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 September 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 November 7, 2019, the number of outstanding shares of the Registrant’s common stock was 25,387,388 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 and restrictions 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 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; or the Company’s ability to maintain compliance with the New York Stock Exchange’s continued listing standards 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
(unaudited—dollars in thousands)

 
September 30,
2019

December 31,
2018
Assets
 

 

Current assets:
 

 

Cash and cash equivalents
 
$
16,360


$
27,650

Receivables, net of allowance for doubtful accounts of approximately $5.0 million and $4.8 million at September 30, 2019 and December 31, 2018, respectively
 
93,480


95,170

Inventories
 
141,150


152,200

Prepaid expenses and other current assets
 
9,480


8,270

Current assets held-for-sale
 
—

 
36,080

Total current assets
 
260,470

 
319,370

Property and equipment, net
 
78,670


86,500

Operating lease right-of-use assets
 
56,170

 
—

Goodwill
 
4,200


4,500

Other intangibles, net
 
60,350


69,400

Deferred income taxes
 
440

 
660

Non-current assets held-for-sale
 
—

 
34,790

Other assets
 
5,700


6,130

Total assets
 
$
466,000

 
$
521,350

Liabilities and Shareholders' Equity
 

 

Current liabilities:
 

 

Short-term borrowings and current maturities, long-term debt
 
$
24,270


$
13,860

Accounts payable
 
79,440


102,350

Short-term operating lease liabilities
 
9,850

 
—

Current liabilities held-for-sale
 
—

 
28,080

Accrued liabilities
 
53,020


58,520

Total current liabilities
 
166,580

 
202,810

Gross long-term debt
 
214,930

 
382,220

Unamortized debt issuance costs and discount
 
(34,200
)
 
(31,570
)
Long-term debt
 
180,730

 
350,650

Deferred income taxes
 
8,280


12,620

Long-term operating lease liabilities
 
50,890

 
—

Non-current liabilities held-for-sale
 
—

 
1,740

Other long-term liabilities
 
20,770


19,750

Total liabilities
 
427,250

 
587,570

Contingencies (See Note 13)
 


 


Shareholders' equity (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; 26,073,894 shares issued and 25,387,388 outstanding at September 30, 2019, and 25,866,747 shares issued and 25,180,241 outstanding at December 31, 2018
 
250

 
250

Common stock warrants exercisable for 6,487,674 shares issued and outstanding at September 30, 2019; none issued and outstanding at December 31, 2018
 
10,720

 
—

Paid-in capital
 
162,760

 
160,990

Treasury stock, at cost: 686,506 shares at September 30, 2019 and December 31, 2018
 
(10,000
)
 
(10,000
)
Accumulated deficit
 
(110,390
)
 
(222,720
)
Accumulated other comprehensive (loss) income
 
(11,250
)
 
7,760

Total Horizon Global shareholders' equity (deficit)
 
42,090

 
(63,720
)
Noncontrolling interest
 
(3,340
)
 
(2,500
)
Total shareholders' equity (deficit)
 
38,750

 
(66,220
)
Total liabilities and shareholders' equity
 
$
466,000

 
$
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
September 30,
 
Nine months ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Net sales
 
$
177,850

 
$
194,030

 
$
548,170

 
$
576,250

Cost of sales
 
(149,560
)
 
(159,500
)
 
(460,010
)
 
(472,120
)
Gross profit
 
28,290

 
34,530

 
88,160

 
104,130

Selling, general and administrative expenses
 
(41,100
)
 
(37,680
)
 
(113,140
)
 
(134,210
)
Impairment of goodwill and intangible assets
 
—

 
(26,640
)
 
—

 
(125,770
)
Net gain (loss) on dispositions of property and equipment
 
50

 
(110
)
 
1,500

 
(520
)
Operating loss
 
(12,760
)
 
(29,900
)
 
(23,480
)
 
(156,370
)
Other expense, net
 
(1,640
)
 
(1,040
)
 
(6,610
)
 
(7,410
)
Interest expense
 
(24,120
)
 
(7,590
)
 
(50,270
)
 
(19,580
)
Loss from continuing operations before income tax
 
(38,520
)
 
(38,530
)
 
(80,360
)
 
(183,360
)
Income tax benefit
 
1,020

 
1,420

 
2,330

 
15,770

Net loss from continuing operations
 
(37,500
)
 
(37,110
)
 
(78,030
)
 
(167,590
)
Income from discontinued operations, net of tax
 
182,750

 
4,110

 
189,520

 
9,670

Net income (loss)
 
145,250

 
(33,000
)
 
111,490


(157,920
)
Less: Net loss attributable to noncontrolling interest
 
(260
)
 
(240
)
 
(840
)
 
(720
)
Net income (loss) attributable to Horizon Global
 
$
145,510

 
$
(32,760
)
 
$
112,330

 
$
(157,200
)
Net income (loss) per share attributable to Horizon Global:
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(1.47
)
 
$
(1.47
)
 
$
(3.05
)
 
$
(6.67
)
Discontinued operations
 
7.21

 
0.16

 
7.50

 
0.39

Total
 
5.74

 
(1.31
)
 
4.45

 
(6.28
)
Diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
(1.47
)
 
(1.47
)
 
(3.05
)
 
(6.67
)
Discontinued operations
 
7.21

 
0.16

 
7.50

 
0.39

Total
 
5.74

 
(1.31
)
 
4.45

 
(6.28
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
25,329,492

 
25,101,847

 
25,267,310

 
25,028,072

Diluted
 
25,329,492

 
25,101,847

 
25,267,310

 
25,028,072



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
September 30,
 
Nine months ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income (loss)
 
$
145,250

 
$
(33,000
)
 
$
111,490

 
$
(157,920
)
Other comprehensive loss, net of tax:
 
 
 
 
 
 
 
 
Foreign currency translation and other
 
(1,320
)
 
(680
)
 
(30
)
 
(4,400
)
Derivative instruments
 
(440
)
 
640

 
(1,720
)
 
2,960

Total other comprehensive loss, net of tax
 
(1,760
)
 
(40
)
 
(1,750
)
 
(1,440
)
Total comprehensive income (loss)
 
143,490

 
(33,040
)
 
109,740

 
(159,360
)
Less: Comprehensive loss attributable to noncontrolling interest
 
(250
)
 
(240
)
 
(830
)
 
(790
)
Comprehensive income (loss) attributable to Horizon Global
 
$
143,740

 
$
(32,800
)
 
$
110,570

 
$
(158,570
)


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)


Nine months ended
September 30,


2019

2018
Cash Flows from Operating Activities:




Net income (loss)
 
$
111,490

 
$
(157,920
)
Less: Net income from discontinued operations
 
189,520

 
9,670

Net loss from continuing operations
 
(78,030
)
 
(167,590
)
 
 

 

Adjustments to reconcile net loss from continued operations to net cash used for operating activities:




Net (gain) loss on dispositions of property and equipment

(1,500
)
 
520

Depreciation

11,980

 
9,410

Amortization of intangible assets

4,800

 
5,640

Write off of operating lease assets
 
4,250

 
—

Impairment of goodwill and intangible assets

—

 
125,770

Amortization of original issuance discount and debt issuance costs

18,570

 
6,050

Deferred income taxes

(3,390
)
 
(3,370
)
Non-cash compensation expense

1,790

 
1,430

Paid-in-kind interest

7,620

 
—

Increase in receivables

(4,680
)
 
(31,950
)
Decrease in inventories

1,920

 
5,630

(Increase) decrease in prepaid expenses and other assets

(2,770
)
 
1,150

Decrease in accounts payable and accrued liabilities

(15,560
)
 
(27,450
)
Other, net

(10,800
)
 
220

Net cash used for operating activities for continuing operations
 
(65,800
)
 
(74,540
)
Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(8,460
)
 
(9,660
)
Net proceeds from sale of business
 
214,570

 
—

Net proceeds from disposition of property and equipment
 
1,470

 
(280
)
Net cash provided by (used for) investing activities for continuing operations
 
207,580

 
(9,940
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on credit facilities
 
13,780

 
12,550

Repayments of borrowings on credit facilities
 
(6,520
)
 
(14,390
)
Proceeds from Second Lien Term Loan, net of issuance costs
 
35,520

 
45,430

Repayments of borrowings on First Lien Term Loan, inclusive of transaction costs
 
(173,430
)
 
(6,490
)
Proceeds from ABL Revolving Debt, net of issuance costs
 
68,790

 
72,430

Repayments of borrowings on ABL Revolving Debt
 
(112,510
)
 
(34,830
)
Proceeds from issuance of Series A Preferred Stock
 
5,340

 
—

Proceeds from issuance of Warrants
 
5,380

 
—

Other, net
 
(10
)
 
(300
)
Net cash (used for) provided by financing activities for continuing operations
 
(163,660
)
 
74,400

Discontinued Operations:
 
 
 
 
Net cash provided by discontinued operating activities
 
11,430

 
8,500

Net cash used for discontinued investing activities
 
(1,120
)
 
(720
)
Net cash provided by (used for) discontinued financing activities
 
—

 
—

Net cash provided by discontinued operations
 
10,310

 
7,780

Effect of exchange rate changes on cash
 
280

 
40

Cash and Cash Equivalents:
 
 
 
 
Decrease for the period
 
(11,290
)
 
(2,260
)
At beginning of period
 
27,650

 
29,570

At end of period
 
$
16,360


$
27,310

Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
19,730

 
$
13,430

Cash paid for taxes
 
$
480

 
$
2,170


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 as of June 30, 2019
 
250

 
10,720

 
161,920

 
(10,000
)
 
(255,900
)
 
7,770

 
(85,240
)
 
(3,080
)
 
(88,320
)
Net income
 
—

 
—

 
—

 
—

 
145,510

 
—

 
145,510

 
(260
)
 
145,250

Other comprehensive loss, net of tax
 
—

 
—

 
—

 
—

 
—

 
(1,760
)
 
(1,760
)
 
—

 
(1,760
)
Non-cash compensation expense
 
—

 
—

 
840

 
—

 
—

 
—

 
840

 
—

 
840

Amounts reclassified from AOCI
 
—

 
—

 
—

 
—

 
—

 
(17,260
)
 
(17,260
)
 
—

 
(17,260
)
Balance at September 30, 2019
 
$
250


$
10,720


$
162,760


$
(10,000
)

$
(110,390
)

$
(11,250
)

$
42,090


$
(3,340
)

$
38,750

 
 
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 December 31, 2017, as reported
 
$
250

 
$
—

 
$
159,490

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

 
$
141,890

 
$
(1,490
)
 
$
140,400

Impact of ASU 2018-02
 
—

 
—

 
340

 
—

 
(900
)
 
560

 
—

 
—

 
—

Balance at January 1, 2018, as restated
 
250


—


159,830


(10,000
)

(18,760
)

10,570


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


—


160,350


(10,000
)

(76,270
)

15,250

 
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

 
—

 
160,830

 
(10,000
)
 
(143,200
)
 
9,240

 
17,120

 
(2,040
)
 
15,080

Net loss
 
—

 
—

 
—

 
—

 
(32,760
)
 
—

 
(32,760
)
 
(240
)
 
(33,000
)
Other comprehensive income, net of tax
 
—

 
—

 
—

 
—

 
—

 
(40
)
 
(40
)
 
—

 
(40
)
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations
 
—

 
—

 
(90
)
 
—

 
—

 
—

 
(90
)
 
—

 
(90
)
Non-cash compensation expense
 
—

 
—

 
220

 
—

 
—

 
—

 
220

 
—

 
220

Balance at September 30, 2018
 
$
250

 
$
—

 
$
160,960

 
$
(10,000
)
 
$
(175,960
)
 
$
9,200

 
$
(15,550
)
 
$
(2,280
)
 
$
(17,830
)

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

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



1. 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. As a result of the Company’s sale of its Horizon Asia-Pacific operating segment (“APAC”), the Company’s operating segments are Horizon Americas and Horizon Europe-Africa. See Note 17, “Segment Information,” for further information on each of the Company’s operating segments. Historical information has been retrospectively adjusted to reflect the classification of APAC as discontinued operations. Discontinued operations are further discussed in Note 3, “Discontinued Operations”.
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

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


Company’s condensed consolidated balance sheet, but did not have a material impact on its condensed consolidated statements of operations 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 12 “Leases,” for the impact of the adoption which resulted in the recognition of ROU assets and corresponding lease liabilities.
3. Discontinued Operations
On September 19, 2019, the Company completed the sale of its subsidiaries that comprised APAC to Hayman Pacific BidCo Pty Ltd., an affiliate of Pacific Equity Partners, for $209.6 million in net cash proceeds after payment of transaction costs, in a net debt free sale. The sale resulted in the recognition of a gain of $180.5 million, of which $17.3 million was related to the cumulative translation adjustment that was reclassified to earnings, which is reflected within the income from discontinued operations, net of taxes line of the condensed consolidated statement of operations.
The Company classified APAC assets and liabilities as held-for-sale as of December 31, 2018 in the accompanying condensed consolidated balance sheet and has classified APAC’s operating results and the gain on the sale as discontinued operations in the accompanying condensed consolidated statement of operations for all periods presented in accordance with ASC 205, “Discontinued Operations.” Prior to being classified as held-for-sale, APAC was included as a separate operating segment.
The following tables presents the Company’s results from discontinued operations:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
 
(dollars in thousands)
Net sales
 
$
29,750

 
$
33,810

 
$
92,300

 
$
101,760

Cost of sales
 
(22,250
)
 
(24,720
)
 
(68,530
)
 
(76,250
)
Selling, general and administrative expenses
 
(3,050
)
 
(3,130
)
 
(9,580
)
 
(10,510
)
Interest expense
 
(80
)
 
(60
)
 
(310
)
 
(210
)
Other expense. net
 
(210
)
 
(470
)
 
(400
)
 
(1,800
)
Income before income tax expense
 
4,160

 
5,430

 
13,480

 
12,990

Income tax expense
 
(1,900
)
 
(1,320
)
 
(4,450
)
 
(3,320
)
Gain on sale of discontinued operations
 
$
180,490

 
$
—

 
$
180,490

 
$
—

Income from discontinued operations, net of tax
 
$
182,750

 
$
4,110

 
$
189,520

 
$
9,670










The following tables presents the Company’s assets and liabilities held for sale:

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


 
 
December 31, 2018
 
 
(dollars in thousands)
Assets
 
 
Current assets:
 
 
Receivables, net of allowance for doubtful accounts
 
$
13,170

Inventories
 
21,490

Prepaid expenses and other current assets
 
1,420

Total current assets
 
36,080

Non-current assets:
 
 
    Property and equipment, net
 
15,780

    Goodwill
 
8,160

    Other intangibles, net
 
8,650

    Deferred income taxes
 
2,030

    Other assets
 
170

Total non-current assets
 
34,790

Assets held-for-sale
 
$
70,870

Liabilities
 
 
Current liabilities:
 
 
  Accounts payable
 
$
20,780

  Accrued liabilities
 
7,300

Total current liabilities
 
28,080

Non-current liabilities:
 
 
    Deferred income taxes
 
1,530

    Other long-term liabilities
 
210

Total non-current liabilities
 
1,740

Total liabilities held-for-sale
 
$
29,820



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


4. Revenues
Revenue Recognition
The Company disaggregates revenue from contracts with customers by major sales channel. The Company determined that disaggregating revenue into these categories best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Automotive OEM channel represents sales to automotive vehicle manufacturers. The Automotive OES channel primarily represents sales to automotive vehicle dealerships. The Aftermarket channel represents sales to automotive installers and warehouse distributors. The Retail channel represents sales to direct-to-consumer retailers. The Industrial channel represents sales to non-automotive manufacturers and dealers of agricultural equipment, trailers, and other custom assemblies. The E-Commerce channel represents sales to direct-to-consumer retailers who utilize the internet to purchase the Company’s products. The Other channel represents sales that do not fit into a category described above and these sales are considered ancillary to the Company’s core operating activities.
The following tables present the Company’s net sales by major sales channel:
 
 
Three Months Ended September 30, 2019
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
Automotive OEM
 
$
21,050

 
$
43,200

 
$
64,250

Automotive OES
 
1,960

 
16,510

 
18,470

Aftermarket
 
26,920

 
19,840

 
46,760

Retail
 
26,600

 
—

 
26,600

Industrial
 
7,650

 
780

 
8,430

E-commerce
 
12,040

 
560

 
12,600

Other
 
—

 
740

 
740

Total
 
$
96,220

 
$
81,630

 
$
177,850

 
 
Three Months Ended September 30, 2018
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
Automotive OEM
 
$
20,320

 
$
40,650

 
$
60,970

Automotive OES
 
1,700

 
12,600

 
14,300

Aftermarket
 
38,470

 
19,980

 
58,450

Retail
 
29,600

 
—

 
29,600

Industrial
 
11,160

 
—

 
11,160

E-commerce
 
13,750

 
1,290

 
15,040

Other
 
510

 
4,000

 
4,510

Total
 
$
115,510

 
$
78,520

 
$
194,030



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


 
 
Nine Months Ended September 30, 2019
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
Automotive OEM
 
$
64,970

 
$
137,900

 
$
202,870

Automotive OES
 
5,380

 
45,840

 
51,220

Aftermarket
 
79,910

 
56,200

 
136,110

Retail
 
88,230

 
—

 
88,230

Industrial
 
23,860

 
2,340

 
26,200

E-commerce
 
38,300

 
1,650

 
39,950

Other
 
20

 
3,570

 
3,590

Total
 
$
300,670

 
$
247,500

 
$
548,170


 
 
Nine Months Ended September 30, 2018
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Total
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
Automotive OEM
 
$
60,320

 
$
134,930

 
$
195,250

Automotive OES
 
4,230

 
39,980

 
44,210

Aftermarket
 
96,700

 
65,180

 
161,880

Retail
 
96,330

 
—

 
96,330

Industrial
 
31,680

 
—

 
31,680

E-commerce
 
29,340

 
3,880

 
33,220

Other
 
1,220

 
12,460

 
13,680

Total
 
$
319,820

 
$
256,430

 
$
576,250

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

Foreign currency translation
 
(300
)
Balance at September 30, 2019
 
$
4,200


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


The gross carrying amounts and accumulated amortization of the Company’s other intangibles are summarized as follows.
 
