shows the Borrowers and Obligors after giving effect to implementing all or any portion of the Proposed Reorganization.



(b) The Obligors hereby acknowledge that the Loan Agreement requires that they establish and maintain Agent’s control of, and first priority perfected Lien on, the Westfalia Deposit Accounts. The Obligors have requested that Agent and Lenders waive the requirement that they establish and maintain Agent’s control of, and first priority perfected Lien on, the Westfalia Deposit Accounts. Subject to the occurrence of the Consent Effective Date, the Agent and Required Lenders party hereto hereby waive the requirement that Obligors establish and maintain Agent’s control of, and first priority perfected Lien on, the Westfalia Deposit Accounts and waive any Events of Default that would have otherwise resulted therefrom so long as the Westfalia Deposit Accounts are pledged to third party creditors and/or suppliers.
(c) The consents and waivers in this Section 3.01 shall be effective only to the extent specifically set forth herein and shall not (i) be construed as a waiver of any breach, Default or Event of Default nor as a waiver of any breach, Default or Event of Default of which the Agent and the Lenders have not been informed by the Obligors, (ii) affect the right of the Agent or the Lenders to demand compliance by the Obligors with all terms and conditions of the Loan Documents, except as specifically waived by this Consent, (iii) be deemed a waiver of or consent to any transaction or future action on the part of any Obligor requiring the Agent’s or any Lender’s consent or approval under the Loan Documents, other than as expressly set forth herein, or (iv) except as consented to hereby, be deemed or construed to be a waiver or release of, or a limitation upon, the Agent’s or the Lenders’ exercise of any rights or remedies under the Loan Agreement or any other Loan Document, whether arising as a consequence of any Default or Event of Default which may now exist or otherwise, all such rights and remedies hereby being expressly reserved.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Each Obligor hereby represents and warrants to each Lender and the Agent, as of the date hereof and as of the Consent Effective Date, as follows:
4.01 Authority . The execution, delivery and performance by such Obligor of this Consent, and the transactions contemplated hereby or thereby, have been duly authorized by all necessary action, and this Consent is a legal, valid and binding obligation of such Obligor enforceable against such Obligor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
4.02 Representations and Warranties . Each representation and warranty of such Obligor in the Loan Documents is true and correct as of the date hereof, after giving effect to this Consent (except for representations and warranties that expressly relate to an earlier date and except for the representations and warranties set forth in Section 9.1.4(d) {No Material Adverse Change} and Section 9.1.15(d) {Solvency} of the Loan Agreement).
4.03 Governmental Approvals; No Conflicts . The execution, delivery, and performance by such Obligor of this Consent (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, (b) will not violate any Applicable Law or regulation or the charter, by-laws or other organizational documents of any Obligor or any Subsidiary of any Obligor or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Obligor or any Subsidiary of any Obligor or their assets, or give rise to a right thereunder to require any payment to be made by any Obligor or any Subsidiary of any Obligor, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, (d) will not result in the creation or imposition of any Lien on any asset of any Obligor or any Subsidiary of any Obligor, except Liens created under the Loan Documents and Liens permitted by Section 10.2.2 of the Loan Agreement, and (e) do not require any acknowledgement, agreement or consent under any indenture, agreement or other instrument binding upon any Obligor or any Subsidiary of any Obligor or their assets, except for such acknowledgements, agreements and consents as have been obtained or made and are in full force and effect, and such acknowledgements, agreements or consents the failure of which to obtain could not reasonably be expected to result in a Material Adverse Effect.
4.04 No Defaults . No Default or Event of Default has occurred and is continuing.
4.05 Beneficial Ownership Certification . As of the date hereof, the information included in the Beneficial Ownership Certification (as defined in the Loan Agreement after giving effect to this Consent), if applicable, is true and correct in all respects.
4.06 Best Interest of the Borrower . That the Proposed Reorganization is in the best interests of the Obligors and is not materially disadvantageous to the Lenders.


2


ARTICLE V
AMENDMENT TO AMENDED AND RESTATED ABL GUARANTEE AND COLLATERAL AGREEMENT

5.01 Amendments to Amended and Restated ABL Guarantee. As of the date hereof, Section 2.9 of the Amended and Restated ABL Guarantee and Collateral Agreement is hereby amended to read in its entirety as follows:
“2.9     German Domiciled Obligors . In the case that during the lifetime of this Agreement the directors of a German Domiciled Obligor reasonably expect to suffer a personal liability in the case of a demand under the guarantee and indemnity, the Agent and Lenders agree to enter into negotiations with that German Domiciled Obligor in order to limit the guarantee and indemnity in order to avoid a personal liability of the directors of that German Domiciled Obligor.”

5.02 Amendments to ABL Credit Agreement .
(a) As of the date hereof, Section 5.6 of the Loan Agreement is hereby amended to read in its entirety as follows:
“5.6     Dominion Account . The available amount in the Dominion Accounts of each Borrower as of the end of a Business Day shall be applied to the Obligations of the Obligor Group to which such Borrower belongs at the beginning of the next Business Day during any Dominion Trigger Period; provided that during any Dominion Trigger Period, Obligors shall cause all amounts in excess of $400,000 in the aggregate in the Deposit Accounts of Canadian Borrower (taken as a whole) to be wire transferred in immediately available funds no later than the Business Day after exceeding such threshold as follows: (i) to the extent such monies are in U.S. Dollars, to the New York Account, and (ii) to the extent such monies are in Canadian Dollars, to the Toronto Account. All such amounts shall be applied to the Canadian Facility Obligations. Notwithstanding the foregoing, (i) the Obligors shall not have any obligation to deposit any proceeds of any Senior Term Loan into a Dominion Account or otherwise cause the same to be applied to the Obligations while any Dominion Trigger Period is in effect and (ii) so long as no Event of Default shall have occurred and be continuing, Agent shall not initiate a sweep of balances in (A) the operating account of Horizon Global Company LLC ending in ’89, (B) the account of Cequent UK Limited ending in ‘7981, (C) the account of C.P. Witter Limited ending in ‘868 or (D) the account of Cequent UK Limited ending in ‘2002. If a credit balance results from such application, it shall not accrue interest in favor of Borrowers and shall be made available to Borrowers of the applicable Borrower Group as long as no Default exists.”
(b) As of the date hereof, Section 5.10.4 of the Loan Agreement is hereby amended to read in its entirety as follows:
“5.10.4 German Guarantee Limitation . In the case that during the lifetime of this Agreement the directors of a German Domiciled Obligor reasonably expect to suffer a personal liability in the case of a demand under the guarantee and indemnity, the Agent and Lenders agree to enter into negotiations with that German Domiciled Obligor in order to limit the guarantee and indemnity in order to avoid a personal liability of the directors of that German Domiciled Obligor.”

