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DEBT AND CREDIT FACILITIES | 3 Months Ended
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Mar. 31, 2025
Debt Disclosure [Abstract] |
DEBT AND CREDIT FACILITIES | DEBT AND CREDIT FACILITIES Senior Notes The components of our senior notes at March 31, 2025 are as follows:
| Senior Notes
(in thousands) | 8.125% (1) |  | 6.50% (2) |  | Total
Senior notes due in 2026 | $ | 193,035 |  |  | $ | 151,440 |  |  | $ | 344,475 |
Unamortized deferred financing costs | (1,307) |  |  | (2,417) |  |  | (3,724) |
Unamortized premium | 132 |  |  | — |  |  | 132 |
Net debt balance | $ | 191,860 |  |  | $ | 149,023 |  |  | $ | 340,883 |
The components of senior notes outstanding at December 31, 2024 are as follows:
| Senior Notes
(in thousands) | 8.125% (1) |  | 6.50% (2) |  | Total
Senior notes due in 2026 | $ | 193,035 |  |  | $ | 151,440 |  |  | $ | 344,475 |
Unamortized deferred financing costs | (1,659) |  |  | (2,757) |  |  | (4,416) |
Unamortized premium | 168 |  |  | — |  |  | 168 |
Net debt balance | $ | 191,544 |  |  | $ | 148,683 |  |  | $ | 340,227 |
(1) The 8.125% Senior Notes mature in February 2026 and $108.4 million is included in current liabilities and $83.5 million is included in noncurrent liabilities in the Condensed Consolidated Balance Sheet at March 31, 2025. $191.5 million is included in noncurrent liabilities in the Condensed Consolidated Balance Sheets at December 31, 2024. (2) The 6.50% Senior Notes mature in December 2026 and are included in noncurrent liabilities in the Condensed Consolidated Balance Sheet at March 31, 2025 and December 31, 2024. Credit Agreement with Axos We entered into the Credit Agreement in January 2024, with certain of our subsidiaries as guarantors, the lenders party thereto from time to time and Axos, as administrative agent, swingline lender and letter of credit issuer. The Credit Agreement provides for an up to $150.0 million asset-based Credit Facility, including a $100.0 million letter of credit sublimit. Our obligations under the Credit Agreement are guaranteed by certain of our domestic and foreign subsidiaries. B. Riley has provided a guaranty of payment with regard to our obligations under the Credit Agreement, as further described below. We used and expect to use the proceeds and letter of credit availability under the Credit Agreement to (i) provide for working capital needs, (ii) provide cash collateral to secure letters of credit to be issued under the Credit Agreement, and (iii) provide for general corporate purposes. The Credit Agreement has a maturity date of January 18, 2027, provided that if as of November 28, 2025, as amended by the Fourth Amendment, the 8.125% Senior Notes and 6.50% Senior Notes have not been refinanced pursuant to a permitted refinancing, as defined in the Credit Agreement, or the maturity date has not otherwise been extended to a date on or after July 18, 2027, then the maturity date of the Credit Agreement is November 28, 2025. As discussed further in Note 1 under Liquidity and Going Concern, we have classified amounts due under the Credit Agreement in current liabilities in the Condensed Consolidated Balance Sheet at March 31, 2025. The interest rates applicable under the Credit Agreement are: (i) with respect to SOFR Loans, (a) SOFR plus 5.25% if the outstanding principal amount of loans is equal to or less than $100.0 million or (b) SOFR plus 4.00% if the outstanding principal amount of loans is equal to or greater than $100.0 million; (ii) with respect to Base Rate Loans, the greater of (a) the Federal Funds Rate plus 2.00% plus the Applicable Margin, (b) the prime rate as designated by Axos plus the Applicable Margin, and (c) Daily Simple SOFR plus 1.00% plus the Applicable Margin; and (iii) with respect to the default rate under the Credit Agreement, the then-existing interest rate plus 2.00%. In connection with the Credit Agreement, we are required to pay (i) a commitment fee equal to 0.50% per annum multiplied by the positive difference by which the Aggregate Revolving Commitments exceed the Total Revolvings Outstanding (as defined in the Credit Agreement), subject to adjustment, (ii) a facility fee equal to the Applicable Margin for SOFR Loans multiplied by the positive difference by which the actual daily amount of L/C Obligations the Administrative Agent is then holding Specified Cash Collateral exceeds the actual daily Outstanding Amount of Revolving Loans, and (iii) a collateral monitoring fee of $1,000 per month. We are permitted to prepay all or any portion of the loans under the Credit Agreement prior to maturity, subject to the payment of an early termination fee. The Credit Agreement requires mandatory prepayments under certain circumstances, including in the event of an overadvance. The Credit Agreement also contains customary events of default (subject, in certain instances, to specified grace periods) including, but not limited to, the failure to make payments of interest or premium, if any, on, or principal under the Credit Agreement, the failure to comply with certain covenants and agreements specified in the Credit Agreement, defaults in respect of certain other indebtedness, and certain events of insolvency. If any event of default occurs, Axos may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Credit Agreement as due and payable immediately. At March 31, 2025, after giving consideration to the Fifth Amendment ("Fifth Amendment") and Sixth Amendment ("Sixth Amendment") to the Credit Agreement (discussed below), we are in compliance with all financial and other covenants contained in the Credit Agreement. On February 28, 2025, the Company with certain subsidiaries of the Company as guarantors, the lenders party to the Credit Agreement and Axos, as administrative agent, entered into the Waiver and Fifth Amendment to the Credit Agreement (the "Fifth Amendment"). In addition, in connection with the Fifth Amendment, the PBGC, Axos, and the second lien holder entered into a lien subordination agreement governing, among other things, the subordination of liens, the provision of enforcement rights, and the application of