 
As of
September 30, 2019
Intangible Category by Useful Life
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
 
(dollars in thousands)
Finite-lived intangible assets:
 
 
 
 
 
 
Customer relationships (2 – 20 years)
 
$
162,940

 
$
(129,020
)
 
$
33,920

Technology and other (3 – 15 years)
 
20,590

 
(14,630
)
 
5,960

Trademark/Trade names (1 – 8 years)
 
150

 
(150
)
 
—

Total finite-lived intangible assets
 
183,680

 
(143,800
)
 
39,880

Trademark/Trade names, indefinite-lived
 
20,470

 
—

 
20,470

Total other intangible assets
 
$
204,150

 
$
(143,800
)
 
$
60,350

 
 
As of
December 31, 2018
Intangible Category by Useful Life
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
 
(dollars in thousands)
Finite-lived intangible assets:
 
 
 
 
 
 
Customer relationships (2 – 20 years)
 
$
168,230

 
$
(124,510
)
 
$
43,720

Technology and other (3 – 15 years)
 
20,490

 
(15,400
)
 
5,090

Trademark/Trade names (1 – 8 years)
 
150

 
(150
)
 
—

Total finite-lived intangible assets
 
188,870

 
(140,060
)
 
48,810

Trademark/Trade names, indefinite-lived
 
20,590

 
—

 
20,590

Total other intangible assets
 
$
209,460

 
$
(140,060
)
 
$
69,400

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 September 30,
 
Nine months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Technology and other, included in cost of sales
 
$
260

 
$
430

 
$
980

 
$
990

Customer relationships and Trademark/Trade names, included in selling, general and administrative expenses
 
1,410

 
1,600

 
3,820

 
4,650

Total amortization expense
 
$
1,670

 
$
2,030

 
$
4,800

 
$
5,640


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


6. Inventories
Inventories consist of the following components:
 
 
September 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Finished goods
 
$
80,440

 
$
89,000

Work in process
 
12,880

 
16,160

Raw materials
 
47,830

 
47,040

Total inventories
 
$
141,150

 
$
152,200



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


7. Property and Equipment, Net
Property and equipment, net consists of the following components:
 
 
September 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Land and land improvements
 
$
440

 
$
460

Buildings
 
20,460

 
18,680

Machinery and equipment
 
120,840

 
121,230

 
 
141,740

 
140,370

Accumulated depreciation
 
(63,070
)
 
(53,870
)
Property and equipment, net
 
$
78,670

 
$
86,500

Depreciation expense included in the accompanying condensed consolidated statements of operations is as follows:
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
(dollars in thousands)
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Depreciation expense, included in cost of sales
 
$
3,170

 
$
2,960

 
$
9,760

 
$
8,630

Depreciation expense, included in selling, general and administrative expense
 
1,420

 
270

 
2,220

 
780

Total depreciation expense
 
$
4,590

 
$
3,230

 
$
11,980

 
$
9,410


8. Accrued and Other Long-term Liabilities

Accrued liabilities consist of the following components:
 
 
September 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Customer incentives
 
$
12,700

 
$
9,990

Customer claims
 
10,370

 
14,130

Accrued compensation
 
8,890

 
5,680

Accrued professional services
 
3,940

 
4,380

Restructuring
 
2,450

 
7,530

Deferred purchase price
 
750

 
3,400

Short-term tax liabilities
 
750

 
1,130

Cross currency swap
 
—

 
1,610

Other
 
13,170

 
10,670

Total accrued liabilities
 
$
53,020

 
$
58,520



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


Other long-term liabilities consist of the following components:
 
 
September 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
Long-term tax liabilities
 
$
6,220

 
$
6,270

Deferred purchase price
 
2,440

 
30

Restructuring
 
1,980

 
2,580

Other
 
10,130

 
10,870

Total other long-term liabilities
 
$
20,770

 
$
19,750


9. Long-term Debt
The Company’s long-term debt consists of the following:
 
 
September 30,
2019
 
December 31,
2018
 
 
(dollars in thousands)
ABL Facility
 
$
19,660

 
$
61,570

First Lien Term Loan
 
25,010

 
190,520

Second Lien Term Loan
 
55,060

 
—

Convertible Notes
 
125,000

 
125,000

Bank facilities, capital leases and other long-term debt
 
14,470

 
18,990

Gross debt
 
239,200

 
396,080

Less:
 
 
 
 
Current maturities, long-term debt
 
24,270

 
13,860

Gross long-term debt
 
214,930

 
382,220

Less:
 
 
 
 
Unamortized debt issuance costs and original issuance discount on First Lien Term Loan
 
790

 
7,380

Unamortized debt issuance costs and discount on Second Lien Term Loan
 
13,800

 
—

Unamortized debt issuance costs and discount on Convertible Notes
 
19,610

 
24,190

Unamortized debt issuance costs and discount
 
34,200

 
31,570

Long-term debt
 
$
180,730

 
$
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 increase the interest rate by 1.0%, reduce the total facility size to $90.0 million and limit the ability to incur additional indebtedness in the future.
In September 2019, the Company amended its existing ABL Facility to provide consent for the sale of APAC, provide consent for the Company’s prepayment of First Lien Term Loan, as discussed below, and increase the existing block by $5.0 million to a total block of $10.0 million, making the effective facility size $80.0 million.

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


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”). All facilities under the ABL Facility mature on June 30, 2020 and are presented in “short-term borrowings and current maturities, long-term debt” in the accompanying September 30, 2019 condensed consolidated balance sheet.
The Company incurred debt issuance costs of approximately $0.5 million in connection with the September 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 $0.3 million and $0.8 million of amortization of debt issuance costs for the three and nine months ended September 30, 2019, respectively, and $0.1 million and $0.4 million for the three and nine months ended September 30, 2018, respectively which are included in the accompanying condensed consolidated statements of operations. There were $2.0 million and $0.8 million of unamortized debt issuance costs included in other assets in the accompanying condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018, respectively. There was $19.7 million and $61.6 million outstanding under the ABL Facility as of September 30, 2019 and December 31, 2018, respectively, with a weighted average interest rate of 7.0% and 4.4%, respectively. Total letters of credit issued under the ABL Facility at September 30, 2019 and December 31, 2018 were $7.8 million and $3.4 million, respectively. The Company had $44.5 million and $10.3 million of availability under the ABL Facility as of September 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 (the “First Lien 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”) to permit the Company to enter into the Second Lien Term Loan Agreement, amend certain financial covenants to make them less restrictive and make certain other affirmative and negative covenants more restrictive.
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.
In May 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.
In September 2019, the Company amended the existing First Lien Term Loan Agreement (“Eighth Term Amendment”) to provide consent for the sale of the Company’s APAC segment, provide consent for the Company to meet its prepayment obligation of the First Lien Term Loan, remove prepayment penalties and make certain negative covenants less restrictive. In September 2019, the Company paid down a portion of its First Lien Term Loan’s outstanding principal plus fees and paid-in-kind interest in the amount of $172.9 million.
Pursuant to the Eighth Term Amendment, the prior first lien leverage covenant was eliminated and replaced with the secured net leverage ratio starting with the fiscal quarter ending December 31, 2020 as follows:
December 31, 2020: 6.00 to 1.00
March 31, 2021: 6.00 to 1.00
June 30, 2021 and each fiscal quarter ending thereafter: 5.00 to 1.00
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 nine months ended September 30, 2019 and wrote off approximately $5.2 million of debt issuance costs due to the modification of the First Lien Term Loan for the September 19, 2019 amendment, which were recorded to selling, general and administrative expense within the accompanying condensed consolidated statements of operations.

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


The Company recorded approximately $5.2 million and $8.7 million of unamortized debt issuance costs to interest expense for the three and nine months ended September 30, 2019, respectively, due to the extinguishment of debt for certain lenders in the loan syndicate in connection with the Sixth, Seventh and Eighth Term Amendments.
The Company recognized approximately $1.7 million and $4.4 million of amortization of debt issuance and discount cost for the three and nine months ended September 30, 2019, respectively, and $0.6 million and $1.4 million for the three and nine months ended September 30, 2018, respectively, which is included in the accompanying condensed consolidated statements of operations.
The Company recognized $3.0 million of paid-in-kind interest on the First Lien Term Loan for the nine months ended September 30, 2019. The Company had an aggregate principal amount outstanding of $25.0 million and $190.5 million as of September 30, 2019 and December 31, 2018, respectively, under the First Lien Term Loan bearing interest at 8.1% 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 further detailed below.
In September 2019, the Company amended the existing Second Lien Term Loan Agreement (“Second Lien Amendment”) to remove the prepayment requirement related to the use of APAC sale proceeds and made certain negative covenants less restrictive. Pursuant to the Second Lien Amendment, the prior first lien leverage covenant was eliminated and replaced with the secured net leverage ratio starting with the fiscal quarter ending December 31, 2020, as outlined in the above section, First Lien Term Loan.
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

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


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 stock warrants within Shareholders’ equity in the Company’s 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 $13.8 million, all of which are recorded as a reduction of the debt balance on the Company’s accompanying condensed consolidated balance sheet as of September 30, 2019. The Company recognized $4.6 million of paid-in-kind interest on its Second Lien Term Loan for the nine months ended September 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

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


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 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 ABL Facility matures on June 30, 2020, and as of September 30, 2019, had an outstanding balance of $19.7 million. The Company believes it has sufficient liquidity to operate its business. However, today it does not have the cash or liquidity to pay off the ABL Facility at maturity. If the Company cannot generate sufficient cash from operations to make the aforementioned payment at maturity, or enter into new or additional financing arrangements, it may result in an event of default because of the inability to meet all of its obligations under its credit agreements. 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.
The Company is in compliance with all of its financial covenants as of September 30, 2019.
10. Derivative Instruments
Foreign Currency Exchange Rate Risk
As of September 30, 2019, the Company was party to forward contracts to hedge changes in foreign currency exchange rates with notional amounts of approximately $3.9 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 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.
Financial Statement Presentation
The fair value carrying amount of the Company’s derivative instruments were recorded as follows:
 
 
 
 
Asset / (Liability) Derivatives
 
 
Balance Sheet Caption
 
September 30,
2019
 
December 31,
2018
 
 
 
 
(dollars in thousands)
Derivatives designated as hedging instruments
 
 
 
 
 
 
Foreign currency forward contracts
 
Prepaid expenses and other current assets
 
$
220

 
$
1,910

Cross currency swap
 
Accrued liabilities
 
—

 
(2,480
)
Total derivatives designated as hedging instruments
 
 
 
220

 
(570
)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
Foreign currency forward contracts
 
Prepaid expenses and other current assets
 
100

 
70

Total derivatives de-designated as hedging instruments
 
 
 
100

 
70

Total derivatives
 
 
 
$
320

 
$
(500
)

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


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 September 30,
 
As of December 31,
 
2019
 
2018
 
(dollars in thousands)
Derivatives classified as cash flow hedges:
Foreign currency forward contracts
$
220

 
$
1,870

Cross currency swap
$
—

 
$
90

The following tables summarize the amounts reclassified from AOCI into earnings:
 
 
Three months ended September 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
 
$
(149,560
)
 
$
(24,120
)
 
$
(159,500
)
 
$
(7,590
)
Amount of Gain Reclassified from AOCI into Earnings
 
 
Derivatives classified as cash flow hedges:
 
 
Foreign currency forward contracts
 
$
350

 
$
—

 
$
440

 
$
—

Cross currency swap
 
$
—

 
$
—

 
$
—

 
$
780

 
 
Nine months ended September 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
 
$
(460,010
)
 
$
(50,270
)
 
$
(472,120
)
 
$
(19,580
)
Amount of Gain Reclassified from AOCI into Earnings
 
 
Derivatives classified as cash flow hedges:
 
 
 
 
 
 
 
 
Foreign currency forward contracts
 
$
1,550

 
$
—

 
$
590

 
$
—

Cross currency swap
 
$
—

 
$
900

 
$
—

 
$
4,000

Over the next 12 months, the Company expects to reclassify approximately $0.2 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.

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


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 September 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)
September 30, 2019
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
 
Recurring
 
$
320

 
$
—

 
$
320

 
$
—

December 31, 2018
 
 
 
 
 
 
 


 
 
Foreign currency forward contracts
 
Recurring
 
$
1,980

 
$
—

 
$
1,980

 
$
—

Cross currency swaps
 
Recurring
 
$
(2,480
)
 
$
—

 
$
(2,480
)
 
$
—



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


11. 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 nine months ended September 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)
 
(3,810
)
 
$
(1,870
)
 
(5,680
)
Balance at September 30, 2019
 
$
1,180

 
$
3,250

 
$
4,430

(1)Other consists primarily of changes in the liability balance due to foreign currency translation in addition to reversals of charges.
The $4.4 million restructuring liability at September 30, 2019 includes $2.4 million of accrued liabilities and $2.0 million of other long-term liabilities.


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


12. Leases

The Company leases certain facilities, automobiles and equipment under non-cancellable operating leases. Our leases have remaining lease terms of one year to twelve 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 $4.3 million and $13.3 million for the three and nine months ended September 30, 2019, respectively. Operating cash flows from operating leases were $4.6 million and $14.3 million for the three and nine months ended September 30, 2019, respectively. ROU assets obtained in exchange for operating lease obligations were $0.2 million and $15.0 million for the three and nine months ended September 30, 2019, respectively. The weighted average remaining term of these leases was approximately 6.7 years and the weighted average discount rate used to measure lease liabilities was approximately 8.7%.

In September 2019, the Company ceased use of its Troy, Michigan headquarters office lease. In conjunction with the lease abandonment, the Company accelerated the recognition of expense of its ROU asset and wrote it off, which resulted in a $4.3 million charge recorded in selling, general and administrative expense in the accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2019.

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

Years ending December 31,
 
Operating Leases
 
 
(dollars in thousands)
2019
 
$
4,990

2020
 
14,120

2021
 
13,180

2022
 
11,270

2023
 
9,000

2024 and thereafter
 
29,900

Total lease payments
 
82,460

Less imputed interest
 
(21,720
)
Present value of lease liabilities
 
$
60,740



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


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. This historical information has been retrospectively adjusted to reflect the removal of discontinued operations. Discontinued operations are further discussed in Note 3, “Discontinued Operations”.
December 31,
 
Minimum Payments
 
 
(dollars in thousands)
2019
 
$
12,380

2020
 
11,350

2021
 
10,120

2022
 
7,350

2023
 
4,350

Thereafter
 
12,480

Total
 
$
58,030

13. 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 third party 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. During the first quarter of 2019, one of the claims resulted in a recall campaign, while the manner in which the other claim will be resolved was 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 through March 31, 2019, 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 recorded a liability of $16.8 million and an asset of $11.1 million, which resulted in a $4.3 million charge during the first quarter of 2019.
On November 6, 2019, the Company reached a commercial settlement with an OEM customer that settles the exposure for certain claims related to the potentially faulty components for $5.5 million. Based on the facts and circumstances, the Company has determined that this settlement is a type I subsequent event which was recorded in its consolidated financial statements during the third quarter of 2019. As a result, the Company reduced its exposure related the claim by $4.3 million during the three months ended September 30, 2019.
As of September 30, 2019, the liability is $8.6 million due to ongoing replacement costs of potentially faulty components and is presented in “accrued liabilities” and the asset balance of $5.0 million is presented in “prepaid expenses and other current assets” in the accompanying September 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 recovery of $6.3 million of incurred costs related to the claim during the second and third quarter of 2019. 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.
14. Earnings (Loss) per Share
Basic loss per share is computed using net income (loss) attributable to Horizon Global and the number of weighted average shares outstanding. Diluted loss per share is computed using net income (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.

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


The following table sets forth the reconciliation of the numerator and the denominator of basic income (loss) per share attributable to Horizon Global and diluted income (loss) per share attributable to Horizon Global:
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands, except share and per share data)
Numerator:
 
 
 
 
 
 
 
 
Net loss from continuing operations
 
$
(37,500
)
 
$
(37,110
)
 
$
(78,030
)
 
$
(167,590
)
Income from discontinued operations, net of tax
 
$
182,750

 
$
4,110

 
$
189,520

 
$
9,670

Less: Net loss attributable to noncontrolling interest
 
$
(260
)
 
$
(240
)
 
$
(840
)
 
$
(720
)
Net income (loss) attributable to Horizon Global
 
$
145,510

 
$
(32,760
)
 
$
112,330

 
$
(157,200
)
Denominator:
 
 
 
 
 
 
 
 
Weighted average shares outstanding, basic
 
25,329,492

 
25,101,847

 
25,267,310

 
25,028,072

Dilutive effect of stock-based awards
 
—

 
—

 
—

 
—

Weighted average shares outstanding, diluted
 
25,329,492

 
25,101,847

 
25,267,310

 
25,028,072

 
 
 
 
 
 
 
 
 
Basic income (loss) per share attributable to Horizon Global
 
 
 
 
 
 
 
 
Continuing Operations
 
$
(1.47
)
 
$
(1.47
)
 
$
(3.05
)
 
$
(6.67
)
Discontinued Operations
 
$
7.21

 
$
0.16

 
$
7.50

 
$
0.39

Total
 
$
5.74

 
$
(1.31
)
 
$
4.45

 
$
(6.28
)
Diluted income (loss) per share attributable to Horizon Global
 

 

 

 

Continuing Operations
 
$
(1.47
)
 
$
(1.47
)
 
$
(3.05
)
 
$
(6.67
)
Discontinued Operations
 
$
7.21

 
$
0.16

 
$
7.50

 
$
0.39

Total
 
$
5.74

 
$
(1.31
)
 
$
4.45

 
$
(6.28
)


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


Due to losses from continuing operations for the three and nine months ended September 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
September 30,
 
Nine months ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Number of options
 
53,321

 
220,726

 
61,184

 
285,538

Exercise price of options
 
$9.20 - $11.29

 
$9.20 - $11.29

 
$9.20 - $11.29

 
$9.20 - $11.29

Restricted stock units
 
1,524,778

 
629,507

 
1,101,855

 
685,286

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
 
6,545,479

 
—

 
3,671,607

 
—

For purposes of determining diluted income (loss) per share, the Company has elected a policy to assume that the principal portion of the Convertible Notes, as described in Note 9, “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 income (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 income (loss) per share.

15. 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 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.

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


Stock Options

The following table summarizes Horizon stock option activity from December 31, 2018 to September 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 September 30, 2019
 
53,321

 
$
10.43

 
5.8
 
$
—

As of September 30, 2019, the unrecognized compensation cost related to stock options is immaterial. For the three and nine months ended September 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 September 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 nine months of 2019, the Company granted an aggregate of 1,527,322 restricted stock units and performance stock units to certain key employees. The total grants consisted of: (i) 353,592 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 performance stock units were $3.69 and $7.08 for the 2019 PSUs and 2018 PSUs, respectively.

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


The grant date fair value of restricted 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 September 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
 
1,527,322

 
3.46

Vested
 
(145,981
)
 
7.40

Canceled, forfeited
 
(287,829
)
 
4.02

Outstanding at September 30, 2019
 
1,513,440

 
$
4.31

As of September 30, 2019, there was $4.1 million in unrecognized compensation costs related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.0 years.
The Company recognized approximately $0.9 million and $1.8 million of stock-based compensation expense related to restricted shares during the three and nine months ended September 30, 2019, respectively, and approximately $0.1 million and $1.5 million during the three and nine months ended September 30, 2018. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

16. 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 September 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 September 30, 2019, there were 26,073,894 shares of common stock issued and 25,387,388 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 9, “Long-term Debt,” for additional information. As of September 30, 2019, warrants to purchase 6,487,674 shares of common stock were issued and remain outstanding.

29
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Accumulated Other Comprehensive Income (“AOCI”)
Changes in AOCI by component, net of tax, for the nine months ended September 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
 
730

 
(30
)
 
700

Less: Net realized gains reclassified to net loss
 
2,450

 
—

 
2,450

Amounts reclassified from AOCI
 
(20
)
 
(17,240
)
 
(17,260
)
Net current-period change
 
(1,740
)
 
(17,270
)
 
(19,010
)
Balance at September 30, 2019
 
$
220

 
$
(11,470
)
 
$
(11,250
)
Changes in AOCI by component, net of tax, for the nine months ended September 30, 2018 are summarized as follows:
 
 
Derivative Instruments
 
Foreign Currency Translation
 
Total
 
 
(dollars in thousands)
Balance at January 1, 2018
 
$
(310
)
 
$
10,880

 
$
10,570

Net unrealized gains (losses) arising during the period (a)
 
6,850

 
(4,330
)
 
2,520

Less: Net realized losses reclassified to net loss (b)
 
3,890

 
—

 
3,890

Net current-period change
 
2,960

 
(4,330
)
 
(1,370
)
Balance at September 30, 2018
 
$
2,650

 
$
6,550

 
$
9,200

__________________________
(a) Derivative instruments, net of income tax expense of $(1.3) million. See Note 10, “Derivative Instruments,” for further details.
(b) Derivative instruments, net of income tax expense of $0.9 million. See Note 10, “Derivative Instruments,” for further details.

17. 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 two operating segments: Horizon Americas and Horizon Europe-Africa. 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. See below for further information regarding the types of products and services provided within each operating segment.
Previously, the Company had three reportable segments. However, as a result of its sale in the third quarter of 2019, we have removed APAC as a separate operating segment and its results are presented as a discontinued operation in the accompanying condensed consolidated financial statements. Historical information has been retrospectively adjusted to reflect these changes. Please see Note 3, “Discontinued Operations,” for additional information.
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.