5.03 Amendments to Post-Closing Schedule . Section 1(b) of Schedule 1 {Post-Closing Schedule} to the Seventh Amendment is hereby amended by adding at the end thereof the following new unnumbered paragraph:
“Notwithstanding anything to the contrary contained in this Section 1(b), Westfalia-Automotive GmbH shall only be required to use commercially reasonable efforts to take all actions and receive all third party consents necessary (subject to the Agreed Security Principles) to satisfy the items described below no later than October 4, 2019 (or, in each case, such longer periods as the Agent may agree in writing):
(a)    a German law security transfer agreement relating to the security transfer of all moveable property (including stock and inventory) over which security shall be granted; and
(b)    such legal opinions as may be necessary in relation to the German law security transfer agreement relating to the security transfer of all moveable property (including stock and inventory) of Westfalia-Automotive GmbH.”


3


ARTICLE VI
CONDITIONS PRECEDENT AND FURTHER ACTIONS

6.01 Conditions Precedent . The limited consent and waiver in Article III and the amendments in Article V shall be deemed effective as of the date first set forth above when each of the following conditions precedent have been satisfied in form and substance satisfactory to the Agent and its counsel (such date, the “Consent Effective Date”):
(a) The Agent shall have received duly executed counterparts of this Consent which, when taken together, bear the authorized signatures of the Obligors, the Agent and the Required Lenders;
(b) The Agent shall have received fully executed consents from each of the required Term Lenders approving the Proposed Reorganization on such terms and conditions as Agent shall approve; and
(c) The Borrowers shall have paid all fees and expenses (provided that legal fees required to be paid as a condition precedent to the occurrence of the Consent Effective Date shall be limited to such legal fees as to which Borrowers have received a summary invoice) owed to and/or incurred by the Agent in connection with this Consent (which the Agent, in its discretion, may collect from Borrowers by charging the same as a Revolving Loan).
6.02 Further Actions . Each of the Obligors to this Consent agrees that at any time and from time to time upon the written request of the Agent, it will execute and deliver such further documents and do such further acts and things as the Agent may reasonably request in order to effect the purposes of this Consent.
ARTICLE VII
REAFFIRMATION
Each Obligor hereby (i) acknowledges and consents to this Consent; (ii) reaffirms its obligations under the Guaranties, the Security Documents and the other Loan Documents; (iii) reaffirms the Liens granted by it pursuant to the Security Documents; and (iv) confirms that the Guaranties, the Security Documents and the other Loan Documents remain in full force and effect, without defense, offset or counterclaim. Although each Guarantor has been informed of the terms of the Consent, such Guarantor hereby confirms that it understands and agrees that the Agent and the Lenders have no duty to so notify such Guarantor or any other guarantor or to seek this or any future acknowledgment, consent or reaffirmation, and nothing contained herein shall create or imply any such duty as to any transaction, past or future.
ARTICLE VIII
MISCELLANEOUS
8.01 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of Obligors, Agent, Lenders, Secured Parties, and their respective successors and assigns. The successors and assigns of the Obligors include, without limitation, their respective receivers, trustees, and debtors-in-possession.
8.02 Further Assurances . Each Obligor party hereto hereby agrees from time to time, as and when requested by the Agent or any Lender, to execute and deliver or cause to be executed and delivered all such documents, instruments and agreements and to take or cause to be taken such further or other action as the Agent or such Lender may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Consent and the other Loan Documents.
8.03 Loan Document . This Consent shall be deemed to be a “Loan Document” for all purposes under the Loan Agreement.
8.04 Governing Law . THIS CONSENT AND, UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, ALL CLAIMS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.
8.05 Consent to Forum .
(a) Forum . EACH OBLIGOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK OR THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1 OF THE LOAN AGREEMENT. A FINAL JUDGMENT IN ANY PROCEEDING OF ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR ANY OTHER MANNER PROVIDED BY APPLICABLE LAW.

4


(b) Other Jurisdictions . Nothing herein shall limit the right of Agent, any Security Trustee or any Lender to bring proceedings against any Obligor (other than a Mexican Domiciled Obligor) in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law (except with respect to service of process to Mexican Domiciled Obligors). Nothing in this Consent shall be deemed to preclude enforcement by Agent or any Security Trustee of any judgment or order obtained in any forum or jurisdiction. Final judgment against an Obligor in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction, including the country in which such Obligor is domiciled, by suit on the judgment.
(c) Each Mexican Domiciled Obligor waives any right to any jurisdiction (other than as provided under Section 8.04 above and this Section 8.05) to which they may be entitled under Applicable Law, by reason of its present or future domicile, or otherwise, for the purposes of proceedings against or involving any of the Mexican Domiciled Obligors, and waives any objection to those courts on the ground of venue or forum non conveniens .
8.06 Severability . Wherever possible, each provision of this Consent shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of this Consent shall remain in full force and effect.
8.07 Entire Agreement . Time is of the essence of this Consent. This Consent constitutes the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
8.08 Execution in Counterparts . This Consent may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Consent shall become effective on the Consent Effective Date. Delivery of a signature page of this Consent by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
8.09 Costs and Expenses . The Borrowers agree to reimburse Agent for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors for advice, assistance, or other representation in connection with this Consent.
8.10 Reference to and Effect upon the Loan Documents . The Loan Agreement and the other Loan Documents shall continue in full force and effect in accordance with the provisions thereof, and are hereby ratified and confirmed. In each case except as expressly provided in this Consent, the execution, delivery and effectiveness of this Consent shall not operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Loan Documents, nor constitute a waiver or amendment of any provision of any of the Loan Documents. Upon the effectiveness of this Consent, each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended hereby.
8.11 Section Headings . The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.
Balance of Page Intentionally Left Blank
Signature Pages Follow







5


IN WITNESS WHEREOF, duly authorized representatives of the parties have executed this Consent and the parties have delivered this Consent, each as of the day and year first written above.
 
