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Note 5 - Bank Debt | 6 Months Ended
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Jun. 30, 2020
Notes to Financial Statements |
Debt Disclosure [Text Block] |
(5) | BANK DEBT
On April 15, 2020, we executed an amendment to our credit agreement with PNC, administrative agent for our lenders. The primary purpose of the amendment was to modify the allowable leverage ratio over the term of the loan to increase available liquidity. As a result of the amendment, our maximum annual capital expenditures are limited to $30 million for 2020, and our dividend is suspended until our leverage ratio falls below 2.0X. In the first half of 2020, we reduced our bank debt $19 million, which as of June 30, 2020 was $161 million. Bank debt is comprised of term debt ($86 million as of June 30, 2020) and a $120 million revolver ($75 million borrowed as of June 30, 2020). The term debt amortization concludes with a final payment in March 2023. The revolver matures September 2023. Our debt is recorded at cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets. Liquidity As of June 30, 2020, under the new leverage ratio, we had additional borrowing capacity of $45.3 million and total liquidity of $52.6 million. Liquidity consists of our additional borrowing capacity and cash and cash equivalents. Fees Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $7.9 million as of our amendment in April 2020. These costs were deferred and are being amortized over the term of the loan. Unamortized costs as of June 30, 2020, and December 31, 2019, were $7.3 million and $6.5 million, respectively. Additional costs incurred with the April 15 amendment were $1.9 million. Bank debt, less debt issuance costs, is presented below (in thousands):
|  | June 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Current bank debt |  | $ | 36,750 |  |  | $ | 34,912 |
Less unamortized debt issuance cost |  |  | (2,439 | ) |  |  | (1,868 | )
Net current portion |  | $ | 34,311 |  |  | $ | 33,044 |
Long-term bank debt |  | $ | 124,363 |  |  | $ | 145,238 |
Less unamortized debt issuance cost |  |  | (4,900 | ) |  |  | (4,644 | )
Net long-term portion |  | $ | 119,463 |  |  | $ | 140,594 |
Total bank debt |  | $ | 161,113 |  |  | $ | 180,150 |
Less total unamortized debt issuance cost |  |  | (7,339 | ) |  |  | (6,512 | )
Net bank debt |  | $ | 153,774 |  |  | $ | 173,638 |
Covenants The credit facility includes a Maximum Leverage Ratio (consolidated funded debt / trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed the amounts below:
Fiscal Periods Ending |  | Ratio |
March 31, 2020 and June 30, 2020 |  | 4.00 to 1.00 |
September 30, 2020 and December 31, 2020 |  | 3.50 to 1.00 |
March 31, 2021 and June 30, 2021 |  | 3.25 to 1.00 |
September 30, 2021 and December 31, 2021 |  | 3.00 to 1.00 |
March 31, 2022 and each fiscal quarter thereafter |  | 2.50 to 1.00 |
As of June 30, 2020, our Leverage Ratio of 2.97 was in compliance with the requirements of the credit agreement. The credit facility also requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA / annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.05 to 1.00 through December 31, 2021, at which time it increases to 1.25 to 1.00 through the maturity of the credit facility. As of June 30, 2020, our Debt Service Coverage Ratio of 1.34 was in compliance with the requirements of the credit agreement. Rate The interest rate on the facility ranges from LIBOR plus 2.75% to LIBOR plus 4.00%, depending on our Leverage Ratio, with a LIBOR floor of 0.50%. We entered into swap agreements to fix the LIBOR component of the interest rate at 2.92% on the declining term loan balance and on $53 million of the revolver. At June 30, 2020, we are paying LIBOR at the swap rate of 2.92% plus 3.50% for a total interest rate of 6.42% on the hedged amount ($139 million) and 4% on the remainder ($22 million). Paycheck Protection Program On April 16, 2020, we entered into a promissory note evidencing an unsecured loan in the amount of $10 million made to the Company under the Paycheck Protection Program (the “Loan”). The Paycheck Protection Program (or “PPP”) was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The Loan to the Company is being made through First Financial Bank, N.A. (the “Lender”). The interest rate on the Loan is 1.00%. Beginning seven months from the date of the Loan, the Company is required to make 18 monthly payments of principal and interest. The promissory note evidencing the Loan contains customary events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or Lender, or breaching the terms of the Loan Documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining a judgment against the Company. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any covered payments of mortgage interest, rent, and utilities. In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal. The Company used all proceeds from the PPP Loan to maintain payroll and make utility payments. At June 30, 2020, the PPP loan totaling $10 million is presented as current and long-term liabilities on the condensed consolidated balance sheet based upon the schedule of repayments and excluding any possible forgiveness of the loan.

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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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