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Long-term debt

12 Months Ended

Dec. 31, 2022

12. Long-term debt


(Expressed in thousands)
Issued	Maturity Date	December 31, 2022		December 31, 2021
5.50% Senior Secured Notes	10/1/2025	$	114,050	$	125,000
Unamortized Debt Issuance Cost		(616)		(926)
		$	113,434	$	124,074

5.50% Senior Secured Notes due 2025 (the "Notes")

On September 22, 2020, in a private offering, the Company issued $125.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2025 (the "Unregistered Notes") under an Indenture at an issue price of 100% of the principal amount. Interest on the Unregistered Notes is payable semi-annually on April 1st and October 1st. The Company used the net proceeds from the offering of the Unregistered Notes, along with cash on hand, to redeem in full our 6.75% Senior Secured Notes due July 1, 2022 (the "Old Notes") in the principal amount of $150.0 million (the Company held $1.4 million in treasury for a net outstanding amount of $148.6 million), and pay all related fees and expenses in relation thereto.

On November 23, 2020, we completed an exchange offer in which we exchanged 99.8% of the Unregistered Notes for a like principal amount of Notes with identical terms, except that such new notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"). We did not receive any proceeds in the exchange offer. The Notes will mature on

October 1, 2025 and bear interest at a rate of 5.50% per annum, payable semiannually on April 1st and October 1st, respectively, of each year.

The Parent used the net proceeds from the offering of the Notes, along with cash on hand, to redeem in full its Old Notes, in the principal amount of $150.0 million (the Parent held $1.4 million in treasury for a net outstanding amount of $148.6 million), and pay all related fees and expenses in relation thereto. The cost to issue the Notes was $3.1 million, of which $1.9 million was paid to its subsidiary, (Oppenheimer & Co Inc., who served as the initial purchaser of the offering), and was eliminated in consolidation. The remaining $1.2 million was capitalized and is amortized over the term of the Notes.

The Company has repurchased and may continue to seek to repurchase its Notes from time to time through, as applicable, tender offers, open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on a number of factors, including, but not limited to, the Company’s priorities for the use of cash, price, market and economic conditions, its liquidity requirements, and legal and contractual restrictions. As of December 31, 2022, the Company repurchased and cancelled $10.95 million aggregate principal amount of its Notes in the open market. As of December 31, 2022, $114.05 million aggregate principal amount of the Notes remain outstanding.

The Indenture governing the Notes contains covenants which place restrictions on the incurrence of indebtedness, the payment of dividends, the repurchase of equity, the sale of assets, the issuance of guarantees, mergers and acquisitions and the granting of liens. These covenants are subject to a number of important exceptions and qualifications. These exceptions and qualifications include, among other things, a variety of provisions that are intended to allow the Company to continue to conduct its brokerage operations in the ordinary course of business. In addition, certain of the covenants will be suspended upon the Parent attaining an investment grade debt rating for the Notes from both S&P Global Ratings and Moody’s Investors Service, Inc.

Pursuant to the Indenture, the following covenants apply to the Parent and its restricted subsidiaries, but generally do not apply, or apply only in part, to its Regulated Subsidiaries (as defined):

• limitation on indebtedness and issuances of preferred stock, which restricts the Parent’s ability to

incur additional indebtedness or to issue preferred stock;

• limitation on restricted payments, which generally restricts the Parent’s ability to declare certain

dividends or distributions, repurchase its capital stock or to make certain investments;

• limitation on dividends and other payment restrictions affecting restricted subsidiaries or Regulated

Subsidiaries, which generally limits the ability of certain of the Parent’s subsidiaries to pay dividends

or make other transfers;

• limitation on future Subsidiary Guarantors (as hereinafter defined), which prohibits certain of the Parent’s

subsidiaries from guaranteeing its indebtedness or indebtedness of any restricted subsidiary unless the Notes

are comparably guaranteed;

• limitation on transactions with shareholders and affiliates, which generally requires transactions among

the Parent’s affiliated entities to be conducted on an arm’s-length basis;

• limitation on liens, which generally prohibits the Parent and its restricted subsidiaries from granting

liens unless the Notes are comparably secured; and

• limitation on asset sales, which generally prohibits the Parent and certain of its subsidiaries from selling

assets or certain securities or property of significant subsidiaries.

The Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable. As of December 31, 2022, we believe that the Parent was in compliance with all of its covenants.

The Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by the Subsidiary Guarantors and future subsidiaries are required to guarantee the Notes pursuant to the indenture. The Notes are secured by a first-priority security interest in substantially all of the Parent’s and the Subsidiary Guarantors’ existing and future tangible and intangible assets, subject to certain exceptions and permitted liens.

Interest expense on the Notes for the year ended December 31, 2022 was $6.8 million ($6.9 million for the year ended December 31, 2021). Interest paid on the Notes for the year ended December 31, 2022 was $6.7 million ($7.0 million for the year ended December 31, 2021).

6.75% Senior Secured Notes (the "Old Notes")

On June 23, 2017, the Parent issued in a private offering $200.0 million aggregate principal amount of 6.75% Senior Secured Notes due 2022 under an indenture at an issue price of 100% of the principal amount. Interest on the Old Notes was payable semi-annually on January 1st and July 1st, beginning January 1, 2018.

The Company redeemed $50.0 million (25%) of the Old Notes on August 25, 2019 plus accrued and unpaid interest and incurred $1.9 million in costs associated with paying the associated call premium ($1.7 million) and the write-off of debt issuance costs ($0.2 million) during the third quarter of 2019.

During the first quarter of 2020, the Company repurchased $1.4 million of the Old Notes. The Company recorded a gain of $85,560 on the repurchase during the first quarter of 2020. The Old Notes were scheduled to mature on July 1, 2022.

On August 28, 2020, the Parent issued a conditional notice of redemption to redeem the entire $150.0 million aggregate principal amount of the outstanding Old Notes on September 28, 2020 (the “Redemption Date”). On September 28, 2020, the Old Notes were fully redeemed.

Interest expense and interest paid on the Old Notes for the year ended December 31, 2020 was $7.4 million.