OBLIGORS:

HORIZON GLOBAL CORPORATION,
a Delaware corporation

By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: General Counsel, Chief Compliance Officer and Corporate Secretary
 
HORIZON GLOBAL AMERICAS INC.,
a Delaware corporation


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary
 
CEQUENT UK LIMITED, a company incorporated in England and Wales with company number 08081641


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

CEQUENT TOWING PRODUCTS OF CANADA LTD., a company formed under the laws of the Province of Ontario


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GLOBAL COMPANY LLC,
a Delaware limited liability company


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON INTERNATIONAL HOLDINGS LLC,
a Delaware limited liability company
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


6


CEQUENT NEDERLAND HOLDINGS B.V.,
a company formed under the laws of the Netherlands
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

CEQUENT MEXICO HOLDINGS B.V.,
a company formed under the laws of the Netherlands
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

CEQUENT SALES COMPANY DE MEXICO, S. DE R.L. de C.V.,
a limited liability company formed under the laws of Mexico
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

CEQUENT ELECTRICAL PRODUCTS DE MEXICO, S. DE R.L. de
C.V., a limited liability company formed under the laws of Mexico


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GLOBAL DIGITAL LIMITED,
a company incorporated in England and Wales with company number
10932461

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA UK LIMITED, a company incorporated in England and
Wales with company number 05569242

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

HORIZON GLOBAL EUROPEAN HOLDINGS LIMITED, a company incorporated in England and Wales with company number 08480228


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


7



C.P. WITTER LIMITED, a company incorporated in England and Wales with company number 01362420


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

TEIJS HOLDING B.V., a Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


TEIJS B.V., a Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA HOLDING B.V., a Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA INVESTOR B.V., a Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA INNOVATION B.V., a Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

HORIZON SOURCING B.V., a Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


8


CEQUENT BRAZIL HOLDINGS COOPERATIEF W.A., a Dutch cooperative with statutory liability ( coöperatie met wettelijke aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

HGHK SERVICES C.V., a Dutch limited partnership ( commanditaire vennootschap )

Represented by its general partner:
Horizon Euro Finance

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HG GERMANY HOLDINGS GMBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE HOLDING GMBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE GMBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

HENRICHS BETEILIGUNGSGESELLSCHAFT MBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE BETEILIGUNGSGESELLSCHAFT MBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


9


HORIZON GLOBAL GERMANY GMBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


WESTFALIA AMERICAN HITCH, INC.,
a Delaware corporation


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON REAL FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


HORIZON GBP FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON SOURCING HOLDINGS LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


HORIZON EURO FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary




10


 
AGENT AND LENDERS :

BANK OF AMERICA, N.A.,
as Agent, a U.S. Lender, a UK Lender and UK Swingline Lender


By: /s/ Kindra M. Mullarky
Name: Kindra M. Mullarky
Title: Senior Vice President


BANK OF AMERICA, N.A. (acting through its Canada branch), as a Canadian Lender and Canadian Swingline Lender


By: /s/ Slywia Durkiewicz
Name: Slywia Durkiewicz
Title: Vice President


BANK OF AMERICA, N.A. (acting through its London branch), as UK Security Trustee


By: /s/ Kindra M. Mullarky
Name: Kindra M. Mullarky
Title: Senior Vice President


 
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a U.S. Lender


By: /s/ Laura Nickas
Name: Laura Nickas
Title: Authorized Signatory


WELLS FARGO CAPITAL FINANCE CORPORATION CANADA, as a Canadian Lender

By: /s/ David G. Phillips
Name: David G. Phillips
Title: Senior Vice President


WELLS FARGO BANK, NATIONAL ASSOCIATION, (London branch), as a UK Lender

By: /s/ Alison Powell
Name: Alison Powell
Title: Authorised Signatory

11


 
BANK OF MONTREAL, as a U.S. Lender and a UK Lender


By: /s/ Steve Friedlander
Name: Steve Friedlander
Title: Managing Director


BANK OF MONTREAL, Toronto Branch, as a Canadian Lender


By: /s/ Helen Alvarez-Hernandez
Name: Helen Alvarez-Hernandez
Title: Managing Director



12


SCHEDULE 1

The following entities will be dissolved and liquidated:

1.
Horizon Sourcing B.V., a Dutch private limited liability company
2.
Horizon Sourcing Holdings LLC, a Delaware limited liability company
3.
HGHK Services C.V., a Dutch limited partnership
4.
Westfalia American Hitch Inc., a Delaware corporation
5.
Westfalia UK Ltd., a company incorporated in England and Wales with company number 05569242
6.
TeIJs Holding B.V., a Dutch private limited liability company
7.
TeIJS B.V., a Dutch private limited liability company
8.
Terwa Holding B.V., a Dutch private limited liability company
9.
Terwa Innovation B.V., a Dutch private limited liability company
10.
Terwa Investors B.V., a Dutch private limited liability company
11.
Horizon Euro Finance LLC, a Delaware limited liability company
12.
Henrichs Beteiligungsgesellschaft mbH, a limited liability company incorporated under German law


13


SCHEDULE 2

Pledgor
Account No./IBAN
Name and Address of the Account Bank
Westfalia Automotive GmbH
DE12480700400322006801
Deutsche Bank
Gütersloh, Postfach 14 54
33244 Gütersloh
Westfalia Automotive GmbH
DE73478601250329900197
Volksbank Bielefeld- Gütersloh eG, Postfach 25 29, 33353 Rheda- Wiedenbruck
Westfalia Automotive GmbH
DE19478601250329900199
Volksbank Bielefeld- Gütersloh eG, Postfach 25 29, 33353 Rheda- Wiedenbruck
Westfalia Automotive GmbH
DE03478601250329900196
Volksbank Bielefeld- Gütersloh eG, Postfach 25 29, 33353 Rheda- Wiedenbruck



14


Exhibit 10.3
OMNIBUS CONSENT, WAIVER AND AMENDMENT

This OMNIBUS CONSENT, WAIVER AND AMENDMENT (this “ Consent ”) is dated as of June 11, 2019 and is entered into by and among HORIZON GLOBAL CORPORATION, a Delaware corporation (“ Borrower ”), the other Loan Parties party hereto, the financial institutions party to this Consent as Lenders, and CORTLAND CAPITAL MARKET SERVICES LLC, in its capacity as administrative agent and collateral agent (“ Agent ”).
RECITALS
WHEREAS, the Borrower, the other Loan Parties party hereto, the Agents and the Lenders have entered into that certain Second Lien Term Loan Credit Agreement, dated as of March 15, 2019 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “ Credit Agreement ”);
WHEREAS, the Borrower and the other Loan Parties have requested that the Agent and Lenders consent to the dissolution and liquidation of certain Subsidiaries identified on Schedule 1 attached hereto subject to the terms and conditions set forth below (the “ Proposed Reorganization ”);
WHEREAS, subject to the terms of this Consent, the Agent and Required Lenders have agreed to consent to the Proposed Reorganization;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the Loan Documents and this Consent, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Initially capitalized terms used but not otherwise defined in this Consent have the respective meanings set forth in the Credit Agreement.
ARTICLE II
RECITALS
The foregoing Recitals are hereby made as part of this Consent.

