NOTES PAYABLE AND AMENDED CREDIT AGREEMENT

3 Months Ended

Mar. 31, 2020

NOTES PAYABLE AND AMENDED CREDIT AGREEMENT [Abstract]

NOTES PAYABLE AND AMENDED CREDIT AGREEMENT

9. NOTES PAYABLE AND AMENDED CREDIT AGREEMENT

Amounts outstanding under the Amended Credit Agreement (as defined below) and notes payable as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

	March 31, 2020			December 31, 2019
Credit Agreement average effective interest rate of 2.4% inclusive of unused fee	$	114,000		$	46,000
Various notes payable with $728 plus accrued interest due in the next year, interest accrues in the range of 4.75% through 5.50% per annum		5,330			5,089
	$	119,330		$	51,089
Less current portion		(728	)		(728	)
Long term portion	$	118,602		$	50,361

Effective December 5, 2013, the Company entered into an Amended and Restated Credit Agreement with a commitment for a $125.0 million revolving credit facility. This agreement was amended in August 2015, January 2016, March 2017 and November 2017 (hereafter referred to as “Amended Credit Agreement”). The Amended Credit Agreement is unsecured and has loan covenants, including requirements that the Company comply with a consolidated fixed charge coverage ratio and consolidated leverage ratio. Proceeds from the Amended Credit Agreement may be used for working capital, acquisitions, purchases of the Company’s common stock, dividend payments to the Company’s common stockholders, capital expenditures and other corporate purposes. The pricing grid which is based on the Company’s consolidated leverage ratio with the applicable spread over LIBOR ranging from 1.25% to 2.0% or the applicable spread over the Base Rate ranging from 0.1% to 1%. Fees under the Amended Credit Agreement include an unused commitment fee ranging from 0.25% to 0.3% depending on the Company’s consolidated leverage ratio and the amount of funds outstanding under the Amended Credit Agreement.

The January 2016 amendment to the Amended Credit Agreement increased the cash and noncash consideration that the Company could pay with respect to acquisitions permitted under the Amended Credit Agreement to $50.0 million for any fiscal year, and increased the amount the Company may pay in cash dividends to its shareholders in an aggregate amount not to exceed $10.0 million in any fiscal year. The March 2017 amendment, among other items, increased the amount the Company may pay in cash dividends to its shareholders in an aggregate amount not to exceed $15.0 million in any fiscal year. The November 2017 amendment, among other items, adjusted the pricing grid as described above, increased the aggregate amount the Company may pay in cash dividends to its shareholders to an amount not to exceed $20.0 million and extended the maturity date to November 30, 2021.

On March 31, 2020, $114.0 million was outstanding on the Amended Credit Agreement resulting in $11.0 million of availability. As of the date of this report, the Company has drawn all funds available, therefore, the outstanding amount is $125 million.

As of March 31, 2020, the Company was in compliance with all of the covenants contained in the credit agreement. The Company cannot be certain that it will be in compliance with covenants at the end of second quarter of 2020. The Company is in discussions with its lender regarding an amendment to the facility so as to maintain compliance with all covenants. The Company anticipates an amendment will be in place by the end of the second quarter of 2020.

The Company generally enters into various notes payable as a means of financing a portion of its acquisitions and purchases of non-controlling interests. In conjunction with the acquisitions on February 27, 2020, the Company entered into a note payable in the amount of $300,000 payable in February 2022 plus accrued interest. Interest accrues at the rate of 4.75% per annum. In conjunction with the 2019 acquisitions, the Company entered into notes payable in the aggregate amount of $4.6 million of which an aggregate principal payment of $0.2 million is due in 2020 and $4.3 million is due in 2021. Interest accrues in the range of 4.75% to 5.50% per annum and is payable with each principal installment.

Subsequent aggregate annual payments of principal required pursuant to the Amended Credit Agreement and outstanding notes payable at March 31, 2020 are as follows (in thousands):

During the twelve months ended March 31, 2021	$	728
During the twelve months ended March 31, 2022		118,602
	$	119,330

The revolving credit facility (balance at March 31, 2020 of $114.0 million) matures on November 30, 2021.