30
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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.

The following table presents the Company’s operating segment activity:
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(dollars in thousands)
Net Sales
 
 
 
 
 
 
 
 
Horizon Americas
 
$
96,220

 
$
115,510

 
$
300,670

 
$
319,820

Horizon Europe-Africa
 
81,630

 
78,520

 
247,500

 
256,430

Total
 
$
177,850

 
$
194,030

 
$
548,170

 
$
576,250

Operating Profit (Loss)
 
 
 
 
 
 
 
 
Horizon Americas
 
$
(2,230
)
 
$
7,270

 
$
5,760

 
$
4,730

Horizon Europe-Africa
 
1,730

 
(31,370
)
 
120

 
(132,150
)
Corporate
 
(12,260
)
 
(5,800
)
 
(29,360
)
 
(28,950
)
Total
 
$
(12,760
)
 
$
(29,900
)
 
$
(23,480
)
 
$
(156,370
)
18. 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 from continuing operations was 2.6% and 2.9% for the three and nine months ended September 30, 2019, respectively. The difference between the effective tax rate and the U.S. statutory tax rate of 21% primarily relates to the valuation allowance recorded in the U.S. and several foreign jurisdictions, which results in no income tax benefit recognized for jurisdictional pretax losses. For the three and nine months ended September 30, 2018, the effective income tax rates were 3.7% and 8.6%, respectively.
As a result of the Company’s sale of APAC, the Company recorded $30.3 million tax expense, which is presented in income from discontinued operations, net of tax, in the accompanying condensed consolidated statements of operations for three and nine month ended September 30, 2019. During the third quarter of 2019, the Company recognized the benefit of a worthless stock deduction for one of its German subsidiaries. A tax benefit was recorded to fully offset the $30.3 million expense recognized on sale, which is presented in income from discontinued operations, net of tax, in the accompanying condensed consolidated statements of operations for three and nine month ended September 30, 2019. The Company believes that it is more likely than not that the Company will realize the income tax benefit of this worthless stock deduction in 2019, to the extent of tax expense associated with the Company’s sale of APAC.
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,

31
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


it is more likely than not the deferred tax assets will not be realized, a valuation allowance is recorded. As of September 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.

32
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


19. Other Expense, Net

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

 
$
—

 
$
(3,630
)
 
$
—

Foreign currency gain / (loss)
 
(1,180
)
 
(530
)
 
(1,800
)
 
(1,070
)
Customer pay discounts
 
(300
)
 
(610
)
 
(1,220
)
 
(1,400
)
Accretion arising from lease recovery
 
(30
)
 
(50
)
 
(100
)
 
(200
)
Brazil acquisition indemnification asset
 
—

 
(290
)
 
—

 
(1,410
)
Brink acquisition ticking fee
 
—

 
—

 
—

 
(5,130
)
Other
 
(130
)
 
440

 
140

 
1,800

Total
 
$
(1,640
)
 
$
(1,040
)
 
$
(6,610
)
 
$
(7,410
)


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”) 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 two operating segments: Horizon Americas and Horizon Europe-Africa. See Note 17, “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

33
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


•
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, which primarily rely on third-party distributors, for which all costs are included in cost of sales.
Segment Information and Supplemental Analysis
Previously, the Company had three reportable segments. However, as a result of the divestiture of Horizon Asia-Pacific (“APAC”) in the third quarter of 2019, we have removed APAC as a separate operating segment and its results are presented as a discontinued operation. Historical information has been retrospectively adjusted to reflect these changes. Please see Note 3, “Discontinued Operations,” and Note 17, “Segment Information” for additional information.
The following table summarizes financial information for our operating segments for the three months ended September 30, 2019 (“3Q19”) and 2018 (“3Q18”):
 
 
Three months ended September 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
 
$
96,220

 
54.1
 %
 
$
115,510

 
59.5
 %
 
$
(19,290
)
 
(16.7
%)
 
$
(19,280
)
 
(16.7
%)
Horizon Europe-Africa
 
81,630

 
45.9
 %
 
78,520

 
40.5
 %
 
3,110

 
4.0
%
 
6,990

 
8.9
%
Total
 
$
177,850

 
100.0
 %
 
$
194,030

 
100.0
 %
 
$
(16,180
)
 
(8.3
%)
 
$
(12,290
)
 
(6.3
%)
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
17,270

 
17.9
 %
 
$
27,780

 
24.0
 %
 
$
(10,510
)
 
(37.8
%)
 
$
(10,460
)
 
(37.7
%)
Horizon Europe-Africa
 
11,020

 
13.5
 %
 
6,750

 
8.6
 %
 
4,270

 
63.3
%
 
4,800

 
71.1
%
Total
 
$
28,290

 
15.9
 %
 
$
34,530

 
17.8
 %
 
$
(6,240
)
 
(18.1
%)
 
$
(5,660
)
 
(16.4
%)
Selling, General and Administrative Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
19,500

 
20.3
 %
 
$
20,460

 
17.7
 %
 
$
(960
)
 
(4.7
%)
 
$
(940
)
 
(4.6
%)
Horizon Europe-Africa
 
9,330

 
11.4
 %
 
11,370

 
14.5
 %
 
(2,040
)
 
(17.9
%)
 
(1,600
)
 
(14.1
%)
Corporate
 
12,270

 
6.9
 %
 
5,850

 
3.0
 %
 
6,420

 
109.7
%
 
N/A

 
N/A

Total
 
$
41,100

 
23.1
 %
 
$
37,680

 
19.4
 %
 
$
3,420

 
9.1
%
 
$
(2,540
)
 
15.8
%
Operating Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
(2,230
)
 
(2.3
)%
 
$
7,270

 
6.3
 %
 
$
(9,500
)
 
(130.7
%)
 
$
(9,480
)
 
(130.4
%)
Horizon Europe-Africa
 
1,730

 
2.1
 %
 
(31,370
)
 
(40.0
)%
 
33,100

 
(105.5
%)
 
33,200

 
(105.8
%)
Corporate
 
(12,260
)
 
(6.9
)%
 
(5,800
)
 
(3.0
)%
 
(6,460
)
 
111.4
%
 
N/A

 
N/A

Total
 
$
(12,760
)
 
(7.2
)%
 
$
(29,900
)
 
(15.4
)%
 
$
17,140

 
(57.3
%)
 
$
23,720

 
22.0
%
(1) Corporate calculated as a percentage of total net sales.



34

Non-GAAP Financial Measures

The Company’s management utilizes Adjusted EBITDA as the key measure of company and segment performance and for planning and forecasting purposes, as management believes this measure is most reflective of the operational profitability or loss of the Company and its operating segments and provides management and investors with information to evaluate the operating performance of its business and is representative of its performance used to measure certain of its financial covenants, further discussed in the Liquidity and Capital Resources section below. Adjusted EBITDA should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Horizon Global, which is the most directly comparable financial measure to Adjusted EBITDA that is prepared in accordance with U.S. GAAP. Adjusted EBITDA, as determined and measured by Horizon Global, should also not be compared to similarly titled measures reported by other companies. The Company also uses operating income (loss) to measure stand alone segment performance.

Adjusted EBITDA is defined as net income attributable to Horizon Global before interest expense, income taxes, depreciation and amortization, and before certain items, as applicable, such as severance, restructuring, relocation and related business disruption costs, impairment of goodwill and other intangibles, non-cash stock compensation, certain product liability recall and litigation claims, acquisition and integration costs, gains (losses) on business divestitures and other assets, board transition support and non-cash unrealized remeasurement costs.

The following table summarizes Adjusted EBITDA for our operating segments for 3Q19:
 
 
Three months ended
September 30, 2019
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Corporate
 
Consolidated
 
 
(dollars in thousands)
Net income attributable to Horizon Global
 
 
 
 
 
 
 
$
145,510

Net loss attributable to noncontrolling interest
 
 
 
 
 
 
 
(260
)
Net income
 
 
 
 
 
 
 
145,250

Interest expense
 
 
 
 
 
 
 
24,120

Income tax benefit
 
 
 
 
 
 
 
(1,020
)
Depreciation and amortization
 
 
 
 
 
 
 
6,250

EBITDA
 
(940
)
 
1,380

 
174,160

 
174,600

Net loss attributable to noncontrolling interest
 
—

 
260

 
—

 
260

Income from discontinued operations, net of tax
 
—

 
—

 
(182,750
)
 
(182,750
)
Severance
 
—

 
—

 
1,620

 
1,620

Restructuring, relocation and related business disruption costs
 
(200
)
 
—

 
4,250

 
4,050

Non-cash stock compensation
 
—

 
—

 
850

 
850

(Gain) loss on business divestitures and other assets
 
320

 
—

 
(1,320
)
 
(1,000
)
Product liability and litigation claims
 
820

 
(4,270
)
 
—

 
(3,450
)
Debt issuance costs
 
—

 
—

 
530

 
530

Unrealized remeasurement costs
 
240

 
650

 
300

 
1,190

Other (income) expense, net
 
310

 
2,720

 
(1,980
)
 
1,050

Adjusted EBITDA
 
$
550

 
$
740

 
$
(4,340
)
 
$
(3,050
)



35

The following table summarizes Adjusted EBITDA for our operating segments for 3Q18:

 
 
Three months ended
September 30, 2018
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Corporate
 
Consolidated
 
 
(dollars in thousands)
Net loss attributable to Horizon Global
 
 
 
 
 
 
 
$
(32,760
)
Net loss attributable to noncontrolling interest
 
 
 
 
 
 
 
(240
)
Net loss
 
 
 
 
 
 
 
(33,000
)
Interest expense
 
 
 
 
 
 
 
7,590

Income tax benefit
 
 
 
 
 
 
 
(1,420
)
Depreciation and amortization
 
 
 
 
 
 
 
5,090

EBITDA
 
8,030

 
(31,560
)
 
1,790

 
(21,740
)
Net loss attributable to noncontrolling interest
 
—

 
230

 
—

 
230

Income from discontinued operations, net of tax
 
—

 
—

 
(4,110
)
 
(4,110
)
Severance
 
660

 
—

 
—

 
660

Restructuring, relocation and related business disruption costs
 
4,220

 
1,370

 
—

 
5,590

Impairment of goodwill and other intangibles
 
—

 
26,640

 
—

 
26,640

Non-cash stock compensation
 
—

 
—

 
230

 
230

Acquisition and integration costs
 
—

 
70

 
1,130

 
1,200

(Gain) loss on business divestitures and other assets
 
650

 
—

 
—

 
650

Unrealized remeasurement costs
 
110

 
530

 
(110
)
 
530

Other (income) expense, net
 
570

 
2,650

 
(3,290
)
 
(70
)
Adjusted EBITDA
 
$
14,240

 
$
(70
)
 
$
(4,360
)
 
$
9,810




36

Results of Operations Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018
Consolidated net sales decreased $16.2 million, or 8.3%, to $177.9 million in 3Q19, as compared with $194.0 million in 3Q18. As noted in the following segment results discussions, the decrease in net sales was primarily attributable to a decrease in net sales in Horizon Americas of $19.3 million primarily attributable to lower shipping volumes in the aftermarket, retail and e-commerce sales channels, partially offset by an increase in net sales of $3.1 million in Horizon Europe-Africa. After adjusting for currency translation impacts, Horizon Europe-Africa net sales were up $7.0 million primarily attributable to higher volumes in the automotive OEM and automotive OES sales channels.
Gross profit margin (gross profit as a percentage of net sales) was 15.9% and 17.8% for 3Q19 and 3Q18, respectively. Negatively impacting gross profit margin were unfavorable costs and operating inefficiencies in Horizon Americas, driven by tariff costs and the timing and inability to fully recover operating input cost increases through customer pricing actions, partially offset by favorable margins in Europe-Africa primarily driven by favorable currency translation between the U.S. dollar and euro.
Selling, general and administrative (“SG&A”) expenses increased $3.4 million primarily attributable to $5.3 million of lease abandonment and leasehold improvement charges related to the Company’s departure from its headquarters lease, partially offset by back office and support costs savings in Horizon Americas and Horizon Europe-Africa as a result of prior year restructuring and business rationalization projects.
Operating margin (operating profit (loss) as a percentage of net sales) was (7.2)% and (15.4)% in 3Q19 and 3Q18, respectively. Operating loss improved by $17.1 million to an operating loss of $12.8 million in 3Q19, from an operating loss of $29.9 million in 3Q18, primarily attributable to a goodwill impairment charge of approximately $26.6 million in Horizon Europe-Africa, offset by lower net sales and gross profit.
Other expense, net increased $0.6 million to $1.6 million in 3Q19, as compared to $1.0 million in 3Q18 primarily attributable to $0.7 million of additional foreign currency loss in 3Q19.
Interest expense increased $16.5 million to $24.1 million in 3Q19, compared to $7.6 million in 3Q18. Interest expense increased because of $50.0 million of additional borrowings on the First Lien Term Loan (as defined below) in July 2018 and $51.0 million of additional borrowings on the Second Lien Term Loan (as defined below) in March 2019, which resulted in higher borrowings as well as higher interest rates compared to 3Q18. In addition, the Company recorded $5.2 million of unamortized debt issuance costs due to its debt refinancing and modifications.
The effective income tax rate for continuing operations for 3Q19 and 3Q18 was 2.6% and 3.7%, respectively. The lower effective income tax rate in 3Q19 is primarily attributable to 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 a decreased 2019 tax benefit.
Net loss from continuing operations decreased by $0.4 million to a net loss of $37.5 million in 3Q19, compared to a net loss from continuing operations of $37.1 million in 3Q18 related to the operating results discussed above.
Income from discontinued operations, net of tax is primarily attributable to the $180.5 million gain that was recognized when the Company completed the sale of APAC during 3Q19. As a result, APAC has been presented as discontinued operations in our condensed consolidated financial statements in accordance with FASB ASC No. 205, Discontinued Operations. See Note 3, “Discontinued operations,” 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 discontinued operations.
See below for a discussion of operating results by segment.

37

Horizon Americas    
Net sales by sales channel, in thousands, for Horizon Americas during 3Q19 and 3Q18 are as follows:
 
 
Three months ended September 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
21,050

 
$
20,320

 
$
730

 
3.6
 %
Automotive OES
 
1,960

 
1,700

 
260

 
15.3
 %
Aftermarket
 
26,920

 
38,470

 
(11,550
)
 
(30.0
)%
Retail
 
26,600

 
29,600

 
(3,000
)
 
(10.1
)%
Industrial
 
7,650

 
11,160

 
(3,510
)
 
(31.5
)%
E-commerce
 
12,040

 
13,750

 
(1,710
)
 
(12.4
)%
Other
 
—

 
510

 
(510
)
 
N/A

Total
 
$
96,220

 
$
115,510

 
$
(19,290
)
 
(16.7
)%

38


CHART-1A35AE9B45EB717A5C2A25.JPG CHART-D7DF191687A43C09158A25.JPG
Net sales decreased $19.3 million to $96.2 million in 3Q19, as compared to $115.5 million in 3Q18, primarily attributable to a $20.7 million decrease due to lower sales volumes from softening in demand primarily in the aftermarket, retail and industrial channels, and a $2.4 million increase in sales returns and allowances. The net sales decrease was partially offset by $4.3 million in 2019 pricing increases, which were implemented to recover increased material and input costs and offset higher import tariffs, which took effect during 2018 and were increased during 2019.
Horizon Americas’ gross profit decreased by $10.5 million to $17.3 million in 3Q19 compared to $27.8 million 3Q18. The decrease in gross profit margin reflects the changes in sales detailed above. Additionally, gross profit was impacted by the following:
–
$3.3 million unfavorable material input costs primarily related to higher freight and tariff costs
–
$3.0 million unfavorable manufacturing costs; and
–
$3.0 million higher scrap costs and inventory reserves; partially offset by
–
$2.7 million of prior-year comparable period restructuring and footprint rationalization projects and related cost inefficiencies that did not reoccur; and
–
$2.4 million in lower outbound freight costs
SG&A expenses decreased $1.0 million to $19.5 million, or 20.3% of net sales, in 3Q19, as compared to $20.5 million, or 17.7% of net sales, in 3Q18. The decrease in SG&A expenses was attributable to the following:
–
$3.5 million in prior-year comparable period organizational restructuring efforts and costs that did not reoccur, partially offset by
–
$1.6 million additional professional fees and litigation claims; and
–
$0.8 million increased allowance for doubtful accounts
Horizon Americas’ had an operating loss of $2.2 million, or (2.3)% of net sales, in 3Q19, which decreased $9.5 million compared to an operating profit of $7.3 million, or 6.3% of net sales, in 3Q18. Operating profit and operating margin decreased primarily due to the decreased net sales and additional operating costs discussed above.

39

Horizon Europe-Africa    
Net sales by sales channel, in thousands, for Horizon Europe-Africa during 3Q19 and 3Q18 are as follows:
 
 
Three months ended September 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
43,200

 
$
40,650

 
$
2,550

 
6.3
 %
Automotive OES
 
16,510

 
12,600

 
3,910

 
31.0
 %
Aftermarket
 
19,840

 
19,980

 
(140
)
 
(0.7
)%
Industrial
 
780

 
—

 
780

 
N/A

E-commerce
 
560

 
1,290

 
(730
)
 
(56.6
)%
Other
 
740

 
4,000

 
(3,260
)
 
(81.5
)%
Total
 
$
81,630

 
$
78,520

 
$
3,110

 
4.0
 %
CHART-F6EE40CA368DDE42A49.JPG CHART-9050A2E9CE265927D69.JPG
Net sales increased by $3.1 million, or 4.0%, to $81.6 million in 3Q19 compared to $78.5 million in 3Q18. Net sales were impacted by $3.9 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, net sales were up $7.0 million. The increase is primarily related to higher sales volumes in the Automotive OEM and Automotive OES channels, partially offset by $3.1 million decrease related to the Company’s divestiture of its non-automotive business in the first quarter of 2019.
Horizon Europe-Africa’s gross profit increased by $4.3 million, or 63.3%, to $11.0 million, or 13.5% of net sales, in 3Q19, compared to $6.8 million, or 8.6% of net sales, in 3Q18. The increase in gross profit margin reflects the changes in sales detailed above. In addition, gross profit was impacted by the following:
–
$4.3 million favorable expense recovery related to the settlement of potential product liability claims (see Note 13, “Contingencies”) with one OEM customer
SG&A expenses decreased by $2.0 million to $9.3 million, or 11.4% of net sales, in 3Q19, as compared to $11.4 million, or 14.5% of net sales, in 3Q18. The increase in SG&A expenses was primarily attributable to the following:
–
$1.3 million of additional costs incurred in the prior-year period related to restructuring and footprint rationalization projects that did not reoccur; and

40

–
$0.7 million reduction in personnel and compensation costs
Horizon Europe-Africa’s operating profit (loss) increased by $33.1 million to an operating profit of $1.7 million, or 2.1% of net sales, in 3Q19, as compared to an operating loss of $31.4 million, or (40.0)% of net sales, in 3Q18, partially as a result of the operating performance discussed above. In addition, operating loss was impacted by a $26.6 million goodwill impairment charge recorded in 3Q18.
Corporate Expenses  Corporate expenses included in operating loss increased $6.5 million to $12.3 million in 3Q19, as compared to $5.8 million expense in 3Q18, primarily attributable to $5.3 million of lease abandonment and leasehold improvement charges related to the Company’s departure from its headquarters lease, coupled with $1.6 million of severance costs related to the separation agreement reached with our former chief executive officer.