ARTICLE III
LIMITED CONSENT UNDER THE LOAN AGREEMENT
3.01 Limited Consent.
(a) The Loan Parties hereby acknowledge that the Proposed Reorganization is not permitted under Section 6.03 of the Credit Agreement. The Loan Parties have therefore requested that the Agent and Lenders consent to the consummation of the Proposed Reorganization. Subject to the occurrence of the Consent Effective Date, the Agent and the Required Lenders party hereto hereby consent to the consummation of the Proposed Reorganization and waive any Events of Default that would have otherwise resulted therefrom so long as (i) the assets, if any, of the entities listed on Schedule 1 , shall be distributed or otherwise transferred to a Loan Party that is not listed on Schedule 1 ; and (ii) the Borrower shall deliver to the Agent, as soon as available, and in any event not later than the next monthly financial statements due under Section 5.01(k) of the Credit Agreement after giving effect to any portion of the Proposed Reorganization, an updated organization chart which accurately shows the Borrower and Loan Parties after giving effect to implementing all or any portion of the Proposed Reorganization.
(b) The consents in this Section 3.01 shall be effective only to the extent specifically set forth herein and shall not (i) be construed as a waiver of any breach, Default or Event of Default nor as a waiver of any breach, Default or Event of Default of which the Agent and the Lenders have not been informed by the Loan Parties, (ii) affect the right of the Agent or the Lenders to demand compliance by the Loan Parties with all terms and conditions of the Loan Documents, except as specifically waived by this Consent, (iii) be deemed a waiver or consent to of any transaction or future action on the part of any Loan Party requiring the Agent’s or any Lender’s consent or approval under the Loan Documents, other than as expressly set forth herein, or (iv) except as consented to hereby, be deemed or construed to be a waiver or release of, or a limitation upon, the Agent’s or the Lenders’ exercise of any rights or remedies under the Loan Agreement or any other Loan Document, whether arising as a consequence of any Default or Event of Default which may now exist or otherwise, all such rights and remedies hereby being expressly reserved.




ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Each Loan Party hereby represents and warrants to each Lender and the Agent, as of the date hereof and as of the Consent Effective Date, as follows:

4.01 Authority . The execution, delivery and performance by such Loan Party of this Consent, and the transactions contemplated hereby or thereby, have been duly authorized by all necessary action, and this Consent is a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
4.02 Representations and Warranties . Each representation and warranty of such Loan Party in the Loan Documents is true and correct as of the date hereof, after giving effect to this Consent (except for representations and warranties that expressly relate to an earlier date and except for the representations and warranties set forth in Section 3.04(d) {No Material Adverse Change} and Section 3.15 {Solvency} of the Loan Agreement).
4.03 Governmental Approvals; No Conflicts . The execution, delivery, and performance by such Loan Party of this Consent (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, (b) will not violate any Applicable Law or regulation or the charter, by-laws or other organizational documents of any Loan Party or any Subsidiary of any Loan Party or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary of any Loan Party or their assets, or give rise to a right thereunder to require any payment to be made by any Loan Party or any Subsidiary of any Loan Party , except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any Subsidiary of any Loan Party, except Liens created under the Loan Documents and Liens permitted by Section 6.02 of the Loan Agreement, and (e) do not require any acknowledgement, agreement or consent under any indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary of any Loan Party or their assets, except for such acknowledgements, agreements and consents as have been obtained or made and are in full force and effect, and such acknowledgements, agreements or consents the failure of which to obtain could not reasonably be expected to result in a Material Adverse Effect.
4.04 No Defaults . No Default or Event of Default has occurred and is continuing.
4.05 Beneficial Ownership Certification . As of the date hereof, the information included in the Beneficial Ownership Certification (as defined in the Loan Agreement after giving effect to this Consent), if applicable, is true and correct in all respects.
4.06 Best Interest of the Borrower . That the Proposed Reorganization is in the best interests of the Loan Parties and is not materially disadvantageous to the Lenders.
ARTICLE V
[RESERVED]

ARTICLE VI
CONDITIONS PRECEDENT AND FURTHER ACTIONS

6.01 Conditions Precedent . The limited consent and waiver in Article III shall be deemed effective as of the date first set forth above when each of the following conditions precedent have been satisfied in form and substance satisfactory to the Agent and its counsel (such date, the “ Consent Effective Date ”):
(a) The Agent shall have received duly executed counterparts of this Consent which, when taken together, bear the authorized signatures of the Loan Parties, the Agent and the Required Lenders;
(b) The Agent shall have received fully executed consents from each of the required lenders under the ABL Credit Agreement and First Lien Term Loan Credit Agreement approving the Proposed Reorganization on such terms and conditions as Agent shall approve; and
(c) The Borrower shall have paid all fees and expenses (provided that legal fees required to be paid as a condition precedent to the occurrence of the Consent Effective Date shall be limited to such legal fees as to which Borrower have received a summary invoice) owed to and/or incurred by the Agent in connection with this Consent.

2


6.02 Further Actions . Each of the Loan Parties to this Consent agrees that at any time and from time to time upon the written request of the Agent, it will execute and deliver such further documents and do such further acts and things as the Agent may reasonably request in order to effect the purposes of this Consent.

ARTICLE VII
REAFFIRMATION

Each Loan Party hereby (i) acknowledges and consents to this Consent; (ii) reaffirms its obligations under the Guarantees, the Security Documents and the other Loan Documents; (iii) reaffirms the Liens granted by it pursuant to the Security Documents; and (iv) confirms that the Guarantees, the Security Documents and the other Loan Documents remain in full force and effect, without defense, offset or counterclaim. Although each Guarantor has been informed of the terms of the Consent, such Guarantor hereby confirms that it understands and agrees that the Agent and the Lenders have no duty to so notify such Guarantor or any other guarantor or to seek this or any future acknowledgment, consent or reaffirmation, and nothing contained herein shall create or imply any such duty as to any transaction, past or future.