proceeds. On March 25, 2025, the Company with certain subsidiaries of the Company as guarantors, the lenders party to the Credit Agreement and Axos, as administrative agent, entered into the Sixth Amendment to the Credit Agreement. The Sixth Amendment, among other things: (i) authorizes 2025 Specified Dispositions subject to satisfaction of the conditions under the Credit Agreement; (ii) increased the inventory valuation percentage as part of the Borrowing Base calculation; (iii) lowered the minimum liquidity covenant level to $20.0 million; and (iv) acknowledged that the Annual Report's financial statements may be qualified with a going concern opinion for the year ended December 31, 2024. At March 31, 2025, we had a total of $123.4 million outstanding on the Credit Agreement, which includes $45.0 million drawn on the revolving credit portion of the facility and $78.4 million drawn on the letter of credit portion. At March 31, 2025, cash collateralizing the letters of credit totaling $78.4 million is classified as current Restricted cash given the classification of the Credit Agreement as current. Total Loans Payable As of March 31, 2025, we had loans payable, which includes the total outstanding on the Credit Agreement as described above, of $132.7 million, net of debt issuance costs of $0.5 million. Included in these amounts is approximately $9.3 million, net of debt issuance costs of $0.5 million, related to sale-leaseback financing transactions. As of December 31, 2024, we had loans payable of $133.7 million, net of debt issuance costs of $0.5 million. Included in these amounts we had approximately $9.3 million, net of debt issuance costs of $0.5 million, related to sale-leaseback financing transactions. Revolving and Letter of Credit Agreements In June 2021, we entered into the Revolving Credit Agreement with PNC as administrative agent, and the Letter of Credit Agreement, pursuant to which PNC agreed to issue up to $110.0 million in letters of credit that were secured in part by cash collateral provided by MSD, as well as a reimbursement, guaranty and security agreement with MSD, as administrative agent, and the cash collateral providers from time to time party thereto, along with certain of our subsidiaries as guarantors, pursuant to which we are obligated to reimburse MSD and any other cash collateral provider to the extent the cash collateral provided by MSD and any other cash collateral provider securing the Letter of Credit Agreement was drawn to satisfy draws on letters of credit (the "Reimbursement Agreement") and the Debt Facilities. Our obligations under the Debt Facilities were guaranteed by certain of our existing and future domestic and foreign subsidiaries. B. Riley, a related party, provided a guaranty of payment with regard to our obligations under the Reimbursement Agreement. The Debt Facilities were effectively replaced by our Credit Agreement with Axos began in January 2024. The Revolving Credit Agreement with PNC was terminated in connection with our entry into the Credit Agreement and we transitioned letters of credit outstanding under the Letter of Credit Agreement and Reimbursement Agreement to the Credit Agreement. All outstanding letters of credit were transitioned to the Credit Agreement by September 30, 2024, and the Letter of Credit Agreement and Reimbursement Agreement were terminated at that time. We recognized a loss on debt extinguishment of $5.1 million in the three months ended March 31, 2024 related to the write-off of unamortized deferred financing fees and other costs incurred to exit the Debt Facilities. A summary of usage of letters of credit under the domestic facilities is as follows:
| March 31,
| 2025 |  | 2024
Letters of credit under domestic facilities: |  |  |
Performance letters of credit | $ | 23,259 |  |  | $ | 18,155 |
Financial letters of credit | 12,416 |  |  | 11,511 |
Total outstanding | $ | 35,675 |  |  | $ | 29,666 |
Backstopped letters of credit | $ | 750 |  |  | $ | 750 |
Surety backstopped letters of credit | $ | 11,800 |  |  | $ | 8,742 |
Letters of credit subject to currency revaluation | $ | 4,535 |  |  | $ | 4,390 |
Other Letters of credit, bank guarantees and surety bonds Certain of our subsidiaries, that are primarily outside of the United States, have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity. We have posted surety bonds to support contractual obligations to customers relating to certain contracts. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion. These bonds generally indemnify customers should we fail to perform our obligations under our applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds the underwriters issue in support of some of our contracting activity. The following table provides a summary of outstanding letters of credit issued outside of the domestic facilities and outstanding surety bonds:
| March 31,
| 2025 |  | 2024
Letters of credit under non-domestic facilities | $ | 2,907 |  |  | $ | 4,085 |
Surety Bonds | $ | 177,426 |  |  | $ | 146,838 |
Our ability to obtain and maintain sufficient capacity under our current Debt Facilities is essential to allow us to support the issuance of letters of credit, bank guarantees and surety bonds. Without sufficient capacity, our ability to support contract security requirements in the future will be diminished. Interest expense in the Condensed Consolidated Financial Statements consisted of the following components:
| Three Months Ended March 31,
(in thousands) | 2025 |  | 2024
Components associated with borrowings from: |  |  |
Senior notes | $ | 6,320 |  |  | $ | 6,271 |
Revolving Credit Agreement | 1,168 |  |  | 1,532 |
| 7,488 |  |  | 7,803 |
Components associated with amortization or accretion of: |  |  |
Revolving Credit Agreement | 1,609 |  |  | 1,149 |
Senior notes | 656 |  |  | 644 |
| 2,265 |  |  | 1,793 |
Components associated with interest from: |  |  |
Lease liabilities | 591 |  |  | 548 |
Letter of Credit interest and fees | 452 |  |  | 1,489 |
Other interest expense | 367 |  |  | 381 |
| 1,410 |  |  | 2,418 |
Total interest expense | $ | 11,163 |  |  | $ | 12,014 |

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