41

The following table summarizes financial information for our operating segments for the nine months ended September 30, 2019 (“3Q19 YTD”) and nine months ended September 2018(“3Q18 YTD”):
 
 
Nine months ended September 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
 
$
300,670

 
54.8
 %
 
$
319,820

 
55.5
%
 
$
(19,150
)
 
(6.0
)%
 
$
(18,670
)
 
(5.8
)%
Horizon Europe-Africa
 
247,500

 
45.2
 %
 
256,430

 
44.5
%
 
(8,930
)
 
(3.5
)%
 
7,440

 
2.9
 %
Total
 
$
548,170

 
100.0
 %
 
$
576,250

 
100.0
%
 
$
(28,080
)
 
(4.9
)%
 
$
(11,230
)
 
(1.9
)%
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
62,080

 
20.6
 %
 
$
73,750

 
23.1
%
 
$
(11,670
)
 
(15.8
)%
 
$
(11,480
)
 
(15.6
)%
Horizon Europe-Africa
 
26,080

 
10.5
 %
 
30,380

 
11.8
%
 
(4,300
)
 
(14.2
)%
 
(2,730
)
 
(9.0
)%
Total
 
$
88,160

 
16.1
 %
 
$
104,130

 
18.1
%
 
$
(15,970
)
 
(15.3
)%
 
$
(14,210
)
 
(13.6
)%
Selling, General and Administrative Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
56,360

 
18.7
 %
 
$
68,730

 
21.5
%
 
$
(12,370
)
 
(18.0
)%
 
$
(12,210
)
 
(17.8
)%
Horizon Europe-Africa
 
27,410

 
11.1
 %
 
36,480

 
14.2
%
 
(9,070
)
 
(24.9
)%
 
(7,190
)
 
(19.7
)%
Corporate
 
29,370

 
5.4
 %
 
29,000

 
5.0
%
 
370

 
1.3
 %
 
N/A

 
N/A

Total
 
$
113,140

 
20.6
 %
 
$
134,210

 
23.3
%
 
$
(21,070
)
 
(15.7
)%
 
$
(19,400
)
 
(1.2
)%
Operating Profit (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Horizon Americas
 
$
5,760

 
1.9
 %
 
$
4,730

 
1.5
%
 
$
1,030

 
21.8
 %
 
$
1,060

 
22.4
 %
Horizon Europe-Africa
 
120

 
—
 %
 
(132,150
)
 
(51.5
%)
 
132,270

 
(100.1
)%
 
132,060

 
(99.9
)%
Corporate
 
(29,360
)
 
(5.4
)%
 
(28,950
)
 
(5.0
%)
 
(410
)
 
1.4
 %
 
N/A

 
N/A

Total
 
$
(23,480
)
 
(4.3
)%
 
$
(156,370
)
 
(27.1
%)
 
$
132,890

 
(85.0
)%
 
$
133,120

 
0.1
 %
(1) Corporate calculated as a percentage of total net sales.


42

The following table summarizes Adjusted EBITDA for our operating segments for 3Q19 YTD:
 
 
Nine months ended
September 30, 2019
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Corporate
 
Consolidated
 
 
(dollars in thousands)
Net income attributable to Horizon Global
 
 
 
 
 
 
 
$
112,330

Net loss attributable to noncontrolling interest
 
 
 
 
 
 
 
(840
)
Net income
 
 
 
 
 
 
 
111,490

Interest expense
 
 
 
 
 
 
 
50,270

Income tax benefit
 
 
 
 
 
 
 
(2,330
)
Depreciation and amortization
 
 
 
 
 
 
 
16,790

EBITDA
 
10,100

 
(3,770
)
 
169,890

 
176,220

Net loss attributable to noncontrolling interest
 
—

 
840

 
—

 
840

Income from discontinued operations, net of tax
 
—

 
—

 
(189,520
)
 
(189,520
)
Severance
 
(200
)
 
10

 
1,620

 
1,430

Restructuring, relocation and related business disruption costs
 
1,110

 
(1,410
)
 
4,250

 
3,950

Non-cash stock compensation
 
—

 
—

 
1,820

 
1,820

(Gain) loss on business divestitures and other assets
 
1,280

 
3,630

 
—

 
4,910

Board transition support
 
—

 
—

 
1,450

 
1,450

Product liability and litigation claims
 
820

 
50

 
—

 
870

Debt issuance costs
 
—

 
—

 
2,660

 
2,660

Unrealized remeasurement costs
 
160

 
1,210

 
440

 
1,810

Other (income) expense, net
 
730

 
8,140

 
(7,120
)
 
1,750

Adjusted EBITDA
 
$
14,000

 
$
8,700

 
$
(14,510
)
 
$
8,190



























43

The following table summarizes Adjusted EBITDA for our operating segments for 3Q18 YTD:
 
 
Nine months ended
September 30, 2018
 
 
Horizon Americas
 
Horizon Europe-Africa
 
Corporate
 
Consolidated
 
 
(dollars in thousands)
Net loss attributable to Horizon Global
 
 
 
 
 
 
 
$
(157,200
)
Net loss attributable to noncontrolling interest
 
 
 
 
 
 
 
(720
)
Net loss
 
 
 
 
 
 
 
(157,920
)
Interest expense
 
 
 
 
 
 
 
19,580

Income tax benefit
 
 
 
 
 
 
 
(15,770
)
Depreciation and amortization
 
 
 
 
 
 
 
15,070

EBITDA
 
7,260

 
(132,630
)
 
(13,670
)
 
(139,040
)
Net loss attributable to noncontrolling interest
 
—

 
720

 
—

 
720

Income from discontinued operations, net of tax
 
—

 
—

 
(9,670
)
 
(9,670
)
Severance
 
5,010

 
1,560

 
2,750

 
9,320

Restructuring, relocation and related business disruption costs
 
11,830

 
2,820

 
—

 
14,650

Impairment of goodwill and other intangibles
 
—

 
125,770

 
—

 
125,770

Non-cash stock compensation
 
—

 
—

 
1,440

 
1,440

Acquisition and integration costs
 
—

 
1,390

 
16,130

 
17,520

(Gain) loss on business divestitures and other assets
 
1,490

 
—

 
—

 
1,490

Unrealized remeasurement costs
 
110

 
750

 
200

 
1,060

Other (income) expense, net
 
2,160

 
8,310

 
(10,710
)
 
(240
)
Adjusted EBITDA
 
$
27,860

 
$
8,690

 
$
(13,530
)
 
$
23,020



44

Results of Operations Nine Months Ended September 30, 2019 Compared with Nine Months Ended September 30, 2018
Overall, net sales decreased $28.1 million, or 4.9%, to $548.2 million for 3Q19 YTD, as compared with $576.3 million in 3Q18 YTD. As noted in the following segment results discussions, the decrease in net sales was primarily attributable to a decrease in Horizon Americas and Horizon Europe-Africa of $19.2 million and $8.9 million, respectively.
Gross profit margin (gross profit as a percentage of sales) approximated 16.1% and 18.1% for 3Q19 YTD and 3Q18 YTD, respectively. Negatively impacting gross profit margin were unfavorable costs driven by tariff costs and the timing and inability to fully recover operating input cost increases through customer pricing actions in Horizon Americas and unfavorable net sales and cost mix in Europe-Africa, primarily driven by unfavorable currency translation in 3Q19 YTD compared to 3Q18 YTD.
Operating margin (operating loss as a percentage of sales) approximated (4.3)% and (27.1)% for 3Q19 YTD and 3Q18 YTD, respectively. Operating loss decreased $132.9 million to an operating loss of $23.5 million for 3Q19 YTD, compared to an operating loss of $156.4 million for 3Q18 YTD, primarily due to the impairment of goodwill and intangible assets totaling approximately $125.8 million in our Horizon Europe-Africa operating segment in 3Q18 YTD. In addition, higher commodity costs in Horizon Americas and Horizon Europe-Africa operating segments negatively impacted operating profit.
SG&A expenses decreased $21.1 million primarily due to realized savings from prior-year restructuring and business rationalization projects.
Other income (expense), net decreased $0.8 million to $6.6 million for 3Q19 YTD compared to $7.4 million for 3Q18 YTD, primarily due to prior-year period costs in connection with the termination of the Brink Group acquisition of $5.1 million, 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 $30.7 million, to $50.3 million, for 3Q19 YTD, as compared to $19.6 million for 3Q18 YTD. Interest expense increased because of $50.0 million of additional borrowings on the First Lien Term Loan in July 2018 and $51.0 million of additional borrowings on the Second Lien Term Loan in March 2019, which resulted in higher borrowings as well as higher interest rates compared to 3Q18 YTD. In addition, the Company recorded $8.7 million of unamortized debt issuance costs due to its debt refinancing and modifications.
The effective income tax rate for 3Q19 YTD and 3Q18 YTD was 2.9% and 8.6%, respectively. The lower effective income tax rate for 3Q19 YTD was primarily attributable to an 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 a decreased 2019 tax benefit.
Net loss from continuing operations decreased by $89.6 million, to a net loss of $78.0 million for 3Q19 YTD, compared to a net loss of $167.6 million for 3Q18 YTD. The decrease is attributable to a $132.9 million decrease in operating loss, primarily driven by the impairment of goodwill and intangible assets in 3Q18 YTD.
Income from discontinued operations, net of tax is primarily attributable to the $180.5 million gain that was recognized when the Company completed the sale of its Horizon Asia-Pacific operating segment (“APAC”) during 3Q 2019. As a result, APAC has been presented as discontinued operations in our condensed consolidated financial statements in accordance with FASB ASC No. 205, Discontinued Operations. See Note 3, “Discontinued operations,” 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 discontinued operations.
See below for a discussion of operating results by segment.









45

Horizon Americas   
Net sales by sales channel, in thousands, for Horizon Americas during 3Q19 YTD and 3Q18 YTD are as follows:
 
 
Nine months ended September 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
64,970

 
$
60,320

 
$
4,650

 
7.7
 %
Automotive OES
 
5,380

 
4,230

 
1,150

 
27.2
 %
Aftermarket
 
79,910

 
96,700

 
(16,790
)
 
(17.4
)%
Retail
 
88,230

 
96,330

 
(8,100
)
 
(8.4
)%
Industrial
 
23,860

 
31,680

 
(7,820
)
 
(24.7
)%
E-commerce
 
38,300

 
29,340

 
8,960

 
30.5
 %
Other
 
20

 
1,220

 
(1,200
)
 
N/A

Total
 
$
300,670

 
$
319,820

 
$
(19,150
)
 
(6.0
)%
CHART-C6C95D1A175CE653351A24.JPG CHART-60DD91A936FC97F41A5A24.JPG
Net sales decreased $19.1 million to $300.7 million in 3Q19 YTD, as compared to $319.8 million in 3Q18 YTD, primarily attributable to a $24.5 million decrease due to lower sales volumes from softening in demand primarily in the aftermarket, retail and industrial channels, partially offset by an increase in volumes in the E-commerce and automotive OEM sales channels, as well as a $4.7 million increase in sales returns and allowances. The net sales decrease was partially offset by $11.2 million in 2019 pricing increases, which were implemented to recover increased material and input costs and offset higher import tariffs, which took effect during 2018 and were increased during 2019.
Horizon Americas’ gross profit decreased $11.7 million to $62.1 million in 3Q19 YTD, as compared to $73.8 million in 3Q18 YTD. The decrease in gross profit margin reflects the changes in sales detailed above. Additionally, gross profit was impacted by the following:
–
$9.1 million unfavorable material input costs primarily related to higher freight and tariff costs
–
$8.5 million unfavorable manufacturing costs; and
–
$4.6 million higher scrap costs and inventory reserves; partially offset by
–
$8.0 million of prior-year comparable period restructuring and footprint rationalization projects and related cost inefficiencies that did not reoccur; and
–
$3.6 million in lower outbound freight costs

46

SG&A expenses decreased $12.4 million to $56.4 million, or 18.7% of net sales in 3Q19 YTD, as compared to $68.7 million, or 21.5% of net sales, in 3Q18 YTD. The decrease in SG&A expenses was attributable to the following:
–
$8.8 million decrease related to prior-year organizational restructuring efforts and business footprint rationalization that did nor reoccur;
–
$4.0 million of lower personnel and compensation costs; and
–
$1.4 million of lower sales and marketing costs
Horizon Americas’ operating profit increased $1.0 million to an operating profit of $5.8 million, or 1.9% of net sales, in 3Q19 YTD, as compared to an operating profit of $4.7 million, or 1.5% of net sales, in 3Q18 YTD. Operating profit and operating margin increased primarily due to impacts of the prior-year comparable period organizational restructuring efforts and business footprint rationalization efforts, partially offset by the lower net sales and additional operating costs discussed above.
Horizon Europe-Africa  
Net sales by sales channel, in thousands, for Horizon Europe-Africa during 3Q19 YTD and 3Q18 YTD are as follows:
 
 
Nine months ended September 30,
 
Change
 
 
2019
 
2018
 
$
 
%
Net Sales
 
 
 
 
 
 
 
 
Automotive OEM
 
$
137,900

 
$
134,930

 
$
2,970

 
2.2
 %
Automotive OES
 
45,840

 
39,980

 
5,860

 
14.7
 %
Aftermarket
 
56,200

 
65,180

 
(8,980
)
 
(13.8
)%
Industrial
 
2,340

 
—

 
2,340

 
N/A

E-commerce
 
1,650

 
3,880

 
(2,230
)
 
(57.5
)%
Other
 
3,570

 
12,460

 
(8,890
)
 
(71.3
)%
Total
 
$
247,500

 
$
256,430

 
$
(8,930
)
 
(3.5
)%
CHART-DF9EFDA89987F99C2BDA18.JPG CHART-9ED464E4E05F84196D7A18.JPG
Net sales decreased $8.9 million, or 3.5%, to $247.5 million in 3Q19 YTD, as compared to $256.4 million in 3Q18 YTD, primarily driven by the weakening of the euro in relation to the U.S. dollar. After considering currency impact, net sales increased $7.4 million. The increase was primarily attributable to increased automotive OEM and OES sales volumes, partially offset by lower aftermarket shipping volumes related to softer demand and the $8.9 million impact of the Company’s sale of its non-automotive business in the first quarter of 2019.

47

Horizon Europe-Africa’s gross profit decreased $4.3 million to $26.1 million, or 10.5% of net sales in 3Q19 YTD, from $30.4 million, or 11.8% of net sales, in 3Q18 YTD. The decrease in gross profit margin reflects the changes in sales detailed above, which is attributable to a sales mix shift from higher margin aftermarket sales to lower margin OE sales. In addition, gross profit was impacted by the following:
–
$1.9 million unfavorable material input and freight costs, partially offset by
–
$5.8 million favorable currency exchange due to the change of the Euro in relation to the U.S. dollar
SG&A expenses decreased $9.1 million to $27.4 million, or 11.1% of net sales in 3Q19 YTD, as compared to $36.5 million, or 14.2% of net sales, in 3Q18 YTD. The decrease in SG&A expenses was primarily attributable to the following:
–
$4.1 million of additional costs incurred in the prior-year comparable period related to restructuring and footprint rationalization projects primarily related to the shift in production to our Brasov, Romania production facility; and
–
$1.9 million favorable currency exchange due to the change of the Euro in relation to the U.S. dollar;
–
$1.9 million reduction in functional support and personnel costs due to lower headcount;
–
$1.0 million reduction in selling and warehouse expense primarily attributable to personnel costs
Horizon Europe-Africa’s operating profit (loss) increased approximately $132.3 million to an operating profit of approximately $120.0 thousand, or 0.05% of net sales in 3Q19 YTD, as compared to an operating loss of $132.2 million, or 51.5% of net sales, in 3Q18 YTD, primarily due to the impairment of goodwill and intangible assets of approximately $125.8 million in the prior-year comparable period, coupled with operational results described above.
Corporate Expenses  Corporate expenses included in operating loss increased approximately $0.4 million to $29.4 million for 3Q19 YTD from $29.0 million for 3Q18 YTD. The increase was primarily attributable to the $5.3 million of lease abandonment and leasehold improvement charges related to the Company’s termination of its headquarters lease, an additional $5.8 million in additional professional fees and other costs related to the Company new debt issuance, amendments, consents and related structure changes entered into during 3Q 19 YTD. Offsetting the increase was $11.0 million of expenses related to the prior-year termination of the Brink Group acquisition, which did not reoccur.

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”). See Note 9, “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 September 30, 2019, and December 31, 2018, there was $13.5 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.
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 the second quarter of 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, Seventh, and Eighth Term Amendments, the Company is in compliance with all of its financial covenants as of September 30, 2019. Refer to Item 1, “Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information.

48

Cash Flows - Operating Activities
Net cash used for operating activities during 3Q19 YTD and 3Q18 YTD was $65.8 million, and $74.5 million, respectively. During 3Q19 YTD, the Company used $44.7 million in cash flows, based on the reported net loss of $78.0 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, write off of operating lease 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 3Q18 YTD, the Company used $21.9 million in cash flows, based on the reported net loss of $167.6 million and after considering the effects of similar non-cash items and goodwill impairment.
Changes in operating assets and liabilities used $21.1 million and $52.6 million of cash during 3Q19 YTD and 3Q18 YTD, respectively. Increases in accounts receivable resulted in a net use of cash of $4.7 million and $32.0 million during 3Q19 YTD and 3Q18 YTD, respectively. The increase in accounts receivable for both periods is a result of the higher sales activity during the second and third quarter compared to the fourth quarter due to the seasonality of the business.
Changes in inventory resulted in a source of cash of $1.9 million during 3Q19 YTD and source of cash of approximately $5.6 million during 3Q18 YTD. The decrease in inventory during 3Q19 YTD was due to softening of demand at the start of the typically strong selling season. The decrease in inventory during 3Q18 YTD was due to the seasonality of our business.
Changes in accounts payable and accrued liabilities resulted in a use of cash of $15.6 million during 3Q19 YTD and a use of cash of $27.5 million during 3Q18 YTD. The use of cash for 3Q19 YTD compared to the use of cash during 3Q18 YTD is primarily related to the timing of purchases and vendor payments within the quarter.
Cash Flows - Investing Activities
Net cash provided by investing activities during 3Q19 YTD was $207.6 million and net cash used for investing activities was $9.9 million during 3Q18 YTD. During 3Q19 YTD, net proceeds from the sale of APAC was $209.6 million, and net proceeds from the sale of certain non-automotive business assets were $5.0 million. 3Q19 YTD saw lower capital expenditure needs as compared to $9.7 million incurred during 3Q18 YTD for growth, capacity and productivity-related projects, primarily within the Westfalia group.
Cash Flows - Financing Activities
Net cash used for financing activities was approximately $163.7 million and net cash provided by financing activities was $74.4 million during the 3Q19 YTD and 3Q18 YTD, respectively. During 3Q19 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 $43.7 million, while we used cash of $173.4 million for repayments and debt issuance and transaction costs to amend our First Lien Term Loan. During 3Q18 YTD, net borrowings from our ABL Facility totaled $37.6 million. During 3Q18 YTD, we used cash of approximately $6.5 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 $199.2 million and $193.3 million as of September 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 further detailed below.

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.

