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Long-term Debt | 12 Months Ended
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Dec. 31, 2021
Debt Disclosure [Abstract] |
Long-term Debt | 9. Long-term Debt The following table provides a summary of the Company’s long-term debt at December 31:
($ in thousands) |  | 2021 |  |  | 2020 |
2021 Term Loan, due 2028 |  | $ | 895,125 |  |  | $ | — |
Senior Notes, due 2029 |  |  | 350,000 |  |  |  | — |
PPP Loan |  |  | 2,933 |  |  |  | — |
2018 Term Loan |  |  | — |  |  |  | 865,642 |
Revolver |  |  | 25,000 |  |  |  | — |
Less: original issue discounts |  |  | (6,753 | ) |  |  | (3,952 | )
Less: unamortized deferred financing costs |  |  | (22,551 | ) |  |  | (19,645 | )
Total long-term debt |  |  | 1,243,754 |  |  |  | 842,045 |
Less: current portion of long-term debt |  |  | (36,952 | ) |  |  | (9,104 | )
Total long-term debt, net of current portion |  | $ | 1,206,802 |  |  | $ | 832,941 |
The following table pres ents the aggregate principal and interest payments in future years on long-term debt as of December 31, 2021:
($ in thousands) |  | Principal |  |  | Interest (2) |
2022 (1) |  | $ | 34,019 |  |  | $ | 51,859 |
2023 |  |  | 9,019 |  |  |  | 51,508 |
2024 |  |  | 9,019 |  |  |  | 51,266 |
2025 |  |  | 9,019 |  |  |  | 50,849 |
2026 |  |  | 9,019 |  |  |  | 50,519 |
Thereafter |  |  | 1,200,030 |  |  |  | 82,296 |
Total |  | $ | 1,270,125 |  |  | $ | 338,297 |
(1) This excludes $2.9 million principal related to the PPP Loan that is expected to be forgiven, as discussed below. (2) The variable interest rates in effect as of December 31, 2021, was used to calculate interest payments for the 2021 Term Loan and the Revolver borrowings. 2021 Term Loan and Senior Notes In March 2021, VM Consolidated, Inc., the Company’s wholly owned subsidiary, entered into an Amendment and Restatement Agreement No.1 to the First Lien Term Loan Credit Agreement (the “2021 Term Loan”) with a syndicate of lenders. The 2021 Term Loan has an aggregate borrowing of $650 million, maturing on March 26, 2028, and an accordion feature providing for an additional $250 million of term loans, subject to satisfaction of certain requirements. In connection with the 2021 Term Loan, the Company had an offering discount cost of $3.3 million and $0.7 million of deferred financing costs, both of which were capitalized and are amortized over the remaining life of the 2021 Term Loan. In addition, in March 2021, VM Consolidated, Inc. issued an aggregate principal amount of $350 million in Senior Unsecured Notes (the “Senior Notes”), due on April 15, 2029. In connection with the issuance of the Senior Notes, the Company incurred $5.7 million in lender and third-party costs, which were capitalized as deferred financing costs and are being amortized over the remaining life of the Senior Notes. The net proceeds from both the 2021 Term Loan and the Senior Notes received in March 2021 were used to repay in full all outstanding debt which was represented by the First Lien Term Loan Credit Agreement (as amended, the “2018 Term Loan”) with a balance of $865.6 million. On December 7, 2021, VM Consolidated Inc, entered into an agreement to exercise the accordion feature under the 2021 Term Loan, borrowing $250 million in incremental term loans (“Incremental Term Loan”). The proceeds from the Incremental Term Loan were used, along with cash on hand, to fund the acquisition of T2 Systems, including repaying in full all outstanding debt for T2 Systems. In connection w ith the Incremental Term Loan, the Company had an offering discount cost of $1.3 million and $3.8 million of deferred financing costs, both of which were capitalized and are amortized over the remaining life of the 2021 Term Loan. The Incremental Term Loan accrued interest from the date of borrowing until December 31, 2021, at which time, it was combined with the 2021 Term Loan to be a single tranche of term loan borrowings. The total principal outstanding under the 2021 Term Loan, which includes the Incremental Term Loan, was $895.1 million at December 31, 2021. The 2021 Term Loan is repayable at 1.0% per annum of the amount initially borrowed, paid in quarterly installments. It bears interest based, at the Company’s option, on either (1) LIBOR plus an applicable margin of 3.25% per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. As of December 31, 2021, the interest rate on the 2021 Term Loan was 3.6%. In addition, the 2021 Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the 2021 Term Loan agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year, beginning with the year ending December 31, 2022), as set forth in the following table:
Consolidated First Lien Net Leverage Ratio (As Defined by the 2021 Term Loan Agreement) |  | Applicable Prepayment Percentage
> 3.70:1.00 |  | 50%
< 3.70:1.00 and > 3.20:1.00 |  | 25%
< 3.20:1.00 |  | 0%
Interest on the Senior Notes is fixed at 5.50% per annum and is payable on April 15 and October 15 of each year (beginning on October 15, 2021). On or after April 15, 2024, the Company may redeem all or a portion of the Senior Notes at the redemption prices set forth below in percentages by year, plus accrued and unpaid interest:
Year |  | Percentage
2024 |  | 102.750%
2025 |  | 101.375%
2026 and thereafter |  | 100.000%
In addition, the Company may redeem up to 40% of the Senior Notes before April 15, 2024, with the net cash proceeds from certain equity offerings. The Company evaluated the March 2021 refinancing transactions on a lender-by-lender basis and accounted for the portion of the transaction that did not meet the accounting criteria for debt extinguishment as a debt modification. Accordingly, the Company recognized a loss on extinguishment of debt of $5.3 million on the 2018 Term Loan during the year ended December 31, 2021, consisting of a $4.0 million write-off of pre-existing deferred financing costs and discounts and $1.3 million of lender and third-party costs associated with the issuance of the new 2021 Term Loan. PPP Loan During fiscal year 2020, Redflex received a loan from the U.S. Small Business Administration (“SBA”) as part of the Paycheck Protection Program (“PPP Loan”) to offset certain employment and other allowable costs incurred as a result of the COVID-19 pandemic. At December 31, 2021, the loan amount outstanding was $2.9 million and is payable within a year, and is included in the current portion of long-term debt. In early 2021, Redflex applied for forgiveness of this loan and, as of December 31, 2021, was still awaiting approval from the SBA. The Revolver The Company has a Revolving Credit Agreement (the “Revolver”) with a commitment of up to $75 million available for loans and letters of credit. The Revolver matures on December 20, 2026. Borrowing eligibility under the Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. The Revolver bears interest on either (1) LIBOR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) LIBOR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on the Company’s average availability to borrow under the commitment. At December 31, 2021, the Company had $25.0 million in outstanding borrowings on the Revolver, which was repaid in full in January 2022. Interest on the unused portion of the Revolver is payable quarterly at 0.375% and the Company is also required to pay participation and fronting fees at 1.38% on $6.2 million of outstanding letters of credit as of December 31, 2021. All borrowings and other extensions of credits under the 2021 Term Loan, Senior Notes and the Revolver are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. At December 31, 2021, the Company was compliant with all debt covenants. Substantially all of the Company’s assets are pledged as collateral to secure the Company’s indebtedness under the 2021 Term Loan and the Revolver. Interest Expense The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $44.9 million, $40.9 million and $60.7 million for the fiscal years ended December 31, 2021, 2020 and 2019 respectively. The weighted average effective interest rates on the Company’s outstanding borrowings were 4.1% and 3.4% at December 31, 2021 and December 31, 2020, respectively.

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