ARTICLE VIII
MISCELLANEOUS

8.01 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of Loan Parties, Agent, Lenders, Secured Parties, and their respective successors and assigns. The successors and assigns of the Loan Parties include, without limitation, their respective receivers, trustees, and debtors-in-possession.
8.02 Further Assurances . Each Loan Party party hereto hereby agrees from time to time, as and when requested by the Agent or any Lender, to execute and deliver or cause to be executed and delivered all such documents, instruments and agreements and to take or cause to be taken such further or other action as the Agent or such Lender may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Consent and the other Loan Documents.
8.03 Loan Document . This Consent shall be deemed to be a “Loan Document” for all purposes under the Credit Agreement.
8.04 Governing Law . THIS CONSENT AND, UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, ALL CLAIMS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.
8.05 Consent to Forum.
(a) Forum . EACH LOAN PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK OR THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.09 OF THE LOAN AGREEMENT. A FINAL JUDGMENT IN ANY PROCEEDING OF ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR ANY OTHER MANNER PROVIDED BY APPLICABLE LAW.
(b) Other Jurisdictions . Nothing herein shall limit the right of Agent, any Security Trustee or any Lender to bring proceedings against any Loan Party (other than a Mexican Domiciled Grantor) in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law (except with respect to service of process to Mexican Domiciled Grantors). Nothing in this Consent shall be deemed to preclude enforcement by Agent or any Security Trustee of any judgment or order obtained in any forum or jurisdiction. Final judgment against a Loan Party in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction, including the country in which such Loan Party is domiciled, by suit on the judgment.
(c) Each Mexican Domiciled Grantors waives any right to any jurisdiction (other than as provided under Section 8.04 above and this Section 8.05) to which they may be entitled under Applicable Law, by reason of its present or future domicile, or otherwise, for the purposes of proceedings against or involving any of the Mexican Domiciled Grantors, and waives any objection to those courts on the ground of venue or forum non conveniens .

3


8.06 Severability . Wherever possible, each provision of this Consent shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of this Consent shall remain in full force and effect.
8.07 Entire Agreement . Time is of the essence of this Consent. This Consent constitutes the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
8.08 Execution in Counterparts . This Consent may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Consent shall become effective on the Consent Effective Date. Delivery of a signature page of this Consent by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
8.09 Costs and Expenses . The Borrower agrees to reimburse Agent for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors for advice, assistance, or other representation in connection with this Consent.
8.10 Reference to and Effect upon the Loan Documents . The Credit Agreement and the other Loan Documents shall continue in full force and effect in accordance with the provisions thereof, and are hereby ratified and confirmed. In each case except as expressly provided in this Consent, the execution, delivery and effectiveness of this Consent shall not operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Loan Documents, nor constitute a waiver or amendment of any provision of any of the Loan Documents. Upon the effectiveness of this Consent, each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended hereby.
8.11 Section Headings . The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.
Balance of Page Intentionally Left Blank
Signature Pages Follow





4


IN WITNESS WHEREOF, duly authorized representatives of the parties have executed this Consent and the parties have delivered this Consent, each as of the day and year first written above.
 
LOAN PARTIES:

HORIZON GLOBAL CORPORATION,
a Delaware corporation

By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: General Counsel, Chief Compliance Officer and Corporate Secretary

 
HORIZON GLOBAL AMERICAS INC.,
a Delaware corporation


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary
 

CEQUENT UK LIMITED, a company incorporated in England and Wales with company number 08081641


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


CEQUENT TOWING PRODUCTS OF CANADA LTD., a company formed under the laws of the Province of Ontario


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GLOBAL COMPANY LLC,
a Delaware limited liability company


By:   /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


HORIZON INTERNATIONAL HOLDINGS LLC,
a Delaware limited liability company
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary



5


CEQUENT NEDERLAND HOLDINGS B.V.,
a company formed under the laws of the Netherlands
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


CEQUENT MEXICO HOLDINGS B.V.,
a company formed under the laws of the Netherlands
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


CEQUENT SALES COMPANY DE MEXICO, S. DE R.L. de C.V.,
a limited liability company formed under the laws of Mexico
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


CEQUENT ELECTRICAL PRODUCTS DE MEXICO, S. DE R.L. de
C.V.,
a limited liability company formed under the laws of Mexico

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


HORIZON GLOBAL DIGITAL LIMITED,
a company incorporated in England and Wales with company number
10932461


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA UK LIMITED, a company incorporated in England and
Wales with company number 05569242


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


6




HORIZON GLOBAL EUROPEAN HOLDINGS LIMITED, a company
incorporated in England and Wales with company number 08480228


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

C.P. WITTER LIMITED, a company incorporated in England and Wales
with company number 01362420


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

TEIJS HOLDING B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TEIJS B.V., a Dutch private limited liability company ( besloten
vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA HOLDING B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA INVESTOR B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


TERWA INNOVATION B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


7


HORIZON SOURCING B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


CEQUENT BRAZIL HOLDINGS COOPERATIEF W.A., a Dutch
cooperative with statutory liability ( coöperatie met wettelijke
aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

HGHK SERVICES C.V., a Dutch limited partnership ( commanditaire
vennootschap )

Represented by its general partner:
Horizon Euro Finance

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HG GERMANY HOLDINGS GMBH, a limited liability company
incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


WESTFALIA-AUTOMOTIVE HOLDING GMBH, a limited liability
company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE GMBH, a limited liability company
incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


8



HENRICHS BETEILIGUNGSGESELLSCHAFT MBH, a limited
liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE BETEILIGUNGSGESELLSCHAFT
MBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

HORIZON GLOBAL GERMANY GMBH, a limited liability company
incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


WESTFALIA AMERICAN HITCH, INC.,
a Delaware corporation


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON REAL FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GBP FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON SOURCING HOLDINGS LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary



9


HORIZON EURO FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary



 
AGENT AND LENDERS :

CORTLAND CAPITAL MARKET SERVICES LLC,
as Administrative Agent and Collateral Agent


By: /s/ Matthew Trybula
Name: Matthew Trybula
Title: Associate Counsel


 
CORRE PARTNERS MANAGEMENT, L.L.C., as a Lender Representative


By: /s/ John Barrettt
Name: John Barrett
Title: Authorized Signatory


 
CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP, as a Lender


By: /s/ John Barrettt
Name: John Barrett
Title: Authorized Signatory


 
CORRE HORIZON FUND, LP, as a Lender


By: /s/ John Barrettt
Name: John Barrett
Title: Authorized Signatory






10


SCHEDULE 1

The following entities will be dissolved and liquidated:

1.
Horizon Sourcing B.V., a Dutch private limited liability company
2.
Horizon Sourcing Holdings LLC, a Delaware limited liability company
3.
HGHK Services C.V., a Dutch limited partnership
4.
Westfalia American Hitch Inc., a Delaware corporation
5.
Westfalia UK Ltd., a company incorporated in England and Wales with company number 05569242
6.
TeIJs Holding B.V., a Dutch private limited liability company
7.
TeIJS B.V., a Dutch private limited liability company
8.
Terwa Holding B.V., a Dutch private limited liability company
9.
Terwa Innovation B.V., a Dutch private limited liability company
10.
Terwa Investors B.V., a Dutch private limited liability company
11.
Horizon Euro Finance LLC, a Delaware limited liability company
12.
Henrichs Beteiligungsgesellschaft mbH, a limited liability company incorporated under
German law