49

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.
In September 2019, the Company amended its existing ABL Facility to provide consent for the sale of APAC, provide consent for the Company’s prepayment of First Lien Term Loan, as discussed below, and increase the existing block by $5.0 million to a total block of $10 million, making the effective facility size $80.0 million.
In September 2019, the Company amended the existing First Lien Term Loan Agreement (“Eighth Term Amendment”) to provide consent for the sale of the Company’s APAC segment, provide consent for the Company to meet its prepayment obligation of the First Lien Term Loan, remove prepayment penalties and make certain negative covenants less restrictive. In September 2019, the Company paid down a portion of its First Lien Term Loan’s outstanding principal plus fees and paid-in-kind interest in the amount of $172.9 million.
Pursuant to the Eighth Term Amendment, the prior first lien leverage covenant was eliminated and replaced with the secured net leverage ratio starting with the fiscal quarter ending December 31, 2020 as follows:
December 31, 2020: 6.00 to 1.00
March 31, 2021: 6.00 to 1.00
June 30, 2021 and each fiscal quarter ending thereafter: 5.00 to 1.00
In September 2019, the Company amended the existing Second Lien Term Loan Agreement (“Second Lien Amendment”) to remove the prepayment requirement related to the use of APAC sale proceeds and made certain negative covenants less restrictive. Pursuant to the Second Lien Amendment, the prior first lien leverage covenant was eliminated and replaced with the secured net leverage ratio starting with the fiscal quarter ending December 31, 2020, consistent with the Eighth Term Amendment above.
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 September 30, 2019, approximately $19.7 million was outstanding on the ABL Facility bearing interest at a weighted average rate of 7.0% and $25.0 million was outstanding on the First Lien Term Loan bearing interest at 8.1%. The Company had $44.5 million of availability under the ABL Facility as of September 30, 2019.
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 September 30, 2019, one-month LIBOR and three-month LIBOR approximated 2.02% and 2.09% 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 3Q19 YTD approximated $13.3 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 ABL Facility matures on June 30, 2020, and as of September 30, 2019, had an outstanding balance of $19.7 million. The Company believes it has sufficient liquidity to operate its business. However, today it does not have the cash or liquidity to pay off the ABL Facility at maturity. The Company intends to enter into a replacement revolving credit facility prior to the maturity of the ABL Facility. However, there can be no assurance that the company will be able to enter into a replacement revolving credit facility with commercially reasonable terms or at all. If the Company cannot generate sufficient cash from operations to make the aforementioned payment at maturity, or enter into new or additional financing arrangements, it may result in an event of default because of the inability to meet all of its obligations under its credit agreements. 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.
The Company is in compliance with all of its financial covenants as of September 30, 2019.
Refer to Note 9, “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.

50

Consolidated EBITDA (defined as “Consolidated EBITDA” in our First Lien Term Loan Agreement and Second Lien Term Loan Agreement, collectively “Term Loan Agreements”) is a comparable measure to how the Company assesses performance. As discussed further in the Segment Information and Supplemental Analysis section of above, we use certain non-GAAP financial measures to assess performance and measure our covenants compliance in accordance with the Term Loan Agreements, which includes Adjusted EBITDA at the operating segment level. For the measurement of our Term Loan Agreements financial covenants, the definition of Consolidated EBITDA limits the amount of non-recurring expenses or costs including restructuring, moving and severance that can be excluded to $10 million in any cumulative four fiscal quarter period. Similarly, the definition limits the amount of fees, costs and expenses incurred in connection with any proposed asset sale that can be excluded to $5 million in any cumulative four fiscal quarter period.
The reconciliations of net income (loss) attributable to Horizon Global to EBITDA, EBITDA to Adjusted EBITDA and Adjusted EBITDA to Consolidated EBITDA for the three months ended September 30, 2019 and 2018; the nine months ended September 30, 2019 and 2018; and the last twelve months ended September 30, 2019 and 2018, are as follows:

 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
Last twelve months ended
September 30,
 
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
(dollars in thousands)
Net income (loss) attributable to Horizon Global
 
$
145,510

 
$
(32,760
)
 
$
178,270

 
$
112,330

 
$
(157,200
)
 
$
269,530

 
$
65,620

 
$
(178,680
)
 
$
244,300

Net loss attributable to noncontrolling interest
 
(260
)
 
(240
)
 
(20
)
 
(840
)
 
(720
)
 
(120
)
 
(1,070
)
 
(420
)
 
(650
)
Net income (loss)
 
145,250

 
(33,000
)
 
178,250

 
111,490

 
(157,920
)
 
269,410

 
64,550

 
(179,100
)
 
243,650

Interest expense
 
24,120

 
7,590

 
16,530

 
50,270

 
19,580

 
30,690

 
58,140

 
25,240

 
32,900

Income tax benefit
 
(1,020
)
 
(1,420
)
 
400

 
(2,330
)
 
(15,770
)
 
13,440

 
1,930

 
(3,330
)
 
5,260

Depreciation and amortization
 
6,250

 
5,090

 
1,160

 
16,790

 
15,070

 
1,720

 
22,300

 
21,310

 
990

EBITDA
 
174,600

 
(21,740
)
 
196,340

 
176,220

 
(139,040
)
 
315,260

 
146,920

 
(135,880
)
 
282,800

Net loss attributable to noncontrolling interest
 
260

 
240

 
20

 
840

 
720

 
120

 
1,070

 
420

 
650

Income from discontinued operations, net of tax
 
(182,750
)
 
(4,110
)
 
(178,640
)
 
(189,520
)
 
(9,670
)
 
(179,850
)
 
(192,690
)
 
(14,210
)
 
(178,480
)
EBITDA from continuing operations
 
(7,890
)
 
(25,610
)
 
17,720

 
(12,460
)
 
(147,990
)
 
135,530

 
(44,700
)
 
(149,670
)
 
104,970

Adjustments pursuant to Term Loan Agreements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Losses on sale of receivables
 
320

 
640

 
(320
)
 
1,280

 
1,490

 
(210
)
 
1,510

 
1,730

 
(220
)
Non-cash equity grant expenses
 
850

 
230

 
620

 
1,820

 
1,440

 
380

 
1,970

 
2,030

 
(60
)
Other non-cash expenses or losses
 
1,180

 
27,470

 
(26,290
)
 
5,560

 
128,250

 
(122,690
)
 
9,300

 
128,420

 
(119,120
)
Term Loans related fees, costs and expenses
 
—

 
—

 
—

 
2,920

 
—

 
2,920

 
2,920

 
—

 
2,920

Lender agent related professional fees, costs, and expenses
 
760

 
—

 
760

 
760

 
—

 
760

 
760

 
—

 
760

Non-recurring expenses or costs (a)
 
2,890

 
7,510

 
(4,620
)
 
8,480

 
41,560

 
(33,080
)
 
20,570

 
47,060

 
(26,490
)
Asset sale related fees, costs, and expenses (b)
 
(1,320
)
 
—

 
(1,320
)
 
—

 
—

 
—

 
—

 
—

 
—

Non-cash losses on asset sales
 
(50
)
 
110

 
(160
)
 
(150
)
 
520

 
(670
)
 
180

 
1,330

 
(1,150
)
Other expense, net
 
210

 
(540
)
 
750

 
(20
)
 
(2,250
)
 
2,230

 
330

 
(2,190
)
 
2,520

Adjusted EBITDA
 
(3,050
)
 
9,810

 
(12,860
)
 
8,190

 
23,020

 
(14,830
)
 
(7,160
)
 
28,710

 
(35,870
)
Non-recurring expense limitation (a) (b)
 
N/A

 
N/A

 
N/A

 
N/A

 
(31,560
)
 
31,560

 
(10,570
)
 
(37,060
)
 
26,490

Other expense, net
 
(210
)
 
540

 
(750
)
 
20

 
2,250

 
(2,230
)
 
(330
)
 
2,190

 
(2,520
)
Consolidated EBITDA
 
$
(3,260
)
 
$
10,350

 
$
(13,610
)
 
$
8,210

 
$
(6,290
)
 
$
14,500

 
$
(18,060
)
 
$
(6,160
)
 
$
(11,900
)
(a) Non-recurring expenses or costs including severance, restructuring and relocation are not to, in aggregate, exceed $10 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.
(b) Fees, costs and expenses incurred in connection with any proposed asset sale are not to, in aggregate, exceed $5 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.

51

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. On August 21, 2019, Standard & Poor’s revised the Company’s outlook to developing.
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 September 30, 2019, we were party to forward contracts, to hedge changes in foreign currency exchange rates, with notional amounts of approximately $3.9 million. See Note 10, “Derivative Instruments,” included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this quarterly report on Form 10-Q.
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 and European Union, are expected to continue to grow. We have been impacted by recently enacted tariffs on imports from China that continued in 3Q19. 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 continued 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 operating performance and make certain other affirmative and negative covenants more restrictive. In addition, the Company used certain of the proceeds from the 3Q19 sale of APAC to pay down $163.3 million of its First Lien Term Loan, satisfying its $100.0 million prepayment requirement under the First Lien Term Loan. In conjunction with the sale of APAC and pay down of the First Lien Term Loan discussed above, the Company entered into certain amendments and consents from its various lender groups to remove its quarterly principal payment obligation, as well as amend certain of its financial covenants related to the First Lien Term Loan and Second Lien Term Loan to not be measured until the fourth quarter 2020. The 3Q19 amendments discussed above allowed the Company to keep $36.3 million of the proceeds from the sale of APAC to provide for its liquidity needs. Although we were able to obtain new financing and amendments to our existing agreements, we remain focused on maintaining liquidity to fund our operations.
The Company is in compliance with all of its financial covenants as of September 30, 2019. Refer to Item 1, “Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information.
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

52

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 12, “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.
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

53

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 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 $25.3 million and $26.3 million change to our net sales for the nine months ended September 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 September 30, 2019 and 2018, a 100 basis point change in LIBOR would result in an approximate $0.3 million and $1.9 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 9, “Long-term Debt,” and Note 10, “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.

54

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 September 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 September 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 September 30, 2019, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

55

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 13, “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 third 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 third 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
None.

 

56

Item 6.    Exhibits.
Exhibits Index:
2.1(c)
3.1(b)
3.2(a)
10.1
10.2
10.3
10.4
10.5
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 Quarterly Report on Form 10-Q filed on August 8, 2019 (File No. 001-37427).
(c)
 
Incorporated by reference to the Exhibit filed with our Current Report on Form 8-K filed on September 25, 2019 (File No. 001-37427).

57

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 G.PIERSON
 
 
 
 
 
Date:
November 12, 2019
By:
 
Jamie G. Pierson
Chief Financial Officer


58

AMENDED AND RESTATED LIMITED CONSENT AND EIGHTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT

This AMENDED AND RESTATED LIMITED CONSENT AND EIGHTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this “Consent and Amendment”) is dated as of September 19, 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 and Amendment as Obligors, the financial institutions party to this Consent and Amendment 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 the Required Lenders consent to the disposition by Cequent Bermuda Holdings Ltd (“Cequent Bermuda”) to Hayman Pacific BidCo Pty Ltd (together with any buyer nominee, the “Buyers”) of all of the shares of Horizon Global Holdings Australia Pty. Ltd (“Horizon Australia”) and the disposition by Horizon GBP Finance LLC (“GBP Finance”) and Horizon Euro Finance LLC (“Euro Finance” and together with Cequent Bermuda and GBP Finance, the “Sellers”) to Buyers of their respective shares of TriMotive Asia Pacific Limited (“TAPL”) pursuant to that certain Share Sale and Purchase Agreement dated as of August 16, 2019 (the “SPA”) among the Buyers and the Sellers. The sale by the Sellers to the Buyers of the shares of Horizon Australia and the shares of TAPL is hereinafter referred to as the “APAC Sale”.

WHEREAS, subject to the terms of this Consent and Amendment, the Agent and Lenders constituting the Required Lenders have agreed to consent to the consummation of the APAC Sale;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the Loan Documents and this Consent and Amendment, 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 and Amendment have the respective meanings set forth in the Loan Agreement, as amended hereby.

ARTICLE II
RECITALS
The foregoing Recitals are hereby made a part of this Consent and Amendment.



ARTICLE III
AMENDMENT TO LOAN AGREEMENT
On the Consent Effective Date, the Loan Agreement is hereby amended as follows:

3.01    Additional Definitions. Section 1.1 of the Loan Agreement is hereby amended to include the following definitions, in appropriate alphabetical order:
“ “Eighth Amendment Availability Block” means $5,000,000.
“Special Availability Block” means the Eighth Amendment Availability Block plus the U.S. Special Availability Block. ”
3.02    Modification to Definitions. Each reference to “U.S. Special Availability Block” in each of the definitions of “Borrowing Base Trigger Period,” “Eligible In-Transit Inventory Trigger Period,” “Financial Covenant Trigger Period,” “Required Conditions” and “U.S. Availability Reserve” is hereby replaced with a reference to “Special Availability Block”.


ARTICLE IV
LIMITED CONSENT UNDER THE LOAN AGREEMENT
4.01    Limited Consent.
(a)The Obligors hereby acknowledge that the APAC Sale is not permitted under Section 10.2.5 of the Loan Agreement. The Obligors have therefore requested that the Agent and Required Lenders consent to the consummation of the APAC Sale. Subject to the terms and conditions contained in this Consent and Amendment, the Agent and Lenders party hereto hereby consent to the consummation of the APAC Sale in accordance with the terms set forth in the SPA and waive any Events of Default that would have otherwise resulted therefrom.
(b)The Obligors desire to make certain voluntary prepayments of the First Lien Term Loan Debt which remains outstanding as a consequence of certain First Lien Term Loan Lenders declining their pro rata share of the mandatory prepayments required to be made with proceeds of the APAC Sale under and in accordance with the terms of the First Lien Term Loan Agreement (such prepayments, the “Voluntary APAC Prepayments”). The Obligors hereby acknowledge that the Voluntary APAC Prepayments are not permitted under Section 10.2.8 of the Loan Agreement. Subject to the terms and conditions contained in this Consent and Amendment, the Agent and the Lenders party hereto hereby consent to the making of the Voluntary APAC Prepayments so long as (i) any and all such Voluntary APAC Prepayments are made on or before September 25, 2019, (ii) no Event of Default exists both before and immediately after giving to each such Voluntary APAC Prepayment, (iii) Total Availability both immediately before and immediately after giving effect to each such Voluntary APAC Prepayment shall be at least $42.5 million, and (iv) after giving effect to all such Voluntary APAC Prepayments, the principal amount of outstanding First Lien Term Loan Debt shall not be less than $25 million.
(c)The consent in this Section 4.01 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 and Amendment, (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.

2

ARTICLE V
CERTIFICATION

The Obligors hereby certify to Agent and Lenders that (a) (i) the Limited Consent and Waiver to Credit Agreement (the “First Lien Term Consent”), dated on or about the date hereof, by and among Parent Borrower, the First Lien Term Loan Lenders party thereto, and the First Lien Term Loan Agent and (ii) the Limited Consent and Waiver to Credit Agreement (the “Second Lien Term Consent”) dated on or about the date hereof, by and among the Parent Borrower, the Second Lien Term Loan Lenders party thereto and the Second Lien Term Loan Agent are not prohibited by Section 10.2.11 of the Loan Agreement, and (b) neither the execution nor the performance of this Consent and Amendment by Obligors pursuant to the Loan Documents violates the Term Loan Documents (after giving effect to each of the First Lien Term Consent and the Second Lien Term Consent).


ARTICLE VI
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:

6.01    Authority. The execution, delivery and performance by such Obligor of this Consent and Amendment, and the transactions contemplated hereby or thereby, have been duly authorized by all necessary action, and this Consent and Amendment 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.
6.02    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 and Amendment (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} of the Loan Agreement).
6.03    Governmental Approvals; No Conflicts. The execution, delivery, and performance by such Obligor of this Consent and Amendment (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.
6.04    No Defaults. No Default or Event of Default has occurred and is continuing.
6.05    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 and Amendment), if applicable, is true and correct in all respects.

3

ARTICLE VII
CONDITIONS PRECEDENT AND FURTHER ACTIONS
7.01    Conditions Precedent. This Consent and Amendment 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 and Amendment 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 copies of the First Lien Term Consent, which shall be in the form circulated by Jones Day to McGuireWoods LLP and Agent at 5:08 p.m., Eastern Time, on September 19, 2019, which includes an acknowledgement that not less than $35 million of Net Proceeds from the APAC Sale are being applied to the Loans, and all conditions precedent set forth in the First Lien Term Consent shall have been met or waived by the First Lien Term Loan Agent and/or the First Lien Term Loan Lenders in accordance with the terms of the First Lien Term Loan Documents;
(c)The Agent shall have received fully executed copies of the Second Lien Term Consent, which shall be in the form circulated by Jones Day to McGuireWoods LLP and Agent at 5:08 p.m., Eastern Time, on September 19, 2019, which includes an acknowledgement that not less than $35 million of Net Proceeds from the APAC Sale are being applied to the Loans, and all conditions precedent set forth in the Second Lien Term Consent shall have been met or waived by the Second Lien Term Loan Agent and/or the Second Lien Term Loan Lenders in accordance with the terms of the Second Lien Term Loan Documents;
(d)The Agent shall be satisfied that after giving effect to consummation of the transactions contemplated hereby and payment of all fees and expenses in connection herewith and therewith (i) Total Availability shall be at least $42.5 million immediately after the repayment of Loans as set forth in sub-clause (ii), and (ii) Loans shall be repaid with Net Proceeds from the APAC Sale in an amount not less than $35 million on or before September 24, 2019;
(e)The Borrowers shall have paid to the Agent, for the benefit of each Lender providing its written consent to this Consent and Amendment, an amendment fee equal to 50 basis points in respect of the aggregate Commitments of such Lender immediately after giving effect to this Consent and Amendment; and
(f)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 and Amendment.
7.02    Further Actions. Each of the parties to this Consent and Amendment agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Consent and Amendment.
ARTICLE VIII
REAFFIRMATION
Each Obligor hereby (i) acknowledges and consents to this Consent and Amendment; (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 and Amendment, 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.


4

ARTICLE IX
MISCELLANEOUS
9.01    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.
9.02    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 Amendment and the other Loan Documents.
9.03    Loan Document. This Consent and Amendment shall be deemed to be a “Loan Document” for all purposes under the Loan Agreement.
9.04    Governing Law. THIS CONSENT AND AMENDMENT 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.
9.05    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.
(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 and Amendment 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 9.04 above and this Section 9.05) 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.
9.06    Severability. Wherever possible, each provision of this Consent and Amendment 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 and Amendment shall remain in full force and effect.

5

9.07    Entire Agreement. Time is of the essence of this Consent and Amendment. This Consent and Amendment 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.
9.08    Execution in Counterparts. This Consent and Amendment 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 and Amendment shall become effective on the Consent Effective Date. Delivery of a signature page of this Consent and Amendment by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
9.09    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 and Amendment.
9.10    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 and Amendment, the execution, delivery and effectiveness of this Consent and Amendment 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 and Amendment, 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.
9.11    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.
9.12    Amendment and Restatement. The Borrowers, the other Obligors party hereto, the Agent and the Lenders have previously executed that certain Limited Consent and Eighth Amendment to Amended and Restated Loan Agreement dated as of September 18, 2019 (the “Original Consent”). The Obligors, the Agent and the Lenders party hereto hereby agree that as of the date first set forth above, the terms and provisions of the Original Consent shall be and hereby are amended and restated in their entirety by the terms and provisions of this Consent and Amendment, and the terms and provisions of the Original Consent shall be superseded by this Consent and Amendment.
Balance of Page Intentionally Left Blank
Signature Pages Follow

6


IN WITNESS WHEREOF, duly authorized representatives of the parties have executed this Consent and Amendment and the parties have delivered this Consent and Amendment, 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                

7


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 Director                
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 Director        

8


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

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


9


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

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

10


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

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


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


11



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

12


 
AGENT AND REQUIRED 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/ Sylwia Durkiewicz
Name: Sylwia 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
 
 


13


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


By: /s/ Nykole Hanna
Name: Nykole Hanna
Title: Authorized Signatory


WELLS FARGO CAPITAL FINANCE CORPORATION CANADA, as a Canadian Lender

By: /s/ David G. Phillips
Name: David G. Phillips
Title: Credit Officer Canada


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

By: /s/ N.B. Hogg
Name: N.B. Hogg
Title: Authorized Signatory


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


By: /s/ Elizabeth Mitchell
Name: Elizabeth Mitchell
Title: Vice President


BANK OF MONTREAL, Toronto Branch, as a Canadian Lender


By: /s/ Keri Stackhouse
Name: Keri Stackhouse
Title: Head Credit Structuring





















14

CONSENT AND AMENDMENT

This CONSENT AND AMENDMENT (this “Consent”) is dated as of September 24, 2019 and is entered into by and among HORIZON GLOBAL CORPORATION, a Delaware corporation (“Borrower”), 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 Agent and certain financial institutions 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, pursuant to Section 2.11(c) of the Credit Agreement, the Borrower is required to prepay the Loan with the Net Proceeds of any Prepayment Event;

WHEREAS, the Borrower has provided a Notice of Prepayment dated as of September 19, 2019 (the “Notice of Prepayment”) to the Lenders indicating that a Prepayment Event resulting from the consummation of the Share Sale and Purchase Agreement dated as of August 16, 2019 among Cequent Bermuda Holdings Ltd, Horizon GBP Finance LLC and Horizon Euro Finance LLC, and Hayman Pacific BidCo Pty Ltd, (the “APAC Sale”) is expected to be consummated and that it anticipates that the Net Proceeds therefrom will be sufficient to repay the Loans in full;

WHEREAS, the Lenders party to this Consent have requested that they be permitted to decline a portion of the prepayment to which they would otherwise be entitled;

WHEREAS, as consideration for the Borrower permitting the Lenders party hereto to decline such prepayment, after giving effect to the Retiring Lender Repayment (as defined below), the Lenders party to this Consent have agreed to amend the Credit Agreement as provided herein, such amendments to be effective with respect to the portion of the Term Loans as to which the prepayment was declined;

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
EXTENDED TRANCHE AND AMENDMENTS
3.01    Extended Tranche.
(a)The Lenders signatory hereto have agreed in accordance with the Notice of Prepayment to roll on a cashless basis certain of their Loans into a new tranche of Extended Term Loans as set forth on Schedule I to this Consent.


