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LONG-TERM DEBT | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
| December 31, 2020 |  | December 31, 2019
| Carrying Value(1) |  | Fair Value |  | Carrying Value(1) |  | Fair Value
ABL Revolver | $ | — |  |  | — |  |  | $ | — |  |  | — |
Term Loan B | 330,000 |  |  | 325,875 |  |  | 244,375 |  |  | 244,375 |
Total Debt | 330,000 |  |  | 325,875 |  |  | 244,375 |  |  | 244,375 |
Less: Current maturities | (3,300) |  |  | (3,259) |  |  | (2,500) |  |  | (2,500) |
Total Long-term Debt | $ | 326,700 |  |  | $ | 322,616 |  |  | $ | 241,875 |  |  | $ | 241,875 |
(1) Carrying value amount do not include unamortized debt issuance costs of $9.6 million and $6.5 million for year ended December 31, 2020 and December 31, 2019 respectively. Asset-Based Loan Facility: On March 17, 2020, the Company entered into an Increase Agreement (the "Increase Agreement") that provided for a $135 million asset-backed revolving line of credit (the "ABL Revolver") a $50 million increase from the $85.0 million available under the original revolver. During the twelve months ended December 31, 2020, the amount available to be borrowed under our credit facility increased to $131.9 million compared to $81.6 million at December 31, 2019 primarily as a result of the above mentioned Increase Agreement offset by outstanding letters of credit. As of December 31, 2020, there were no amounts of ABL Loans outstanding under the ABL Revolver. The Company's consolidated Fixed Charge Coverage Ratio was 3.45 to 1.00 as of December 31, 2020. DXP was in compliance with all such covenants that were in effect on such date under the ABL Revolver as of December 31, 2020. The ABL Credit Agreement may be increased in increments of $10.0 million up to an aggregate of $50.0 million. The facility will mature on August 29, 2022. Interest accrues on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average daily excess availability under the facility for the most recently completed calendar quarter. Fees ranging from 0.25% to 0.375% per annum are payable on the portion of the facility not in use at any given time. The unused line fee was 0.375% at December 31, 2020. The interest rate for the ABL facility was 1.9% at December 31, 2020. Term Loan B: On December 23, 2020, DXP entered into a new seven year, $330 million Senior Secured Term Loan B (the “Term Loan B Agreement”), which replaced DXP’s previously existing Senior Secured Term Loan. The Term Loan B Agreement provides for a new $330 million term loan (the “Term Loan”) that amortizes in equal quarterly installments of 0.25% with the balance payable in December 2027, when the facility matures. Subject to securing additional lender commitments, the Term Loan B Agreement allows for incremental increases in facility size up to an aggregate of $52.5 million, plus an additional amount such that DXP’s Secured Leverage Ratio (as defined in the Term Loan B Agreement) would not exceed 3.75 to 1.00. Interest accrues on the Term Loan at a rate equal to the base rate plus a margin of 3.75% for the Base Rate Loans (as defined in the Term Loan B Agreement), or LIBOR plus a margin of 4.75% for the Eurodollar Rate Loans (as defined in the Term Loan B Agreement). We are required to repay the Term Loan with certain asset sales and insurance proceeds, certain debt proceeds and 50% of excess cash flow, if our total leverage ratio is no more than 3.00 to 1.00 and greater than 2.50 to 1:00, reducing to 25%, if our total leverage ratio is no more than 2.50 to 1.00. The interest rate for the Term Loan was 5.75% as of December 31, 2020. Financial Covenants: DXP’s principal financial covenants under the ABL Credit Agreement and Term Loan B Agreement include: Fixed Charge Coverage Ratio – The Fixed Charge Coverage Ratio under the ABL Credit Agreement is defined as the ratio for the most recently completed four-fiscal quarter period, of (a) EBITDA minus capital expenditures (excluding those financed or funded with debt (other than the ABL Loans), (ii) the portion thereof funded with the net proceeds from asset dispositions of equipment or real property which DXP is permitted to reinvest pursuant to the Term Loan and the portion thereof funded with the net proceeds of casualty insurance or condemnation awards in respect of any equipment and real estate which DXP is not required to use to prepay the ABL Loans pursuant to the Term Loan B Agreement or with the proceeds of casualty insurance or condemnation awards in respect of any other property) minus cash taxes paid (net of cash tax refunds received during such period), to (b) fixed charges. The Company is restricted from allowing its fixed charge coverage ratio be less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under the ABL facility falls below a threshold set forth in the ABL Credit Agreement. As of December 31, 2020, the Company's consolidated Fixed Charge Coverage Ratio was 3.45 to 1.00. Secured Leverage Ratio – The Term Loan B Agreement requires that the Company’s Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of unrestricted cash, not to exceed $150 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2020, is either equal to or less than as indicated in the table below:
| Fiscal Quarter | Secured Leverage Ratio
| December 31, 2020 | 5.75:1:00
| March 31, 2021 | 5.75:1:00
| June 30, 2021 | 5.75:1:00
| September 30, 2021 | 5.50:1:00
| December 31, 2021 | 5.50:1:00
| March 31, 2022 | 5.25:1:00
| June 30, 2022 | 5.25:1:00
| September 30, 2022 | 5.25:1:00
| December 31, 2022 | 5.00:1:00
| March 31, 2023 | 5.00:1:00
| June 30, 2023 and each Fiscal Quarter thereafter | 4.75:1:00
EBITDA as defined under the Term Loan B Agreement for financial covenant purposes means, without duplication, for any period of determination, the sum of, consolidated net income during such period; plus to the extent deducted from consolidated net income in such period: (i) income tax expense, (ii) franchise tax expense, (iii) consolidated interest expense, (iv) amortization and depreciation during such period, (v) all non-cash charges and adjustments, and (vi) non-recurring cash expenses related to the Term Loan, provided, that if the Company acquires or disposes of any property during such period (other than under certain exceptions specified in the Term Loan B Agreement, including the sale of inventory in the ordinary course of business, then EBITDA shall be calculated, after giving pro forma effect to such acquisition or disposition, as if such acquisition or disposition had occurred on the first day of such period. As of December 31, 2020, the Company’s consolidated Secured Leverage Ratio was 3.24 to 1.00. In connection with the extinguishment of the previously existing term loan agreement we recorded a $2.3 million write-off of debt issuance costs, which was included in interest expense during 2020. Interest on Borrowings The interest rates on our borrowings outstanding at December 31, 2020 and 2019, including the amortization of debt issuance costs, were as follows:
| December 31,
| 2020 |  | 2019
ABL Revolver | 1.9 | % |  | 3.5 | %
Term Loan B | 5.75 | % |  | 6.5 | %
Weighted average interest rate | 5.75 | % |  | 6.5 | %
The Company was in compliance with all financial covenants as of December 31, 2020. Extinguishment and modification of Previously Existing Credit Agreement As set forth above, on December 23, 2020, the Company terminated its previously existing credit agreement and replaced it with a new Term Loan and Security Agreement. The terminated agreement was under the previous Term Loan and Security Agreement dated as of August 29, 2017, by and among the Company, as borrower, and Goldman Sachs Bank USA, as issuing lender and administrative agent for other lenders (the “Original Credit Agreement”). This Original Credit Agreement was subsequently amended on June 25, 2018 (the “Original Term Loan Agreement”). The refinancing of the term loan involved multiple lenders who were considered members of a loan syndicate. In determining whether the refinancing was to be accounted for as a debt extinguishment or modification, we considered whether the lenders remained the same or changed and whether the change in debt terms was substantial. The debt terms would be considered substantially different if the present value of the cash inflows and outflows of the new term loans, including all principal increases and lender fees on the refinancing date, was at least 10% different from the present value of the remaining cash inflows and outflows of the original term loans, or the 10% Test. We performed a separate 10% Test for each individual lender participating in the loan syndication. For existing lenders who participated in the new term loans as part of the new loan syndicate, the refinancing was accounted for as a modification as the change in debt terms was determined to not be substantial using the 10% Test. Deferred financing costs of $3.0 million and an original issue discount of $4.1 million were associated with modified and new debt and will be amortized to interest expense using the interest method over the life of the term loans. In connection with the original lenders considered an extinguishment of the previously existing Term Loan and Security Agreement we recorded a $5.4 million write-off of debt issuance costs and third-party fees, which was included in interest expense during 2020. As of December 31, 2020, the maturities of long-term debt for the next five years and thereafter were as follows (in thousands):
| Year | $ Amount
| 2021 | $ | 3,300 |
| 2022 | 3,300 |
| 2023 | 3,300 |
| 2024 | 3,300 |
| 2025 | 3,300 |
| Thereafter | 313,500 |
| Total | $ | 330,000 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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