Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

v3.19.1
Long-Term Debt
3 Months Ended
Mar. 31, 2019
Long-Term Debt  
Long-Term Debt

4.  LONG-TERM DEBT

 

The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands:

   

 

 

 

 

 

 

 

 

 

As of

 

    

March 31, 

    

December 31, 

Principal debt balances:

 

2019

    

2018

Current portion of long-term debt - term loan

 

$

24,063

 

$

21,875

Current portion of long-term debt - equipment notes

 

 

5,028

 

 

4,977

Long-term portion of long-term debt - Senior Notes

 

 

400,000

 

 

400,000

Long-term portion of long-term debt - term loan

 

 

299,062

 

 

305,625

Long-term portion of long-term debt - equipment notes

 

 

18,201

 

 

19,478

Unamortized debt issuance costs

 

 

(8,091)

 

 

(8,481)

Total debt, net of unamortized debt issuance costs

 

 

738,263

 

 

743,474

Less: current portion of long-term debt

 

 

29,091

 

 

26,852

Total long-term debt

 

$

709,172

 

$

716,622

 

The following table sets forth our remaining principal payments for our outstanding debt balances as of March 31, 2019, in thousands:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments Due by Period

 

 

2019

 

2020

 

2021

 

2022

 

2023

 

Thereafter

 

Total

Senior Notes

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

400,000

 

$

400,000

Term loan

    

 

17,500

    

 

26,250

    

 

30,625

    

 

248,750

    

 

 —

    

 

 —

    

 

323,125

Equipment notes

 

 

3,751

 

 

5,187

 

 

5,407

 

 

5,636

 

 

3,248

 

 

 —

 

 

23,229

Total

 

$

21,251

 

$

31,437

 

$

36,032

 

$

254,386

 

$

3,248

 

$

400,000

 

$

746,354

 

Amended Credit Agreement and Senior Secured Term Loan Facility 

On March 28, 2018, the Company executed an amendment to its credit agreement, which primarily facilitated the acquisition of USI by (i) extending until August 29, 2018, the period during which the Company could access the $100.0 million delayed draw term loan feature and (ii) providing that the Company could issue up to $500.0 million of Senior Notes in connection with its acquisition of USI.  On May 1, 2018, the Company closed on its acquisition of USI.  The acquisition was funded through net proceeds from the issuance of our Senior Notes on April 25, 2018 together with the net proceeds from the $100.0 million delayed draw term loan commitment accessed on May 1, 2018 under the Company’s Amended Credit Agreement.  These funds were also used for the payment of related fees and expenses, as well as for general corporate purposes.

 

The following table outlines the key terms of our Amended Credit Agreement (dollars in thousands):

 

 

 

 

 

Senior secured term loan facility (original borrowing) (a)

$

250,000

 

Additional delayed draw term loan (b)

$

100,000

 

 

 

 

 

Additional term loan and/or revolver capacity available under incremental facility (c)

$

200,000

 

 

 

 

 

Revolving Facility

$

250,000

 

Sublimit for issuance of letters of credit under Revolving Facility (d)

$

100,000

 

Sublimit for swingline loans under Revolving Facility (d)

$

20,000

 

 

 

 

 

Interest rate as of March 31, 2019

 

3.74

%

Scheduled maturity date

 

5/05/2022

 


(a)

The Amended Credit Agreement provides for a term loan limit of $350.0 million; $250.0 million was drawn on May 5, 2017.

(b)

On May 1, 2018, the net proceeds from the $100.0 million delayed draw term loan were used to partially fund the USI acquisition.

(c)

Additional borrowing capacity is available under the incremental facility, subject to certain terms and conditions (including existing or new lenders providing commitments in respect of such additional borrowing capacity).

(d)

Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the Revolving Facility.

 

Interest payable on borrowings under the Amended Credit Agreement is based on an applicable margin rate plus, at our option, either: 

 

·

A base rate determined by reference to the highest of either (i) the federal funds rate plus 0.50 percent, (ii) Bank of America’s “prime rate,” or (iii) the LIBOR rate for U.S. dollar deposits with a term of one month, plus 1.00 percent; or

 

·

A LIBOR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowings.