(b)The consent in this Section 3.01 shall be effective only to the extent specifically set forth herein with respect to the APAC Sale and shall not be construed as a waiver of any future right to any prepayment pursuant to Section 2.11 of the Credit Agreement.
(c)The outstanding principal amount of Loans outstanding after giving effect to the prepayment of Term Loans of the Retiring Lenders (as defined below) resulting from the APAC Sale on or about the date hereof shall be deemed to be a new tranche of Term Loans and “Extended Term Loans” in accordance with Section 2.23 of the Credit Agreement and shall constitute “Term Loans” and “Term B Loans.” As of the date hereof, the Term Loans and Lenders are set forth in Schedule I to this Consent.
3.02    Amendments.
Subject to the satisfaction of the conditions precedent specified in Section 6.01 below (including, without limitation, the Retiring Lender Repayment (as defined below)), but effective as of the Consent Effective Date (as defined below), the Credit Agreement is hereby amended as follows:
(a)The following definitions of “Eighth Amendment” and “Eighth Amendment Effective Date” are hereby added to the Credit Agreement in appropriate alphabetical order:
““Eighth Amendment” means that certain Consent and Amendment to this Credit Agreement, dated as of September 24, 2019, among the Borrower, the Agent and the Lenders party thereto.
“Eighth Amendment Effective Date” means the “Consent Effective Date” as set forth in the Eighth Amendment.”
(b)The definition of “Consolidated EBITDA” is hereby amended by restating clause (a)(xiii) thereof as follows:
“(xiii) unusual or nonrecurring expenses or costs, including restructuring, moving and severance expense, provided that the aggregate amount added to Consolidated EBITDA pursuant to this clause (xiii) shall not exceed $10,000,000 in any four Fiscal Quarter period,”
(c)The following definitions of “Secured Indebtedness” and “Secured Net Leverage Ratio” are hereby added to the Credit Agreement in appropriate alphabetical order:
““Secured Indebtedness” means Total Indebtedness that is secured by a Lien on any asset of the Borrower or any of its Subsidiaries.
“Secured Net Leverage Ratio” means, on any date, the ratio of (a) Secured Indebtedness as of such date, to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter of the Borrower most recently ended prior to such date for which financial statements are available).”
(d)The definition of “Term Loan Maturity Date” is hereby amended and restated as follows:

““Term Loan Maturity Date” means July 1, 2021 (or if such date is not a Business Day, the immediately preceding Business Day)”.
(e)The Credit Agreement is hereby amended by replacing the text of each of Section 2.10(a), Section 2.10(b), Section 2.11(b), Section 2.11(d), Section 2.12(c), Section 5.01(j), Section 5.01(k) and 5.14 with “[Reserved]”.
(f)Section 2.10(c) of the Credit Agreement is amended in its entirety to read as follows:


2

“To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date”.
(g)Section 2.11(a) of the Credit Agreement is amended in its entirety to read as follows:

“(a)    The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty, and notwithstanding any other provision of this Agreement to the contrary, any payment made by the Borrower pursuant to this Section 2.11(a) within the 90 days following the Eighth Amendment Effective Date shall not be required to be made on a pro rata basis among the Lenders.”
(h)Section 2.11 (c) of the Credit Agreement is amended in its entirety to read as follows:

“(c)    In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event after the Eighth Amendment Effective Date, the Borrower shall, within three Business Days after such Net Proceeds are received (and, in the case of any event described in clause (e) of the definition of the term Prepayment Event, on the date on which such Net Proceeds are received) prepay Borrowings of Loans in an aggregate amount equal to (x) in the case of any Prepayment Event (other than any event described in clauses (a) or (d) of the definition of the term Prepayment Event), 100% of such Net Proceeds, (y) in the case of any Prepayment Event described in clause (a) of the definition of the term Prepayment Event, 100% of such Net Proceeds in excess of $5,000,000 in the aggregate after the Eighth Amendment Effective Date, and (z) in the case of any event described in clause (d) of the definition of the term Prepayment Event, the Equity Contribution Percentage of such Net Proceeds.”
(i)The proviso at the end of Section 6.05(j) of the Credit Agreement is hereby amended by replacing the text thereof with “provided that (i) no Event of Default shall have occurred and be continuing, (ii) all sales, transfers and other dispositions permitted by this clause (j) shall be made for fair market value, (iii) all sales, transfers and other dispositions permitted by this clause (j) above shall be for 100% cash consideration, and (iv) all Net Proceeds thereof in excess of $5,000,000 in the aggregate for all such sales, transfers and other dispositions after the Eighth Amendment Effective Date shall be applied to prepay the Loans pursuant to Section 2.11(c)”.
(j)Section 10.02(b) of the Credit Agreement is hereby amended in its entirety as follows:

“(b) Except as provided in Section 2.23, neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the written consent of the Required Lenders; provided that (A) any such agreement may, without the consent of the Required Lenders (i) increase the Commitment of any Lender with the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, with the written consent of each Lender affected thereby, (iii) postpone the maturity of any Loan, or any scheduled date of payment of the principal amount of any Term Loan under Section 2.10, or any date for the payment of any interest or fees payable hereunder, or reduce or forgive the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, with the written consent of each Lender affected thereby, and (B) no such agreement shall (i) change Section 2.18(a), (b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (ii) change the percentage set forth in the definition of “Required Lenders” or any other provision of any Loan Document (including this Section) specifying the number or percentage of Lenders

3

(or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (iii) release all or substantially all of the Subsidiary Loan Parties from their Guarantees under the Guarantee and Collateral Agreement (except as expressly provided in the Guarantee and Collateral Agreement), without the written consent of each Lender, (iv) release all or substantially all of the Collateral from the Liens of the Security Documents, without the written consent of each Lender (except as expressly provided in the Security Documents) or (v) change the order of priority of payments set forth in Section 2.4 of the Guarantee and Collateral Agreement without the written consent of each Lender; provided, further, that (1) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent, without the prior written consent of the Administrative Agent or the Collateral Agent, as applicable, and (2) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Lenders of a particular Class (but not the Lenders of any other Class) may be effected by an agreement or agreements in writing entered into by the Borrower and requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower and consenting Lenders if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement.”

(k)Section 6.13(a) of the Credit Agreement is hereby amended in its entirety as follows:

“(a) The Borrower will not permit the Secured Net Leverage Ratio as of the last day of any fiscal quarter commencing, with the fiscal quarter ending December 31, 2020, to exceed the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter
Secured Net Leverage Ratio
December 31, 2020
6.00 to 1.00
March 31, 2021
6.00 to 1.00
June 30, 2021 and each fiscal quarter ending thereafter
5.00 to 1.00

ARTICLE IV
REPRESENTATIONS AND WARRANTIES


The Borrower hereby represents and warrants to each Lender party hereto and the Agent, as of the date hereof as follows:

4.01    Authority. The execution, delivery and performance by the Borrower 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 the Borrower enforceable against the Borrower in accordance with its terms, subject to

4

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    No Defaults. No Default or Event of Default has occurred and is continuing.
4.03    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.

ARTICLE V
ACKNOWLEDGEMENTS

Acknowledgements. Each Lender hereto hereby consents, acknowledges and agrees that on or about the date hereof, (i) the Borrower will repay loans under the ABL Credit Agreement in an amount of not less than $35,000,000 (without a permanent reduction in the commitments thereof), and (ii) no portion of the proceeds of the APAC Sale that are applied to the loans under the ABL Credit Agreement shall thereafter be deemed to constitute proceeds of any sale or transfer of property or assets.

ARTICLE VI
CONDITIONS PRECEDENT AND FURTHER ACTIONS
6.01    Conditions Precedent. The limited consent and amendments 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 Lenders party hereto;
(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 transactions contemplated hereby;
(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 the Borrower have received a summary invoice) owed to and/or incurred by the Agent and the Required Lenders in connection with this Consent; and
(d)Each Lender that has not executed this Consent (a “Retiring Lender”) shall have received payment of all principal, interest and fees in respect of the Term Loan owing to such Retiring Lender from the Net Proceeds of the APAC Sale described in the Notice of Prepayment (the “Retiring Lender Repayment”). In connection therewith, the Borrower shall have prepaid Loans in an aggregate principal amount of not less than $141,000,000 together with (i) all accrued and unpaid interest thereon and (ii) the prepayment fees required to be paid under Section 2.11(b) (prior to giving effect to this Consent) with respect thereto.

ARTICLE VII
[RESERVED]


ARTICLE VIII
MISCELLANEOUS
8.01    Successors and Assigns. This Consent shall be binding upon and inure to the benefit of Loan Parties, Agent, Lenders, 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.

5

8.02    Further Assurances. The Borrower 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. THE BORROWER 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.
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. 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.

6

Balance of Page Intentionally Left Blank
Signature Pages Follow



7



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.
 
BORROWER:

HORIZON GLOBAL CORPORATION,
a Delaware corporation

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


 
AGENT AND LENDERS:

JPMORGAN CHASE BANK, N.A.,
as Agent

By: /s/ Samir A. Hashmy
Name: Samir A. Hashmy
Title: Managing Director

 
 

 
Corre Opportunities Qualified Master Fund, LP, as a Lender

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner
 
Corre Opportunities II Qualified Master Fund, LP, as a Lender

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner
 
Corre Horizon Fund, LP, as a Lender

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner
 
NEWPORT GLOBAL CREDIT FUND (MASTER) LP, as a Lender

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

By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
Title: COO

8


 
FIDELITY NATIONAL TITLE INSURANCE COMPANY, as a Lender

By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
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


9



SCHEDULE I

Lender
Term Loans
Corre Opportunities Qualified Master Fund, LP
$10,565,540.31
Corre Opportunities II Master Fund, LP
$2,841,420.31
Corre Horizon Fund, LP
$6,887,065.71
Newport Global Credit Fund LP
$196,395.97
Newport Global Opportunities Fund I-A LP
$3,257,161.24
Fidelity National Title Insurance Company
$938,684.88
Commonwealth Land Title Insurance Company
$313,731.58



10

CONSENT AND AMENDMENT

This CONSENT AND AMENDMENT (this “Consent”) is dated as of September 24, 2019 and is entered into by and among HORIZON GLOBAL CORPORATION, a Delaware corporation (“Borrower”), 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 Agent and certain financial institutions 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, pursuant to Section 2.11(c) of the Credit Agreement, the Borrower is required to prepay the Term Loans with the Net Proceeds of any Prepayment Event;

WHEREAS, Section 2.11(g) of the Credit Agreement provides that until the Discharge of the Senior Obligations, no prepayments with the Net Proceeds of a Prepayment Event shall be required to be made, except with respect to any portion of such Net Proceeds that have been declined or waived by the First Lien Term Loan Lenders;

WHEREAS, the consummation of the transactions contemplated by that certain Share Sale and Purchase Agreement dated as of August 16, 2019 among Cequent Bermuda Holdings Ltd, Horizon GBP Finance LLC and Horizon Euro Finance LLC, and Hayman Pacific BidCo Pty Ltd, (the “APAC Sale”) have resulted in a “Prepayment Event” under the Credit Agreement;

WHEREAS, the Borrower and its Subsidiaries and have received Net Proceeds from the Prepayment Event;

WHEREAS, certain First Lien Term Loan Lenders have requested that they be permitted to decline prepayments under the First Lien Term Loan Agreement (the “Declined Proceeds”);

WHEREAS, the Borrower has requested that the Lenders agree to waive the prepayment to which they would otherwise be entitled under Section 2.11(g) in the amount of the Declined Proceeds;

WHEREAS, the Borrower has requested that the Lenders party to this Consent agree to certain other amendments to the Credit Agreement;

WHEREAS, subject to the terms of this Consent, the Agent and Lenders party hereto have agreed to (i) amend the Credit Agreement as provided herein and (ii) waive the required prepayment in the amount of the Declined Proceeds.

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
CONSENT AND AMENDMENTS
3.01Consent.
(a)The Lenders signatory hereto have agreed to waive the prepayment required pursuant to Section 2.11(g) with respect to the APAC Sale in the amount of the Declined Proceeds so long as the Declined Proceeds in the aggregate amount not exceeding $35,000,000 are applied solely to pay Loans under (and as defined in) the ABL Credit Agreement.
(b)The consent in this Section 3.01 shall be effective only to the extent specifically set forth herein with respect to the APAC Sale and shall not be construed as a waiver of any future right to any prepayment pursuant to Section 2.11 of the Credit Agreement.
3.02    Amendments.
Subject to the satisfaction of the conditions precedent specified in Section 6.01 below, but effective as of the Consent Effective Date (as defined below), the Credit Agreement is hereby amended as follows:
(a)The following definitions of “First Amendment” and “First Amendment Effective Date” are hereby added to the Credit Agreement in appropriate alphabetical order:
““First Amendment” means that certain Consent and Amendment to this Credit Agreement, dated as of September 24, 2019, among the Borrower, the Agent and the Lenders party thereto.
“First Amendment Effective Date” means the “Consent Effective Date” as set forth in the First Amendment.”
(b)The definition of “Consolidated EBITDA” is hereby amended by restating clause (a)(xiii) thereof as follows:
“(xiii) unusual or nonrecurring expenses or costs, including restructuring, moving and severance expense, provided that the aggregate amount added to Consolidated EBITDA pursuant to this clause (xiii) shall not exceed $10,000,000 in any four Fiscal Quarter period”,
(c)The definition of “Loan Documents” is hereby amended and restated in its entirety as follows:

“Loan Documents” means this Agreement, the Security Documents, the Intercreditor Agreements, the Fee Letter, the Agent Fee Letter, promissory notes, if any, executed and delivered pursuant to Section 2.09(e), and all other documents, certificates, instruments or agreements executed and delivered by or on behalf of a Loan Party for the benefit of the Administrative Agent, the Lender Representative or any Lender in connection with this Agreement on the date hereof or after the date hereof, provided that any such document executed and delivered after the date hereof is expressly identified as a “Loan Document” therein.
(d)The Credit Agreement is hereby amended by replacing the text of each of Section 2.11(d) and Section 5.14 with “[Reserved]”.
(e)Section 2.11 (c) is amended in its entirety to read as follows:

“(c)    In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event after the First Amendment Effective Date, the Borrower shall, within three Business Days after such Net Proceeds are received (and, in the case of any event described in clause (e) of the definition of the term Pre-payment Event, on the date on which such Net Proceeds are received) prepay Borrowings of Loans in an aggregate amount equal to (x) in the case of any Prepayment Event (other than any event described in clauses (a) or (d) of the definition of the term Prepayment Event), 100% of such Net Proceeds, (y) in the case of any

2

Prepayment Event described in clause (a) of the definition of Prepayment Event, 100% of such Net Proceeds in excess of $5,000,000 in the aggregate after the First Amendment Effective Date, and (z) in the case of any event described in clause (d) of the definition of the term Prepayment Event, the Equity Contribution Percentage of such Net Proceeds.”
(f)The proviso at the end of Section 6.05(j) is hereby amended by replacing the text thereof with “provided that (i) no Event of Default shall have occurred and be continuing, (ii) all sales, transfers and other dispositions permitted by this clause (j) shall be made for fair market value, (iii) all sales, transfers and other dispositions permitted by this clause (j) above shall be for 100% cash consideration, and (iv) all Net Proceeds thereof in excess of $5,000,000 in the aggregate for all such sales, transfers and other dispositions after the First Amendment Effective Date shall be applied to prepay the Loans pursuant to Section 2.11(c) (subject to Section 2.11(g))”.
(g)The table in Section 6.13(a) of the Credit Agreement is hereby amended in its entirety as follows:
Fiscal Quarter
Secured Net Leverage Ratio
December 31, 2020
6.00 to 1.00
March 31, 2021
6.00 to 1.00
June 30, 2021 and each fiscal quarter ending thereafter
5.00 to 1.00
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES


The Borrower hereby represents and warrants to each Lender party hereto and the Agent, as of the date hereof as follows:

4.01    Authority. The execution, delivery and performance by the Borrower 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 the Borrower enforceable against the Borrower 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    No Defaults. No Default or Event of Default has occurred and is continuing.
4.03    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.
ARTICLE V
ACKNOWLEDGEMENTS
Acknowledgements. Each Lender hereto hereby consents, acknowledges and agrees that on or about the date hereof, (i) the Borrower will repay loans under the ABL Credit Agreement in an amount of not less than $35,000,000 (without a permanent reduction in the commitments thereof) and (ii) no portion of the proceeds of the APAC Sale that are applied to the loans under the ABL Credit Agreement shall thereafter be deemed to constitute proceeds of any sale or transfer of property or assets.


3

ARTICLE VI
CONDITIONS PRECEDENT AND FURTHER ACTIONS
6.01    Conditions Precedent. The limited consent and amendments 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”):
(c)The Agent shall have received duly executed counterparts of this Consent which, when taken together, bear the authorized signatures of the Borrower, the Agent and the Lenders party hereto;
(d)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 transactions contemplated hereby;
(e)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 the Borrower have received a summary invoice) owed to and/or incurred by the Agent and the Lender Representative in connection with this Consent (including, without limitation, the legal fees of Milbank LLP and Holland & Knight LLP); and
(f)In connection with the APAC Sale, the Borrower shall have prepaid the First Lien Term Loans of each of the First Lien Term Lenders other than those consenting to Declined Proceeds.
ARTICLE VII
[RESERVED]

ARTICLE VIII
MISCELLANEOUS
8.01    Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Loan Parties, Agent, Lenders, 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. The Borrower 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. THE BORROWER 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

4

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.
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. 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

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.
 