11


Exhibit 10.4
OMNIBUS CONSENT, WAIVER AND AMENDMENT

This OMNIBUS CONSENT, WAIVER AND AMENDMENT (this “ Consent ”) is dated as of June 11, 2019 and is entered into by and among HORIZON GLOBAL CORPORATION, a Delaware corporation (“ Borrower ”), the other Loan Parties party hereto, the financial institutions party to this Consent as Lenders, and JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent and collateral agent (“ Agent ”).
RECITALS
WHEREAS, the Borrower, the other Loan Parties party hereto, the Agent and the Lenders have entered into that certain Term Loan Credit Agreement, dated as of June 30, 2015 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “ Credit Agreement ”);
WHEREAS, the Borrower and the other Loan Parties have requested that the Agent and Lenders consent to the dissolution and liquidation of certain Subsidiaries identified on Schedule 1 attached hereto subject to the terms and conditions set forth below (the “ Proposed Reorganization ”);
WHEREAS, subject to the terms of this Consent, the Agent and Required Lenders have agreed to consent to the Proposed Reorganization;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the Loan Documents and this Consent, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Initially capitalized terms used but not otherwise defined in this Consent have the respective meanings set forth in the Credit Agreement.
ARTICLE II
RECITALS

The foregoing Recitals are hereby made as part of this Consent.
ARTICLE III
LIMITED CONSENT UNDER THE LOAN AGREEMENT
3.01 Limited Consent .
(a) The Loan Parties hereby acknowledge that the Proposed Reorganization is not permitted under Section 6.03 of the Credit Agreement. The Loan Parties have therefore requested that the Agent and Lenders consent to the consummation of the Proposed Reorganization. Subject to the occurrence of the Consent Effective Date, the Agent and the Required Lenders party hereto hereby consent to the consummation of the Proposed Reorganization and waive any Events of Default that would have otherwise resulted therefrom so long as (i) the assets, if any, of the entities listed on Schedule 1 , shall be distributed or otherwise transferred to a Loan Party that is not listed on Schedule 1 ; and (ii) the Borrower shall deliver to the Agent, as soon as available, and in any event not later than the next monthly financial statements due under Section 5.01(k) of the Credit Agreement after giving effect to any portion of the Proposed Reorganization, an updated organization chart which accurately shows the Borrower and Loan Parties after giving effect to implementing all or any portion of the Proposed Reorganization.
(b) The consents in this Section 3.01 shall be effective only to the extent specifically set forth herein and shall not (i) be construed as a waiver of any breach, Default or Event of Default nor as a waiver of any breach, Default or Event of Default of which the Agent and the Lenders have not been informed by the Loan Parties, (ii) affect the right of the Agent or the Lenders to demand compliance by the Loan Parties with all terms and conditions of the Loan Documents, except as specifically waived by this Consent, (iii) be deemed a waiver or consent to of any transaction or future action on the part of any Loan Party requiring the Agent’s or any Lender’s consent or approval under the Loan Documents, other than as expressly set forth herein, or (iv) except as consented to hereby, be deemed or construed to be a waiver or release of, or a limitation upon, the Agent’s or the Lenders’ exercise of any rights or remedies under the Loan Agreement or any other Loan Document, whether arising as a consequence of any Default or Event of Default which may now exist or otherwise, all such rights and remedies hereby being expressly reserved.



ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Each Loan Party hereby represents and warrants to each Lender and the Agent, as of the date hereof and as of the Consent Effective Date, as follows:
4.01 Authority . The execution, delivery and performance by such Loan Party of this Consent, and the transactions contemplated hereby or thereby, have been duly authorized by all necessary action, and this Consent is a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
4.02 Representations and Warranties . Each representation and warranty of such Loan Party in the Loan Documents is true and correct as of the date hereof, after giving effect to this Consent (except for representations and warranties that expressly relate to an earlier date and except for the representations and warranties set forth in Section 3.04(d) {No Material Adverse Change} and Section 3.15 {Solvency} of the Loan Agreement).
4.03 Governmental Approvals; No Conflicts . The execution, delivery, and performance by such Loan Party of this Consent (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, (b) will not violate any Applicable Law or regulation or the charter, by-laws or other organizational documents of any Loan Party or any Subsidiary of any Loan Party or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary of any Loan Party or their assets, or give rise to a right thereunder to require any payment to be made by any Loan Party or any Subsidiary of any Loan Party , except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any Subsidiary of any Loan Party, except Liens created under the Loan Documents and Liens permitted by Section 6.02 of the Loan Agreement, and (e) do not require any acknowledgement, agreement or consent under any indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary of any Loan Party or their assets, except for such acknowledgements, agreements and consents as have been obtained or made and are in full force and effect, and such acknowledgements, agreements or consents the failure of which to obtain could not reasonably be expected to result in a Material Adverse Effect.
4.04 No Defaults . No Default or Event of Default has occurred and is continuing.
4.05 Beneficial Ownership Certification . As of the date hereof, the information included in the Beneficial Ownership Certification (as defined in the Loan Agreement after giving effect to this Consent), if applicable, is true and correct in all respects.
4.06 Best Interest of the Borrower . That the Proposed Reorganization is in the best interests of the Loan Parties and is not materially disadvantageous to the Lenders.
ARTICLE V
[RESERVED]

ARTICLE VI
CONDITIONS PRECEDENT AND FURTHER ACTIONS

6.01 Conditions Precedent . The limited consent and waiver in Article III shall be deemed effective as of the date first set forth above when each of the following conditions precedent have been satisfied in form and substance satisfactory to the Agent and its counsel (such date, the “ Consent Effective Date ”):
(a) The Agent shall have received duly executed counterparts of this Consent which, when taken together, bear the authorized signatures of the Loan Parties, the Agent and the Required Lenders;
(b) The Agent shall have received fully executed consents from each of the required lenders under the ABL Credit Agreement and Junior Credit Agreement approving the Proposed Reorganization on such terms and conditions as Agent shall approve; and
(c) The Borrower shall have paid all fees and expenses (provided that legal fees required to be paid as a condition precedent to the occurrence of the Consent Effective Date shall be limited to such legal fees as to which Borrower have received a summary invoice) owed to and/or incurred by the Agent in connection with this Consent.
6.02 Further Actions . Each of the Loan Parties to this Consent agrees that at any time and from time to time upon the written request of the Agent, it will execute and deliver such further documents and do such further acts and things as the Agent may reasonably request in order to effect the purposes of this Consent.

