Long-Term Debt

6 Months Ended

Jun. 30, 2019

6. Long-Term Debt

Long-term debt consisted of the following (in thousands):



	June 30, 2019			December 31, 2018
Credit Facility	$	792,500		$	839,500

2027 Notes	500,000			—
Less: Deferred financing costs, net of amortization	(8,550		)	—
	491,450			—

2022 Notes	350,000			350,000
Less: Debt discount, net of amortization	(2,411		)	(2,766		)
Less: Deferred financing costs, net of amortization	(2,725		)	(3,133		)
	344,864			344,101

2021 Notes	—			350,000
Less: Debt discount, net of amortization	—			(1,789		)
Less: Deferred financing costs, net of amortization	—			(2,311		)
	—			345,900
Long-term debt	$	1,628,814		$	1,529,501

Archrock Credit Facility

In April 2018, in connection with the Merger and Amendment No. 1, the Archrock Credit Facility was terminated. As a result of the termination, we recorded a debt extinguishment loss of $2.5 million during the three and six months ended June 30, 2018. We incurred $0.2 million in commitment fees in 2018 prior to the facility’s termination and were in compliance with all covenants through its closing.

Credit Facility

As of June 30, 2019, there were $15.2 million letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 2.7%. The weighted average annual interest rate on the outstanding balance under the Credit Facility, excluding the effect of interest rate swaps, was 5.3% and 5.4% at June 30, 2019 and December 31, 2018, respectively. We incurred $0.6 million in commitment fees on the daily unused amount of the Credit Facility during each of the three months ended June 30, 2019 and 2018 and $1.1 million during each of the six months ended June 30, 2019 and 2018.

We must maintain the following consolidated financial ratios, as defined in the Credit Facility agreement:



EBITDA to Interest Expense	2.5 to 1.0
Senior Secured Debt to EBITDA	3.5 to 1.0
Total Debt to EBITDA
Through fiscal year 2019	5.75 to 1.0
Through second quarter of 2020	5.50 to 1.0
Thereafter ⁽¹⁾	5.25 to 1.0

——————


⁽¹⁾	Subject to a temporary increase to 5.5 to 1.0 for any quarter during which an acquisition satisfying certain thresholds is completed and for the two quarters immediately following such quarter.

As of June 30, 2019, the ratio requirements above did not constrain our undrawn capacity and as such, all of the $442.3 million of undrawn capacity was available for additional borrowings. As of June 30, 2019, we were in compliance with all covenants under the Credit Facility agreement.

2027 Notes

On March 21, 2019, we completed a private offering of $500.0 million aggregate principal amount of 6.875% senior notes due April 2027 and received net proceeds of $491.2 million after deducting issuance costs. The $8.8 million of issuance costs were recorded as deferred financing costs within long-term debt in our condensed consolidated balance sheets and are being amortized to interest expense in our condensed consolidated statement of operations over the term of the notes. The net proceeds were used to repay borrowings outstanding under the Credit Facility as of March 31, 2019.

The 2027 Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the U.S. except pursuant to a registration exemption under the Securities Act and applicable state securities laws. We offered and issued the 2027 Notes only to qualified institutional buyers in accordance with Rule 144A under the Securities Act and to certain non-U.S. persons outside the U.S. in accordance with Regulation S under the Securities Act.

The 2027 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by us and all of our existing subsidiaries, other than Archrock Partners, L.P. and APLP Finance Corp., which are co-issuers of the 2027 Notes, and certain of our future subsidiaries. The 2027 Notes and the guarantees rank equally in right of payment with all of our and the guarantors’ existing and future senior indebtedness.

The 2027 Notes may be redeemed at any time, in whole or in part, at specified redemption prices and make-whole premiums, plus any accrued and unpaid interest.

Redemption of 2021 Notes

On April 5, 2019, the 2021 Notes were redeemed at 100% of their $350.0 million aggregate principal amount plus accrued and unpaid interest of $0.2 million with borrowings from the Credit Facility. We recorded a debt extinguishment loss of $3.7 million related to the redemption during the three and six months ended June 30, 2019.