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Secured Credit Facility and Other Debt | 12 Months Ended
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Dec. 31, 2017
Debt Disclosure [Abstract] |
Secured Credit Facility and Other Debt | Secured Credit Facility and Other Debt Long-term debt consists of the following (in thousands):
| As of December 31,
| 2017 |  | 2016
Loans | $ | 85,000 |  |  | $ | 3,532 |
Less deferred loan costs | (8,812 | ) |  | (803 | )
Total loans, Net | 76,188 |  |  | 2,729 |
Notes and deferred payments to sellers, Tealstone Acquisition | 12,393 |  |  | — |
Notes payable for transportation and construction equipment and other | 1,557 |  |  | 2,665 |
Total debt | 90,138 |  |  | 5,394 |
Current maturities of long-term debt | 3,978 |  |  | 4,648 |
Less current deferred loan costs | — |  |  | (803 | )
Less current maturities of long-term debt, net | (3,978 | ) |  | (3,845 | )
Total long-term debt | $ | 86,160 |  |  | $ | 1,549 |
On April 3, 2017, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into a Loan and Security Agreement with Wilmington Trust, National Association, as agent, and the lenders party thereto (the “Oaktree Facility”), providing for a term loan of $85,000,000 (the “Loan”) with a maturity date of April 4, 2022, which replaced the then existing debt facility. The Oak Tree Facility is secured by substantially all of the assets of the Company and its subsidiaries. Interest on the Loan is equal to the one-, two-, three- or six-month London interbank rate, or LIBOR, plus 8.75% per annum on the unpaid principal amount of the Loan, subject to adjustment under certain circumstances. Interest on the Loan is generally payable monthly. There are no amortized principal payments; however, the Company is required to prepay the Loan, and in certain cases pay a prepayment premium thereon, with proceeds received from the issuances of debt or equity, transfers, events of loss and extraordinary receipts. The Company is required to make an offer quarterly to the lenders to prepay the Loan in an amount equal to 75% of its excess cash flow, plus accrued and unpaid interest thereon and a prepayment premium. The Oaktree Facility contains various covenants that limit, among other things, the Company’s ability and certain of its subsidiaries’ ability to incur certain indebtedness, grant certain liens, merge or consolidate, sell assets, make certain loans, enter into acquisitions, incur capital expenditures, make investments, and pay dividends. In addition, the Company is required to maintain the following principal financial covenants:
• | a ratio of secured indebtedness to EBITDA of not more than 3.10 to 1.00 for four consecutive quarters, reducing to 1.80 to 1.00 by the four consecutive quarters ending September 30, 2019;
• | daily cash collateral of not less $15,000,000, potentially further increasing to $18,000,000 beginning on April 4, 2018;
• | a rolling four quarter gross margin in Backlog of not less than $60,000,000, increasing to $70,000,000 by March 31, 2019;
• | the incurrence of net capital expenditures during each four consecutive fiscal quarters shall not exceed $15,000,000;
• | bonding capacity shall be maintained at all times in an amount not less than $1,000,000,000; and
• | the EBITDA of Tealstone Residential Concrete, Inc. shall not be less than $12,000,000 during each four consecutive fiscal quarters.
The Company is in compliance with these covenants at December 31, 2017. The Oaktree Facility also includes customary events of default, including events of default relating to non-payment of principal or interest, inaccuracy of representations and warranties, breaches of covenants, cross-defaults, bankruptcy and insolvency events, certain unsatisfied judgments, loan documents not being valid, calls under the Company’s bonds, failure of specified individuals to remain employed by the Company, and a change of control. If an event of default occurs, the lenders will be able to accelerate the maturity of the Oaktree Facility and exercise other rights and remedies. Deferred loan costs and warrants totaled $10.4 million, which included attorney and investment bank fees as well as amounts paid to the lenders and warrants valued at $3.5 million. Refer to Note 2 for additional information on the warrants. The total amount will be amortized on a straight-line basis, which approximates the effective interest method, over the five-year life of the Loan. Amortization expense of $1.6 million has been included in interest expense for the twelve months ended December 31, 2017. Notes and Deferred Payments to Sellers As part of the Tealstone Acquisition, the Company issued $5,000,000 of promissory notes to the sellers and agreed to make $2,426,000 and $7,500,000 of deferred cash payments on the second and third anniversaries of the closing date, respectively. Based on a 12% discount rate, the Company recorded $11.6 million as notes and deferred payments to sellers in long-term debt on our consolidated balance sheet at the acquisition closing date. Accreted interest for the period was $0.8 million for the twelve months ended December 31, 2017, respectively, and was recorded as interest expense. Notes Payable for Transportation and Construction Equipment The Company has purchased and financed various transportation and construction equipment to enhance the Company’s fleet of equipment. The total long-term notes payable related to the purchase of financed equipment was $1.6 million and $2.7 million at December 31, 2017 and December 31, 2016, respectively. The purchases have payment terms ranging from 3 to 5 years and the associated interest rates range from 3.15% to 6.92% the fair value of these notes payable approximates their book value. Fair Value The Company’s debt is recorded at its carrying amount in the consolidated balance sheets. As of December 31, 2017 and December 31, 2016, the carrying values of our debt outstanding approximated the fair values and were $90.1 million and $5.4 million. There was no revolver as of December 31, 2017 and no amounts outstanding on the Equipment-based Facility revolver as of December 31, 2016. Loss on Extinguishment of Debt As part of the extinguishment of our Equipment-based Facility, $0.8 million in debt extinguishment costs was expensed and included as a “loss on extinguishment of debt” on our statement of operations for the twelve months ended December 31, 2017. In order to extinguish our Prior Credit Facility debt, the Company incurred costs of $0.2 million which were included in “Loss on extinguishment of debt” in the Company’s 2015 consolidated statement of operations. Equipment-based Facility In May 2015, the Company and its wholly-owned subsidiaries entered into a $40.0 million loan and security agreement with Nations, consisting of a $20.0 million Term Loan and a $20.0 million Revolving Loan (combined, the “Equipment-based Facility”). The Equipment-based facility was repaid with a portion of the Oak Tree Facility on April 3, 2017 and was terminated. During 2016, the Company prepaid $10.0 million of the principal balance of our Term Loan and paid approximately $0.3 million as prepayment fees which were recorded as “Interest expense” in our consolidated statement of operations. At December 31, 2016, the Company had no amounts drawn on the Revolving Loan, $3.5 million outstanding under the Term Loan and $20.0 million of borrowings available. The Revolving Loan was utilized by the Company to provide ongoing working capital and for other general corporate purposes. Interest Expense The Company's interest expense for the twelve months ended December 31, 2017 was $9.8 million, compared to $2.6 million and $3.0 million 2016 and 2015, respectively. The increase in interest cost, in 2017, is due to our Oak Tree Facility that has a higher amount of principal outstanding. Maturities of Debt The Company’s long-term obligations mature in future years as follows (amounts in thousands):
Years Ending December 31, | Amount
2018 | $ | 3,978 |
2019 | 2,634 |
2020 | 10,370 |
2021 | 6 |
2022 | 73,150 |
Thereafter | — |
Total | $ | 90,138 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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