2


ARTICLE VII
REAFFIRMATION
Each Loan Party hereby (i) acknowledges and consents to this Consent; (ii) reaffirms its obligations under the Guarantees, the Security Documents and the other Loan Documents; (iii) reaffirms the Liens granted by it pursuant to the Security Documents; and (iv) confirms that the Guarantees, the Security Documents and the other Loan Documents remain in full force and effect, without defense, offset or counterclaim. Although each Guarantor has been informed of the terms of the Consent, such Guarantor hereby confirms that it understands and agrees that the Agent and the Lenders have no duty to so notify such Guarantor or any other guarantor or to seek this or any future acknowledgment, consent or reaffirmation, and nothing contained herein shall create or imply any such duty as to any transaction, past or future.
ARTICLE VIII
MISCELLANEOUS
8.01 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of Loan Parties, Agent, Lenders, Secured Parties, and their respective successors and assigns. The successors and assigns of the Loan Parties include, without limitation, their respective receivers, trustees, and debtors-in-possession.
8.02 Further Assurances . Each Loan Party party hereto hereby agrees from time to time, as and when requested by the Agent or any Lender, to execute and deliver or cause to be executed and delivered all such documents, instruments and agreements and to take or cause to be taken such further or other action as the Agent or such Lender may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Consent and the other Loan Documents.
8.03 Loan Document . This Consent shall be deemed to be a “Loan Document” for all purposes under the Credit Agreement.
8.04 Governing Law . THIS CONSENT AND, UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, ALL CLAIMS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.
8.05 Consent to Forum.
(a) Forum . EACH LOAN PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK OR THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.09 OF THE LOAN AGREEMENT. A FINAL JUDGMENT IN ANY PROCEEDING OF ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR ANY OTHER MANNER PROVIDED BY APPLICABLE LAW.
(b) Other Jurisdictions . Nothing herein shall limit the right of Agent, any Security Trustee or any Lender to bring proceedings against any Loan Party (other than a Mexican Domiciled Grantor) in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law (except with respect to service of process to Mexican Domiciled Grantors). Nothing in this Consent shall be deemed to preclude enforcement by Agent or any Security Trustee of any judgment or order obtained in any forum or jurisdiction. Final judgment against a Loan Party in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction, including the country in which such Loan Party is domiciled, by suit on the judgment.
(c) Each Mexican Domiciled Grantors waives any right to any jurisdiction (other than as provided under Section 8.04 above and this Section 8.05) to which they may be entitled under Applicable Law, by reason of its present or future domicile, or otherwise, for the purposes of proceedings against or involving any of the Mexican Domiciled Grantors, and waives any objection to those courts on the ground of venue or forum non conveniens .
8.06 Severability . Wherever possible, each provision of this Consent shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of this Consent shall remain in full force and effect.
8.07 Entire Agreement . Time is of the essence of this Consent. This Consent constitutes the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

3


8.08 Execution in Counterparts . This Consent may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Consent shall become effective on the Consent Effective Date. Delivery of a signature page of this Consent by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
8.09 Costs and Expenses . The Borrower agrees to reimburse Agent for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors for advice, assistance, or other representation in connection with this Consent.
8.10 Reference to and Effect upon the Loan Documents . The Credit Agreement and the other Loan Documents shall continue in full force and effect in accordance with the provisions thereof, and are hereby ratified and confirmed. In each case except as expressly provided in this Consent, the execution, delivery and effectiveness of this Consent shall not operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Loan Documents, nor constitute a waiver or amendment of any provision of any of the Loan Documents. Upon the effectiveness of this Consent, each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended hereby.
8.11 Section Headings . The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

Balance of Page Intentionally Left Blank
Signature Pages Follow






4


IN WITNESS WHEREOF, duly authorized representatives of the parties have executed this Consent and the parties have delivered this Consent, each as of the day and year first written above.
 
LOAN PARTIES:

HORIZON GLOBAL CORPORATION,
a Delaware corporation

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: General Counsel, Chief Compliance Officer and Corporate Secretary

 
HORIZON GLOBAL AMERICAS INC.,
a Delaware corporation


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary
 

CEQUENT UK LIMITED, a company incorporated in England and Wales with company number 08081641


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


CEQUENT TOWING PRODUCTS OF CANADA LTD., a company formed under the laws of the Province of Ontario


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GLOBAL COMPANY LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


HORIZON INTERNATIONAL HOLDINGS LLC,
a Delaware limited liability company
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary



5


CEQUENT NEDERLAND HOLDINGS B.V.,
a company formed under the laws of the Netherlands
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


CEQUENT MEXICO HOLDINGS B.V.,
a company formed under the laws of the Netherlands
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


CEQUENT SALES COMPANY DE MEXICO, S. DE R.L. de C.V.,
a limited liability company formed under the laws of Mexico
By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


CEQUENT ELECTRICAL PRODUCTS DE MEXICO, S. DE R.L. de
C.V., a limited liability company formed under the laws of Mexico

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GLOBAL DIGITAL LIMITED,a company incorporated in
England and Wales with company number 10932461


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA UK LIMITED, a company incorporated in England and
Wales with company number 05569242


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

HORIZON GLOBAL EUROPEAN HOLDINGS LIMITED, a company
incorporated in England and Wales with company number 08480228


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


6




C.P. WITTER LIMITED, a company incorporated in England and Wales
with company number 01362420


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

TEIJS HOLDING B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TEIJS B.V., a Dutch private limited liability company ( besloten
vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA HOLDING B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA INVESTOR B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

TERWA INNOVATION B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


HORIZON SOURCING B.V., a Dutch private limited liability company
( besloten vennootschap met beperkte aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory


7


CEQUENT BRAZIL HOLDINGS COOPERATIEF W.A., a Dutch
cooperative with statutory liability ( coöperatie met wettelijke
aansprakelijkheid )


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Authorized Signatory

HGHK SERVICES C.V., a Dutch limited partnership ( commanditaire
ennootschap )

Represented by its general partner:
Horizon Euro Finance

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HG GERMANY HOLDINGS GMBH, a limited liability company
incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE HOLDING GMBH, a limited liability
company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE GMBH, a limited liability company
incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

HENRICHS BETEILIGUNGSGESELLSCHAFT MBH, a limited
liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director

WESTFALIA-AUTOMOTIVE BETEILIGUNGSGESELLSCHAFT
MBH, a limited liability company incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


8



HORIZON GLOBAL GERMANY GMBH, a limited liability company
incorporated under German law


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Director


WESTFALIA AMERICAN HITCH, INC.,
a Delaware corporation


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON REAL FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON GBP FINANCE LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary

HORIZON SOURCING HOLDINGS LLC,
a Delaware limited liability company


By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary


HORIZON EURO FINANCE LLC,
a Delaware limited liability company

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: Vice President and Secretary