 

The applicable margin rate is determined based on our Secured Leverage Ratio.  In the case of base rate borrowings, the applicable margin rate ranges from 0.00 percent to 1.50 percent and in the case of LIBOR rate borrowings, the applicable margin ranges from 1.00 percent to 2.50 percent.  Borrowings under the Amended Credit Agreement are prepayable at the Company’s option without premium or penalty.  The Company is required to make prepayments with the net cash proceeds of certain asset sales and certain extraordinary receipts.

 

Revolving Facility

 

The Company has outstanding standby letters of credit that secure our financial obligations related to our workers’ compensation, general insurance, and auto liability programs.  These standby letters of credit, as well as any outstanding amount borrowed under our Revolving Facility, reduce the availability under the Revolving Facility.  The following table summarizes our availability under the Revolving Facility, in thousands:

 

 

 

 

 

 

 

 

 

 

As of

 

 

March 31, 

    

December 31, 

 

    

2019

    

2018

Revolving Facility

 

$

250,000

 

$

250,000

Less: standby letters of credit

 

 

(67,278)

 

 

(59,288)

Availability under Revolving Facility

 

$

182,722

 

$

190,712

 

We are required to pay commitment fees to the Lenders in respect of any unutilized commitments.  The commitment fees range from 0.15 percent to 0.275 percent per annum, depending on our Secured Leverage Ratio.  We must also pay customary fees on outstanding letters of credit.

 

Senior Notes 

The Senior Notes are our senior unsecured obligations and bear interest at 5.625% per year, payable semiannually in arrears on May 1 and November 1 of each year, which began on November 1, 2018. The Senior Notes mature on May 1, 2026, unless redeemed early or repurchased.  We have the right to redeem the Senior Notes under certain circumstances, and, if we undergo a change in control, we must make an offer to repurchase all of the Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. 

   

Equipment Notes 

During 2018, the Company executed $26.6 million of equipment notes for the purpose of financing the purchase of vehicles and equipment.  The Company did not issue any equipment notes during the quarter ended March 31, 2019.  The Company’s equipment notes each have a five year maturity through 2023 and bear interest at fixed rates between 3.9% and 4.4%.  

   

Covenant Compliance 

The indenture governing our Senior Notes contains customary restrictive covenants that, among other things, generally limit our ability to incur additional debt and issue preferred stock; to create liens; to pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments; to place limitations on distributions from certain subsidiaries; to issue guarantees; to issue or sell the capital stock of certain subsidiaries; to sell assets; to enter into transactions with affiliates; and to effect mergers.  The Senior Notes indenture also contains customary events of default, subject in certain cases to grace and cure periods. Generally, if an event of default occurs and is continuing, the trustee under the indenture or the holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on all the Senior Notes immediately due and payable.  The Senior Notes and related guarantees have not been registered under the Securities Act of 1933, and we are not required to register either the Senior Notes or the guarantees in the future.

   

The Amended Credit Agreement contains certain covenants that limit, among other things, the ability of the Company to incur additional indebtedness or liens; to make certain investments or loans; to make certain restricted payments; to enter into consolidations, mergers, sales of material assets, and other fundamental changes; to transact with affiliates; to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends; or to make certain accounting changes.  The Amended Credit Agreement contains customary affirmative covenants and events of default.

 

The Amended Credit Agreement requires that we maintain a Net Leverage Ratio and minimum FCCR throughout the term of the agreement.  The following table sets forth the maximum Net Leverage Ratios and minimum FCCR required:

 

 

 

 

 

 

Quarter Ending

    

Maximum
Net Leverage Ratio

 

Minimum
FCCR

June 30, 2018 through September 30, 2018

 

3.75:1.00

 

1.25:1.00

December 31, 2018 through June 30, 2019

 

3.50:1.00

 

1.25:1.00

September 30, 2019 and each fiscal quarter end thereafter

 

3.25:1.00

 

1.25:1.00

 

The following table outlines the key financial covenants effective for the period covered by this Quarterly Report:

 

 

 

 

 

 

As of March 31, 2019

Maximum Net Leverage Ratio

 

3.50:1.00

Minimum FCCR

 

1.25:1.00

Compliance as of period end

 

In Compliance