BORROWER:

HORIZON GLOBAL CORPORATION,
a Delaware corporation

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


 
AGENT AND LENDERS:

CORTLAND CAPITAL MARKET SERVICES LLC,
as Agent

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

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

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner

 
Corre Opportunities Qualified Master Fund, LP, as a Lender

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner

 
Corre Opportunities II Qualified Master Fund, LP, as a Lender

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner
 
Corre Horizon Fund, LP, as a Lender

By: /s/ John Barrett
Name: John Barrett
Title: Managing Partner

6


 
FIDELITY NATIONAL TITLE INSURANCE COMPANY, as a Lender

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

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

By: /s/ Anthony L. Longi, Jr.
Name: Anthony L. Longi, Jr.
Title: COO
 
SIMON CHARITABLE PRIVATE LLC, as a Lender

By: /s/ Karen A. Vereb
Name: Karen A. Vereb
Title: Secretary

By: /s/ Mark A. Madeja
Name: Mark A. Madeja
Title: Assistant Secretary

 
PW FOCUS FUND LLC, as a Lender
By: Parkwood LLC, Managing Member

By: /s/ Karen A. Vereb
Name: Karen A. Vereb
Title: Secretary

By: /s/ Mark A. Madeja
Name: Mark A. Madeja
Title: Vice President
 
SIMON MARKETABLE LP, as a Lender
By: Parkwood LLC, General Partner

By: /s/ Karen A. Vereb
Name: Karen A. Vereb
Title: Secretary

By: /s/ Mark A. Madeja
Name: Mark A. Madeja
Title: Vice President
 
ULYSSES PARTNERS, LP, as a Lender

By: /s/ Joshua Nash
Name: Joshua Nash LLC, a General Partner
Title: Joshua Nash, its Manager




SEPARATION AGREEMENT
This Separation Agreement (this “Separation Agreement”) between Horizon Global Corporation (the “Company”) and Carl S. Bizon (“you” and similar words) sets forth certain terms of your separation from the Company and its affiliates, including certain waivers and releases by you required under the Company’s Executive Severance/Change of Control Policy (the “Severance Policy”) or otherwise in order to receive certain separation payments and benefits, as set forth in detail below.
By signing this Separation Agreement, you and the Company agree as follows:
1.STATUS OF EMPLOYMENT
You agree that, as of September 20, 2019, you resign from all positions you hold (if any) as an officer or director of the Company and the Company’s subsidiaries and affiliates, as applicable (other than your position as Chief Executive Officer and President of the Company), and that you will promptly execute any documents and take any actions as may be necessary or reasonably requested by the Company to effectuate or memorialize your termination from all such positions with the Company and its subsidiaries and affiliates. You also agree that you will terminate from your position as Chief Executive Officer and President of the Company, effective September 23, 2019. Furthermore, you agree that, effective September 30, 2019 (the “Separation Date”), you resign from all other positions you hold (if any) with, and as an employee of, the Company and the Company’s subsidiaries and affiliates, as applicable, and that you will promptly execute any documents and take any actions as may be necessary or reasonably requested by the Company to effectuate or memorialize your termination from all positions with the Company and its subsidiaries and affiliates. You agree that the terminations described in this Paragraph 1 shall be treated as set forth in Paragraph 2 of this Separation Agreement.
2.SEVERANCE BENEFITS
In consideration for you (a) signing this Separation Agreement, and (b) signing, no earlier than the Separation Date and no later than 52 days following the Separation Date, a general waiver and release of claims, substantially in the form attached hereto as Exhibit A (the “Release”), and letting the Release become effective as set forth in the Release, (x) for purposes of the Severance Policy and this Separation Agreement, your separation from the Company will be deemed a Qualifying Termination (as defined in the Severance Policy), and (y) you will receive the payments and benefits as specified on Exhibit B attached hereto, all subject to applicable tax withholding (the “Severance Benefits”). The Severance Benefits will be in full satisfaction of any amounts due under the Severance Policy, the Horizon Global Corporation Amended and Restated 2015 Equity and Incentive Compensation Plan (as amended or amended and restated from time to time, the “Equity Plan”), and other compensation arrangements of the Company.
3.RESTRICTIVE COVENANTS
By signing this Separation Agreement, you reaffirm that you will continue to abide by the covenants set forth in Section 7 of the Severance Policy, which expressly survive your Qualifying Termination.


4.LIMITATIONS
Nothing in this Separation Agreement or the Severance Policy shall be binding upon the parties to the extent it is void or unenforceable for any reason, including, without limitation, as a result of any law regulating competition or proscribing unlawful business practices; provided, however, that to the extent that any provision in this Separation Agreement or the Severance Policy could be modified to render it enforceable under applicable law, it shall be deemed so modified and enforced to the fullest extent allowed by law.
5.OTHER ACKNOWLEDGEMENTS
Nothing in this Separation Agreement or the Severance Policy prevents you from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations. Furthermore, no Company policy or individual agreement between the Company and you shall prevent you from providing information to government authorities regarding possible legal violations, participating in investigations, testifying in proceedings regarding the Company’s past or future conduct, engaging in any future activities protected under the whistleblower statutes administered by any government agency (e.g., EEOC, NLRB, SEC, etc.) or receiving a monetary award from a government-administered whistleblower award program for providing information directly to a government agency. The Company nonetheless asserts and does not waive its attorney-client privilege over any information appropriately protected by privilege.
6.MATERIAL BREACH
You agree that in the event of any breach of any provision of Section 7 of the Severance Policy, the Company will be entitled to equitable and/or injunctive relief and, because the damages for such a breach will be impossible or impractical to determine and will not therefore provide a full and adequate remedy, the Company or (as applicable) any and all past, present or future parents, subsidiaries and affiliates of the Company (the “Horizon Companies”) will also be entitled to specific performance by you. No amount owing to you under this Separation Agreement shall be subject to set-off or reduction by reason of any claims which the Company has or may have against you. You will be entitled to recover actual damages if the Company breaches this Separation Agreement, including any unexcused late or non-payment of any amounts owed under this Separation Agreement, or any unexcused failure to provide any other benefits specified in this Separation Agreement. Failure by either party to enforce any term or condition of this Separation Agreement at any time shall not preclude that party from enforcing that provision, or any other provision, at a later time.
7.REVIEW OF SEPARATION AGREEMENT
This Separation Agreement is important. You are advised to review it carefully and consult an attorney before signing it, as well as any other professional whose advice you value, such as an accountant or financial advisor. If you agree to the terms of this Separation Agreement, sign in the space below where your agreement is indicated. The payments and benefits specified in this Separation Agreement are contingent on your signing this Separation Agreement and the Release no earlier than the Separation Date and no later than 52 calendar days following the Separation Date, and not revoking the Release.

- 2

8.RETURN OF PROPERTY
You affirm that you will return to the Company, no later than the Separation Date (or such earlier time as the Company may reasonably request), all Company Property, as described more fully below. “Company Property” includes Company-owned computers, tablets, mobile phones, equipment, supplies and documents. Such documents may include, but are not limited to, customer information, supplier information, product information, financial statements, cost data, price lists, invoices, forms, passwords, electronic files and media, mailing lists, contracts, reports, manuals, personnel files, correspondence, business cards, drawings, employee lists or directories, photographs, maps, surveys, and the like, including copies, notes or compilations made there from, whether such documents are embodied on “hard copies” or contained on computer disk or any other medium. You further agree that you will not retain any copies or duplicates of any such Company Property.
9.RESIDENCE AND RELOCATION
You agree that you will, no later than December 31, 2019, fully vacate the residential space that has been leased by the Company for you (the “Company-Leased Residence”). Further, you agree that you will remove all personal property from the Company-Leased Residence no later than December 31, 2019. In addition, you agree that you will return to the Company the automobile that has been leased by the Company for you no later than December 31, 2019.
The Company agrees that the Company will pay the reasonable costs of packing and shipping your personal property to your selected location in Australia, as well as other reasonable costs relating to your relocation back to Australia (such shipping and other reasonable costs, the “Relocation Costs”); provided, however, that the Company shall select any relocation firm(s) that will assist with such Relocation Costs. Further, the Company shall provide you with one one-way business class flight (through an airline selected by the Company) from the United States to your selected location in Australia.
The Company agrees that it will provide you with assistance with respect to your compliance with applicable immigration laws to the extent related to your relocation from the United States to Australia, which assistance may include the retention of a consultant. The Company agrees to pay the reasonable fees or costs of any consultant or assistance described in this paragraph. You are required to provide requested information to any such consultant on a timely basis.
If any reimbursements or in-kind benefits provided by the Company pursuant to this Separation Agreement would constitute deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, such reimbursements or in-kind benefits shall be subject to the following rules: (a) the amounts to be reimbursed, or the in-kind benefits to be provided, shall be determined pursuant to the terms of the applicable benefit plan, policy or agreement and shall be limited to your lifetime and the lifetime of your eligible dependents; (b) the amount eligible for reimbursement, or the in-kind benefits provided, during any calendar year may not affect the expenses eligible for reimbursement, or the in-kind benefits provided, in any other calendar year; (c) any reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (d) your right to an in-kind benefit or reimbursement is not subject to liquidation or exchange for cash or another benefit.

- 3

10.FUTURE COOPERATION
You agree that you shall, without any additional compensation, respond to reasonable requests for information from the Company regarding matters that may arise in the Company’s business. You further agree to fully and completely cooperate with the Company, its advisors and its legal counsel with respect to any litigation that is pending against the Company and any claim or action that may be filed against the Company in the future. Such cooperation shall include making yourself available at reasonable times and places for interviews, reviewing documents, testifying in a deposition or a legal or administrative proceeding, and providing advice to the Company in preparing defenses to any pending or potential future claims against the Company. The Company agrees to (or to cause one of its affiliates to) pay/reimburse you for any approved travel expenses reasonably incurred as a result of your cooperation with the Company, with any such payments/reimbursements to be made in accordance with the Company's expense reimbursement policy as in effect from time to time.
11.NON-DISPARAGEMENT
You agree that, subject to Paragraph 5 of this Separation Agreement, you will not make or issue, or procure any person, firm, or entity to make or issue, any statement in any form, including written, oral and electronic communications of any kind, which conveys negative or adverse information concerning the Company, the Horizon Companies, or any and all past, present, or future related persons or entities, including but not limited to the Company’s and the Horizon Companies’ officers, directors, managers, employees, shareholders, agents, attorneys, successors and assigns, specifically including without limitation Horizon Global Corporation, their business, their actions or their officers or directors, to any person or entity, regardless of the truth or falsity of such statement. This Paragraph does not apply to truthful testimony compelled by applicable law or legal process.
12.TAX MATTERS
By signing this Separation Agreement, you acknowledge that you will be solely responsible for any taxes, which may be imposed on you as a result of the Severance Benefits or other amounts under this Separation Agreement, or any other personal income amounts. All amounts payable to you under this Separation Agreement will be subject to applicable US tax withholding by the Company, and the Company has not made any representations or guarantees regarding the tax result for you with respect to any income recognized by you in connection with this Separation Agreement, the Severance Benefits, or any other amounts payable under this Separation Agreement or any other personal income amounts.

The Company agrees to retain one or more consultants to assist you with the preparation of your individual income tax returns for US and non-US tax returns for all tax years where the Company’s compensation triggers multinational tax filing. In the event that your tax returns with respect to these tax years are subject to an audit by a governmental entity responsible for the administration of imposition of any tax, the Company will retain one or more consultants to assist you with such audit, provided that such audit is not the result of any unlawful action by you or your intentional or reckless misconduct (including, but not limited to, fraud or misrepresentation) or bad faith. The Company agrees to pay the reasonable fees and costs of any consultant described in this paragraph. You are required to provide requested information to any such consultant on a timely basis.

- 4

13.OTHER ACKNOWLEDGEMENTS
You and the Company also acknowledge and agree that any outstanding option rights, cash incentive awards, restricted stock unit awards and performance share unit awards previously granted by the Company to you under the Equity Plan will be amended by this Separation Agreement to the extent necessary or desirable to provide for the treatment of such awards as set forth in Exhibit B attached hereto.
14.NATURE OF AGREEMENT
By signing this Separation Agreement, you acknowledge that you are doing so freely, knowingly and voluntarily. You acknowledge that in signing this Separation Agreement you have relied only on the promises written in this Separation Agreement and not on any other promise made by the Company or Horizon Companies. This Separation Agreement is not, and will not be considered, an admission of liability or of a violation of any applicable contract, law, rule, regulation, or order of any kind. This Separation Agreement contains the entire agreement between the Company, other Horizon Companies and you regarding your departure from the Company, except that all post-employment covenants contained in the Severance Policy remain in full force and effect. The Severance Benefits are in full satisfaction of any severance benefits under the Severance Policy, the Equity Plan, and of any other compensation arrangements between you and the Company or the Horizon Companies. This Separation Agreement may not be altered, modified, waived or amended except by a written document signed by a duly authorized representative of the Company and you. Except as otherwise explicitly provided, this Separation Agreement will be interpreted and enforced in accordance with the laws of the state of Michigan, and the parties hereto, including their successors and assigns, consent to the jurisdiction of the state and federal courts of Michigan. The headings in this document are for reference only, and shall not in any way affect the meaning or interpretation of this Separation Agreement.
[SIGNATURE PAGE FOLLOWS]

- 5



IN WITNESS WHEREOF, you and the Company have executed this Separation Agreement as of the dates set forth below.
CARL S. BIZON
/s/ Carl S. Bizon
     
Date: 9/30/2019
HORIZON GLOBAL CORPORATION
By:     /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: General Counsel, Chief Compliance
Officer, and Corporate Secretary

Date: 10/2/2019


- 6


Exhibit A
Release

This Release is between Horizon Global Corporation (the “Company”) and Carl S. Bizon (“you” and similar words), in consideration of the benefits provided to you and to be received by you from or on behalf of the Company as described in the Separation Agreement between the Company and you dated as of the applicable date referenced therein (the “Separation Agreement”). Capitalized terms used herein without definition have the meanings ascribed to such terms in the Separation Agreement.
By signing this Release, you and the Company hereby agree as follows:
1.WAIVER AND RELEASE
You, on behalf of yourself and anyone claiming through you, including each and all of your legal representatives, administrators, executors, heirs, successors and assigns (collectively, the “Releasors”), hereby fully, finally and forever release, absolve and discharge the Company and each and all of its legal predecessors, successors, assigns, fiduciaries, parents, subsidiaries, divisions and other affiliates, and each of the foregoing’s respective past, present and future principals, partners, shareholders, directors, officers, employees, agents, consultants, attorneys, trustees, administrators, executors and representatives (collectively, the “Company Released Parties”), of, from and for any and all claims, causes of action, lawsuits, controversies, liabilities, losses, damages, costs, expenses and demands of any nature whatsoever, at law or in equity, whether known or unknown, asserted or unasserted, foreseen or unforeseen, that the Releasors (or any of them) now have, have ever had, or may have against the Company Released Parties (or any of them) based upon, arising out of, concerning, relating to or resulting from any act, omission, matter, fact, occurrence, transaction, claim, contention, statement or event occurring or existing at any time in the past up to and including the date on which you sign this Release, including, without limitation: (a) all claims arising out of or in any way relating to your employment with or separation of employment from the Company or its affiliates; (b) all claims for compensation or benefits, including salary, commissions, bonuses, vacation pay, expense reimbursements, severance pay, fringe benefits, stock options, restricted stock units or any other ownership interests in the Company Released Parties; (c) all claims for breach of contract, wrongful termination and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, invasion of privacy and emotional distress; (e) all other common law claims; and (f) all claims (including claims for discrimination, harassment, retaliation, attorneys fees, expenses or otherwise) that were or could have been asserted by you or on your behalf in any federal, state, or local court, commission, or agency, or under any federal, state, local, employment, services or other law, regulation, ordinance, constitutional provision, executive order or other source of law, including without limitation under any of the following laws, as amended from time to time: the Age Discrimination in Employment Act (the “ADEA”), as amended by the Older Workers’ Benefit Protection Act of 1990 (the “OWBPA”), Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 1981 & 1981a, the Americans with Disabilities Act, the Equal Pay Act, the Employee Retirement Income Security Act, the Lilly Ledbetter Fair Pay Act of 2009, the Family and Medical Leave Act, Sarbanes-Oxley Act of 2002, the National Labor Relations Act, the Rehabilitation Act of 1973, the WARN Act, Federal Executive Order 11246, the Genetic Information Nondiscrimination Act, the Elliott-Larsen Civil Rights Act, the Michigan Equal Pay Law, the Michigan Minimum Wage Law of 1964,

A-1

the Michigan Persons With Disabilities Civil Rights Act, and the Michigan Whistleblower's Protection Act (the “Release”).
2.SCOPE OF RELEASE
Nothing in this Release (a) shall release the Company from any of its obligations set forth in the Separation Agreement or any claim that by law is non-waivable, (b) shall release the Company from any obligation to defend and/or indemnify you against any third party claims arising out of any action or inaction by you during the time of your employment and within the scope of your duties with the Company to the extent you have any such defense or indemnification right, and to the extent permitted by applicable law and to the extent the claims are covered by the Company’s director & officer liability insurance or (c) shall affect your right to file a claim for workers’ compensation or unemployment insurance benefits.
You further acknowledge that by signing this Release, you do not waive the right to file a charge against the Company with, communicate with or participate in any investigation by the EEOC, the Securities and Exchange Commission or any comparable state or local agency. However, you waive and release, to the fullest extent legally permissible, all entitlement to any form of monetary relief arising from a charge you or others may file, including without limitation any costs, expenses or attorneys’ fees. You understand that this waiver and release of monetary relief would not affect an enforcement agency’s ability to investigate a charge or to pursue relief on behalf of others. Notwithstanding the foregoing, you will not give up your right to any benefits to which you are entitled under any retirement plan of the Company that is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended, or any monetary recovery under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002.
By executing this Release you represent that, as of the date you sign this Release, no claims, lawsuits, or charges have been filed by you or on your behalf against the Company Released Parties.
3.REVIEW OF RELEASE
In compliance with the requirements of the OWBPA, you acknowledge by your signature below that, with respect to the rights and claims waived and released under this Release under the ADEA, you specifically acknowledge and agree as follows: (a) you have read and understand the terms of this Release; (b) you have been advised and hereby are advised, and have had the opportunity, to consult with an attorney before signing this Release; (c) you are releasing the Company and the other Company Released Parties from, among other things, any claims that you may have against them pursuant to the ADEA; (d) the releases contained in the Release do not cover rights or claims that may arise after you sign this Release; (e) you have been given a period of 52 days in which to consider and execute this Release (although you may elect not to use the full 52-day period at your option); (f) you may revoke the Release during the seven-day period following the date on which you sign this Release, and the Release will not become effective and enforceable until the seven-day revocation period has expired; and (g) any such revocation must be submitted in writing to the Company c/o Jay Goldbaum, General Counsel, Chief Compliance Officer, and Corporate Secretary, Horizon Global Corporation, 2600 West Big Beaver Road, Suite 555, Troy, Michigan 48084 prior to the expiration of such seven-day revocation period. If you revoke the Release within such seven-day revocation period, it shall be null and void.

A-2

4.ENTIRE AGREEMENT
This Release, the Separation Agreement, and the documents referenced therein contain the entire agreement between you and the Company, and take priority over any other written or oral understanding or agreement that may have existed in the past. You acknowledge that no other promises or agreements have been offered for this Release (other than those described above) and that no other promises or agreements will be binding unless they are in writing and signed by you and the Company. Should any provision of this Release be declared by a court of competent jurisdiction to be illegal, void, or unenforceable, the remaining provisions shall remain in full force and effect; provided, however, that upon a finding that the Release, in whole or part, is illegal, void, or unenforceable, you shall be required, at the option of the Company, either to return the Severance Benefits (as defined in the Separation Agreement) or to execute a release that is legal and enforceable.

I agree to the terms and conditions set forth in this Release.