9


 
AGENT:

JPMORGAN CHASE BANK, N.A.,
as Agent


By: /s/ Krys Szremski
Name: Krys Szremski
Title: Executive Director


 
LAPETUS CAPITAL II LLC,
as a Lender


By: /s/ Neil Mahajan
Name: Neil Mahajan
Title: Authorized Signatory


 
LAPETUS CAPITAL III LLC,
as a Lender


By: /s/ Neil Mahajan
Name: Neil Mahajan
Title: Authorized Signatory
 
COMMONWEALTH LAND TITLE INSURANCE COMPANY,
 as a Lender


By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
Title: Authorized Signatory
 
FIDELITY NATIONAL TITLE INSURANCE COMPANY, as a Lender


By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
Title: Authorized Signatory
 
NEWPORT GLOBAL OPPORTUNITIES FUND I-A LP,
as a Lender


By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
Title: Chief Operating Officer
 
NEWPORT GLOBAL CREDIT FUND (MASTER) LP,
as a Lender


By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
Title: Chief Operating Officer






10


 
KCOF Management VIII, L.L.C.,
as a Lender


By: /s/ Albert Scheer
Name: Albert Scheer
Title:Vice President

 
Crown Point CLO II Ltd.
Crown Point CLO III, Ltd.,
as a Lender


By: /s/ Sajedur Rahman
Name: Sajedur Rahman
Title: Authorized Signatory

 
CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP,
as a Lender


By: /s/ John Barrett
Name: John Barrett
Title:Authorized Signatory

 
CORRE OPPORTUNITIES II MASTER FUND, LP,
as a Lender


By: /s/ John Barrett
Name: John Barrett
Title:Authorized Signatory

 
CORRE HORIZON FUND, LP,
as a Lender


By: /s/ John Barrett
Name: John Barrett
Title:Authorized Signatory


11


 
ATRIUM VIII
MADISON PARK FUNDING X, LTD.
MADISON PARK FUNDING XI, LTD.
MADISON PARK FUNDING XII, LTD.
MADISON PARK FUNDING XIII, LTD.
MADISON PARK FUNDING XIV, LTD.
MADISON PARK FUNDING XV, LTD.
MADISON PARK FUNDING XVI, LTD.
MADISON PARK FUNDING XVII, LTD.
MADISON PARK FUNDING XVIII, LTD.
MADISON PARK FUNDING XX, LTD.
MADISON PARK FUNDING XXI, LTD.
MADISON PARK FUNDING XXII, LTD.
MADISON PARK FUNDING XL, LTD.
MADISON PARK FUNDING XLI, LTD.
MADISON PARK FUNDING XLIII, LTD.
ONE ELEVEN FUNDING I, LTD.
ONE ELEVEN FUNDING II, LTD.

By: Credit Suisse Asset Management, LLC, as portfolio manager

BENTHAM HIGH YIELD FUND

By: Credit Suisse Asset Management, LLC as agent (sub-advisor) for Challenger Investment Services Limited, the Responsible Entity for Bentham High Yield Fund

CREDIT SUISSE FLOATING RATE HIGH INCOME FUND
CREDIT SUISSE STRATEGIC INCOME FUND

By: Credit Suisse Management, LLC, as investment advisor

THE CITY OF NEW YORK GROUP TRUST

By: Credit Suisse Management, LLC, as its manager

as Lenders


By: /s/ Thomas Flannery
Name: Thomas Flannery
Title: Managing Director


12


 
CREDIT SUISSE NOVA (LUX)

By: Credit Suisse Asset Management, LLC or Credit Suisse Asset Management Limited, each as a Co-Investment Adviser to Credit Suisse Fund Management S.A., management company for Credit Suisse Nova (Lux)

MADISON PARK FUNDING XIX, LTD.
MADISON PARK FUNDING XXIII, LTD.
MADISON PARK FUNDING XXIV, LTD.
MADISON PARK FUNDING XXV, LTD.

By: Credit Suisse Asset Management, LLC, as collateral manager

DOLLAR SENIOR LOAN FUND, LTD. DOLLAR SENIOR LOAN FUND II, LTD. By Credit Suisse Asset Management, LLC, as investment manager

DAVINCI REINSURANCE LTD.

By: Credit Suisse Asset Management, LLC, as investment manager for DaVinci Reinsurance Holdings, Ltd., the owner of DaVinci Reinsurance Ltd.

KP FIXED INCOME FUND

By: Credit Suisse Asset Management, LLC, as Sub-Adviser for Callan Associates Inc., the Adviser for the KP Funds, the Trust for KP Fixed Income Fund

as Lenders


By: /s/ Thomas Flannery
Name: Thomas Flannery
Title: Managing Director



13


SCHEDULE 1

The following entities will be dissolved and liquidated:

1.
Horizon Sourcing B.V., a Dutch private limited liability company
2.
Horizon Sourcing Holdings LLC, a Delaware limited liability company
3.
HGHK Services C.V., a Dutch limited partnership
4.
Westfalia American Hitch Inc., a Delaware corporation
5.
Westfalia UK Ltd., a company incorporated in England and Wales with company number 05569242
6.
TeIJs Holding B.V., a Dutch private limited liability company
7.
TeIJS B.V., a Dutch private limited liability company
8.
Terwa Holding B.V., a Dutch private limited liability company
9.
Terwa Innovation B.V., a Dutch private limited liability company
10.
Terwa Investors B.V., a Dutch private limited liability company
11.
Horizon Euro Finance LLC, a Delaware limited liability company
12.
Henrichs Beteiligungsgesellschaft mbH, a limited liability company incorporated under
German law

14


Exhibit 31.1
Certification
Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
(Chapter 63, Title 18 U.S.C. Section 1350(A) and (B))

I, Carl S. Bizon, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Horizon Global Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 8, 2019
 
/s/  CARL S. BIZON
 
Carl S. Bizon
Chief Executive Officer





Exhibit 31.2
Certification
Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
(Chapter 63, Title 18 U.S.C. Section 1350(A) and (B))

I, Jamie G. Pierson, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Horizon Global Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 8, 2019
 
/s/ JAMIE G. PIERSON
 
Jamie G. Pierson
Chief Financial Officer





Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Horizon Global Corporation (the "Company") on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carl S. Bizon, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2019
 
/s/  CARL S. BIZON
 
Carl S. Bizon
Chief Executive Officer





Exhibit 32.2
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Horizon Global Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jamie G. Pierson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that to the best of my knowledge:
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2019
 
/s/  JAMIE G. PIERSON
 
Jamie G. Pierson
Chief Financial Officer