CARL S. BIZON
/s/ Carl S. Bizon

Date: 9/30/2019


A-3

Exhibit B
Severance and Other Benefits*


1.
Severance benefits under the Severance Policy,† which severance benefits consist of the following (as further described in, and qualified by reference to, the Severance Policy):
◦
Payment of an amount equal in value to the product of (a) 1.5, multiplied by (b) the sum of (i) $630,000 (your annual base salary rate (as in effect on the Separation Date)) plus (ii) $315,000 (the value of your target short-term incentive award for the 2019 calendar year). This amount will be payable in equal installments in accordance with the Company’s payroll practices as in effect from time to time commencing on the day the Release becomes effective and ending on the last payroll date of or on behalf of the Company in the last month of the 18-month period following the Separation Date, provided that the first such payment shall include all amounts that would have been paid to you in accordance with the Company’s payroll practices if such payments had begun on the Separation Date;
◦
Payment of (a) all accrued but unpaid base salary through the Separation Date and (b) 10 days of earned but unused vacation through the Separation Date. These amounts will be payable by the next payroll date following the Separation Date;
◦
A transaction bonus amount equal to $840,752, in cash, in connection with the Company’s sale of its Asia-Pacific business segment, payable on the day the Release becomes effective;
◦
If you timely elect to continue group health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and subject to the Company’s COBRA policies, the Company or its appropriate affiliate will reimburse you for the employer’s portion of premiums for continued group health coverage under COBRA until the earliest of (a) the termination of your COBRA period, (b) 18 months after the Separation Date, or (c) the date you become eligible to receive any medical benefits under any plan or program of any other employer. You will be responsible for payment of the COBRA premium and will be reimbursed by the Company or its appropriate affiliate for the portion of the premium that the Company or its appropriate affiliate would have paid for group health coverage if you had continued to be an employee of the Company or its appropriate affiliate. In the event that your COBRA period expires before the date that is 18 months after the Separation Date, the Company or its appropriate affiliate will pay you a monthly amount equal to the monthly contribution that the Company or its appropriate affiliate would have paid for your coverage under the applicable group health plan of the Company or its appropriate affiliate if you had continued as an employee of the Company or its appropriate affiliate until the earlier of (x) 18 months after the Separation Date or (y) the date on which you become eligible to receive any medical benefits under any plan or program of any other employer; and
______________________
* Except as otherwise expressly provided, all benefits are to be paid or provided in the manner and at the time specified in the applicable plan or agreement, or as required under applicable law.
† All benefits will remain subject to Section 8(B) of the Severance Policy.

B-1


◦
Executive-level outplacement services until the earlier of (a) 12 months following the Separation Date or (b) the date on which you become employed by a subsequent employer.
◦
Treatment of outstanding Equity Plan awards as follows, subject in all cases to the applicable terms and provisions of the Equity Plan, the related award agreements and the Severance Policy:
▪
Each of your unvested awards that are outstanding under the Equity Plan, other than equity awards and cash incentive awards that are subject to vesting upon the attainment of performance goals, shall vest in an amount equal to (a) the product of (i) the total number of shares subject to such award and (ii) a fraction, the numerator of which is equal to the number of whole calendar months that have elapsed from the grant date of the applicable award to the Separation Date and the denominator of which is equal to the full number of calendar months in the vesting period of such award, less (b) the number of shares that had already become vested as of the Separation Date in respect of such award. As a result, the following portions of the following awards granted to you under the Equity Plan will vest as of the Separation Date:
•
March 1, 2018 Restricted Stock Units Grant: 12,810 RSUs
•
March 19, 2019 Restricted Stock Units Grant: 19,444 RSUs
•
June 6, 2019 Restricted Stock Units Grant: 11,648 RSUs
RSUs that vest as described in this paragraph will be settled on the earlier of April 7, 2020 and your death.
▪
Notwithstanding the foregoing, each equity award and cash incentive award granted under the Equity Plan that is subject to vesting upon the attainment of performance goals shall become payable in an amount equal to (a) the product of (i) the total number of shares or amount of cash, as applicable, that is earned with respect to such award at the end of the applicable performance period based on actual performance in accordance with the terms of the governing arrangements under which such performance-based award was granted and, (ii) a fraction, the numerator of which is equal to the number of whole calendar months that have elapsed from the grant date of the applicable award to the Separation Date and the denominator of which is the full number of calendar months in the vesting period of such award, less (b) the number of shares or amount of cash that had already become vested as of the Separation Date in respect of such award. Awards that vest as described in this paragraph will be settled at the time when such awards are settled under the applicable terms of the Equity Plan for individuals who remain employed through the end of the applicable performance period.
As a result of the pro-ration formula described above, the target number of PSUs subject to each of your outstanding PSU awards is as follows:
Grant Date
Original Target PSUs
Pro-Rated Target PSUs
March 19, 2019
100,000
19,444
June 6, 2019
96,096
11,648


B-2

2.
Accrued vested benefits under any other benefit plans, programs or arrangements of the Company or its appropriate affiliate (including any vested benefits under the Company’s qualified and nonqualified retirement plans), subject to the terms of such plans, programs or arrangements.
3.
With respect to each equity award referenced above, all applicable withholding requirements with respect thereto shall be satisfied by retention by the Company of a portion of the shares otherwise deliverable to you thereunder, with the shares so retained credited against such withholding requirement at the market value of such shares on the date of such delivery, provided that in no event will the market value of the shares to be so withheld exceed the minimum amount of taxes required to be withheld.

B-3




HORIZON GLOBAL CORPORATION

Performance Share Units Agreement
Signing Grant

This PERFORMANCE SHARE UNITS AGREEMENT (this “Agreement”) is made as of ________________ by and between Horizon Global Corporation, a Delaware corporation (the “Company”), and ___________________ (the “Grantee”).

1.Certain Definitions. Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in the Company’s Amended and Restated 2015 Equity and Incentive Compensation Plan (the “Plan”).
2.Grant of PSUs. Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Grantee as of _______________ (the “Date of Grant”) ____________ performance-based Restricted Stock Units (“PSUs”). Subject to the degree of attainment of the performance goals established for these PSUs, as approved by the Committee and thereafter communicated to the Grantee (the “Statement of Performance Goals”), the Grantee may earn from ___% to _____% of the PSUs. Each PSU shall then represent the right of the Grantee to receive one Common Share subject to and upon the terms and conditions of this Agreement.
3.Payment of PSUs. The PSUs will become payable in accordance with the provisions of Section 6 of this Agreement if the Grantee’s right to receive payment for the PSUs becomes both earned and nonforfeitable in accordance with Section 5 of this Agreement.
4.Restrictions on Transfer of PSUs. Subject to Section 15 of the Plan, neither the PSUs evidenced hereby nor any interest therein or in the Common Shares underlying such PSUs shall be transferable prior to payment to the Grantee pursuant to Section 6 hereof other than by will or pursuant to the laws of descent and distribution.
5.Earning and Vesting of PSUs.
(a)
A percentage of the PSUs from ____% to ____% shall be earned (such portion, the “Earned PSUs”) to the extent that the performance goals described in the Statement of Performance Goals for these PSUs (the “_________Performance Goals”) are achieved for the period commencing on _____________ and ending on _______________ (the “Performance Period”), once determined and certified by the Committee in its sole discretion. The Earned PSUs shall become nonforfeitable and payable to the Grantee (“Vested,” or similar terms), if at all, in three substantially equal installments on each of the first three anniversaries of the Date of Grant (the period commencing on the Date of Grant and ending on the third anniversary of the Date of Grant, the “Vesting Period”), subject to the Grantee remaining in continuous employment with the Company or a Subsidiary through each such anniversary. Any PSUs that do not so Vest will be forfeited, including, except as provided in Section 5(b) or Section 5(c) below, if the Grantee ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any interruption or termination of the Grantee’s employment with the Company or a Subsidiary. Continuous employment shall not be considered interrupted or terminated in the case of transfers between locations of the Company and its Subsidiaries.

1


(b)
Notwithstanding Section 5(a) above, the PSUs shall be earned and Vest (to the extent the PSUs have not previously Vested) and be paid pursuant to Section 6 hereof upon the occurrence of any of the following events at a time when the PSUs have not been forfeited in the following manner:
(i)
If the Grantee should die or become Disabled prior to the end of the Vesting Period while the Grantee is continuously employed by the Company or any of its Subsidiaries, the Grantee shall earn and Vest in the number of PSUs which the Grantee would have earned and Vested in in accordance with the terms and conditions of this Section 5 if Grantee had remained in the continuous employ of the Company or a Subsidiary from the Date of Grant until the end of the Vesting Period or the occurrence of a Change in Control to the extent a Replacement Award is not provided, whichever occurs first; or
(ii)
in the event of a Change in Control that occurs prior to the end of the Vesting Period, the PSUs shall be earned and Vest in accordance with Section 5(c) below.
(c)

(i)
Notwithstanding Section 5(a) above, if at any time before the end of the Vesting Period or forfeiture of the PSUs, and while the Grantee is continuously employed by the Company or a Subsidiary, a Change in Control occurs, then the PSUs will be earned and Vest (except to the extent that a Replacement Award is provided to the Grantee in accordance with Section 5(c)(ii) to continue, replace or assume the PSUs covered by this Agreement (the “Replaced Award”)) as follows: the Performance Period and the Vesting Period will terminate and the Committee as constituted immediately before the Change in Control will determine and certify the Earned PSUs based on actual performance through the most recent date prior to the Change in Control for which achievement of the ________ Performance Goals can reasonably be determined, and such Earned PSUs shall be 100% Vested. PSUs that are earned and Vest in accordance with this Section 5(c)(i) will be paid as provided for in Section 6 of this Agreement.
(ii)
For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (e.g., performance-based restricted stock units) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, (D) if the Grantee holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Grantee under the Code are not less favorable to such Grantee than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Grantee holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the two preceding sentences are satisfied. The determination of whether the conditions of this Section 5(c)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
(iii)
If, after receiving a Replacement Award, the Grantee experiences a termination of employment with the Company or a Subsidiary (or any of their successors) (as

2


applicable, the “Successor”) by reason of a termination by the Successor without Cause or by the Grantee for Good Reason, in each case within a period of two years after the Change in Control and during the remaining vesting period for the Replacement Award, 100% of the Replacement Award shall become nonforfeitable with respect to the performance-based restricted stock units covered by such Replacement Award upon such termination and shall be paid in accordance with Section 6(a) of this agreement.
(iv)
If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding PSUs that at the time of the Change in Control are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be earned and Vested at the time of such Change in Control and will be paid as provided for in Section 6 of this Agreement.
(d)
For purposes of this Agreement, the following definitions apply:
(i)
“Good Reason” shall mean (A) a material and permanent diminution in the Grantee’s duties or responsibilities; (B) a material reduction in the aggregate value of base salary and bonus opportunity provided to the Grantee by the Company; or (C) a permanent reassignment of the Grantee to another primary office more than 50 miles from the current office location. The Grantee must notify the Company of the Grantee’s intention to invoke termination for Good Reason within 90 days after the Grantee has knowledge of such event, provide the Company 30 days’ opportunity for cure, and terminate employment within two years following the initial existence of such event, or such event shall not constitute Good Reason. The Grantee may not invoke termination for Good Reason if Cause exists at the time of such termination.
(ii)
“Cause” shall mean (A) the Grantee’s conviction of or plea of guilty or nolo contendere to a crime constituting a felony under the laws of the United States or any State thereof or any other jurisdiction in which the Company or its Subsidiaries conduct business; (B) the Grantee’s willful misconduct in the performance of the Grantee’s duties to the Company or its Subsidiaries and failure to cure such breach within thirty days following written notice thereof from the Company; (C) the Grantee’s willful failure or refusal to follow directions from the Board (or direct reporting executive) and failure to cure such breach within thirty days following written notice thereof from the Board; or (D) the Grantee’s breach of fiduciary duty to the Company or its Subsidiaries for personal profit.  Any failure by the Company or a Subsidiary to notify the Grantee after the first occurrence of an event constituting Cause shall not preclude any subsequent occurrences of such event (or a similar event) from constituting Cause. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement prevents the Grantee from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of clarity the Grantee is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act.
(iii)
“Disabled” shall mean (A) the Grantee is unable to engage in any substantial gainful activity due to medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, or (B) due to any medically determinable physical or mental impairment expected to result in death or last for a continuous period not less than 12 months, the Grantee has received

3


income replacement benefits for a period of not less than three months under an accident and health plan sponsored by the Company.
(e)
Any PSUs that have not Vested pursuant to Section 5 by the end of the Vesting Period will be forfeited automatically and without further notice after the end of the Vesting Period (or earlier if, and on such date that, Grantee ceases to be an employee of the Company or a Subsidiary prior to the end of the Vesting Period for any reason other than as described in this Section 5).
6.Form and Time of Payment of PSUs.
(a)
Payment for the PSUs, after and to the extent they have become earned and Vested, shall be made in the form of Common Shares. Except as provided in Section 6(b), payment shall be made as soon as administratively practical following (but in no event later than thirty (30) days following) the end of the Vesting Period.
(b)
Notwithstanding Section 6(a), to the extent that the PSUs are earned and Vested on the date of a Change in Control, Grantee will receive payment for Vested PSUs in Common Shares on the date of the Change in Control; provided, however, that if such Change in Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Grantee is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to Section 6(a).
(c)
Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Shares may be issued to the Grantee at a time earlier than otherwise expressly provided in this Agreement.
(d)
The Company’s obligations to the Grantee with respect to the PSUs will be satisfied in full upon the issuance of Common Shares corresponding to such PSUs.
7.Dividend Equivalents; Voting and Other Rights.
(a)
The Grantee shall have no rights of ownership in the Common Shares underlying the PSUs and no right to vote the Common Shares underlying the PSUs until the date on which the Common Shares underlying the PSUs are issued or transferred to the Grantee pursuant to Section 6 above.
(b)
From and after the Date of Grant and until the earlier of (i) the time when the PSUs are paid in accordance with Section 6 hereof or (ii) the time when the Grantee’s right to receive Common Shares in payment of the PSUs is forfeited in accordance with Section 5 hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Shares generally, the Grantee shall be credited with cash per PSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including earning, Vesting, payment and forfeitability) as apply to the PSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the PSUs to which they relate.
(c)
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Shares in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.

4


8.Adjustments. The PSUs and the number of Common Shares issuable for each PSU and the other terms and conditions of the grant evidenced by this Agreement are subject to adjustment as provided in Section 11 of the Plan.
9.Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with the delivery to the Grantee of Common Shares or any other payment to the Grantee or any other payment or vesting event under this Agreement, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the obligation of the Company to make any such delivery or payment that the Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement shall be satisfied by retention by the Company of a portion of the Common Shares to be delivered to the Grantee or by delivering to the Company other Common Shares held by the Grantee. If such election is made, the shares so retained shall be credited against such withholding requirement at the market value of such Common Shares on the date of such delivery. In no event will the market value of the Common Shares to be withheld and/or delivered pursuant to this Section 9 to satisfy applicable withholding taxes exceed the minimum amount of taxes required to be withheld.
10.Compliance With Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of the Plan and this Agreement, the Company shall not be obligated to issue any Common Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law.
11.Compliance With Section 409A of the Code. To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause this Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with or be exempt from Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Grantee). If the PSUs become payable on the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code and the Grantee is a “specified employee” as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code, then, to the extent necessary to comply with Section 409A of the Code and avoid any additional taxes thereunder, payment for the PSUs shall be made on the earlier of the fifth business day of the seventh month after the date of the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code or the Grantee’s death.
12.Interpretation. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. Except as expressly provided in this Agreement, capitalized terms used herein will have the meaning ascribed to such terms in the Plan.
13.No Right to Future Awards or Employment. The grant of the PSUs under this Agreement to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the PSUs and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement shall confer upon the Grantee any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company or any of its Subsidiaries to terminate the employment or adjust the compensation of the Grantee.

5


14.Relation to Other Benefits. Any economic or other benefit to the Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or any of its Subsidiaries and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any of its Subsidiaries.
15.Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that (a) no amendment shall adversely affect the rights of the Grantee under this Agreement without the Grantee’s written consent, and (b) the Grantee’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or Section 10D of the Exchange Act.
16.Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
17.Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement. Notwithstanding anything in this Agreement to the contrary, Grantee acknowledges and agrees that this Agreement and the award described herein (and any settlement thereof) are subject to the terms and conditions of the Company’s clawback policy (if any) as may be in effect from time to time specifically to implement Section 10D of the Exchange Act and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the Common Shares may be traded) (the “Compensation Recovery Policy”), and that relevant sections of this Agreement shall be deemed superseded by and subject to the terms and conditions of the Compensation Recovery Policy from and after the effective date thereof.
18.Electronic Delivery. The Company may, in its sole discretion, deliver any documents related to the PSUs and the Grantee’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Grantee’s consent to participate in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
19.Governing Law. This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.
20.Successors and Assigns. Without limiting Section 4 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.
21.Acknowledgement. The Grantee acknowledges that the Grantee (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.
22.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.



6


HORIZON GLOBAL CORPORATION

By: ________________________

Name: Jay Goldbaum
Title: General Counsel, Chief Compliance Officer & Corporate Secretary

Grantee Acknowledgment and Acceptance

By: _________________________    

Name:
Title:
    

7


    
Statement of Performance Goals
This Statement of Performance Goals applies to the PSUs granted to the Grantee on the Date of Grant and applies with respect to the Performance Share Units Agreement between the Company and the Grantee (the “Agreement”). Capitalized terms used in this Statement of Performance Goals that are not specifically defined in this Statement of Performance Goals have the meanings assigned to them in the Agreement.
1.
Definitions. For purposes hereof:
a.
“Beginning Stock Price” means the closing price of a Common Share on the principal stock exchange on which the Common Shares are then traded on ________________.
b.
“Ending Stock Price” means the average closing price of a Common Share on the principal stock exchange on which the Common Shares are then traded for the last 30 trading days of the Performance Period.
2.
PSU Performance Matrix. From ___% to ___% of the PSUs will be earned based on absolute Common Shares price performance during the Performance Period as follows:

Performance Level
Ending Stock Price Minus Beginning Stock Price
PSUs Earned
Below Threshold I
Less than $______
_____%
Threshold I
$______
_____%
Threshold II
$______
_____%
Threshold III
$______
_____%
Maximum
$______ or greater
_____%

3.
Number of PSUs Earned. Following the Performance Period, the Committee shall determine whether and to what extent the ___________ Performance Goals have been satisfied for the Performance Period and shall determine the number of PSUs that shall become Earned PSUs hereunder and under the Agreement on the basis of the following:
a.
Below Threshold I. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is less than $_______, as set forth in the Performance Matrix, then ___% of the PSUs shall become Earned PSUs.
b.
Threshold I. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is equal to $_____, as set forth in the Performance Matrix, then ____% of the PSUs shall become Earned PSUs.
c.
Between Threshold I and Threshold II. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is greater than $_____ but less than $______, a percentage between ____% and ____% (determined on the basis of straight-line mathematical interpolation) of the PSUs (rounded up to the nearest whole number of PSUs) shall become Earned PSUs.
d.
Threshold II. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is equal to $_____, as set forth in the Performance Matrix, then _____% of the PSUs shall become Earned PSUs.
e.
Between Threshold II and Threshold III. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is greater than $______ but less than $______, a percentage between ____% and ____% (determined on the basis of straight-line mathematical interpolation) of the PSUs (rounded up to the nearest whole number of PSUs) shall become Earned PSUs.

8


f.
Threshold III. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is equal to $______, as set forth in the Performance Matrix, then _____% of the PSUs shall become Earned PSUs.
g.
Between Threshold III and Maximum. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is greater than $______ but less than $______, a percentage between _____% and _____% (determined on the basis of straight-line mathematical interpolation) of the PSUs (rounded up to the nearest whole number of PSUs) shall become Earned PSUs.
h.
Equals or Exceeds Maximum. If, upon the conclusion of the Performance Period, the Ending Stock Price minus the Beginning Stock Price is equal to or greater than $______, as set forth in the Performance Matrix, then ____% of the PSUs shall become Earned PSUs.


9


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, Terrence G. Gohl, 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: November 12, 2019
 
/s/ TERRENCE G. GOHL
 
Terrence G. Gohl
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: November 12, 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 September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Terrence G. Gohl, 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: November 12, 2019
 
/s/  TERRENCE G. GOHL
 
Terrence G. Gohl
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 September 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: November 12, 2019
 
/s/  JAMIE G. PIERSON
 
Jamie G. Pierson
Chief Financial Officer