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LONG-TERM DEBT | 3 Months Ended
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Mar. 31, 2019
LONG-TERM DEBT |
LONG-TERM DEBT | 9. LONG-TERM DEBT At March 31, 2019, the Company had a credit facility with CoBank, ACB and a syndicate of other lenders that provided for a $225 million revolving credit facility (the “Credit Facility”) that included (i) up to $10 million under the Credit Facility for standby or trade letters of credit, (ii) up to $25 million under the Credit Facility for letters of credit that were necessary or desirable to qualify for disbursements from the FCC’s mobility fund and (iii) up to $10 million under a swingline sub-facility. The Credit Facility had a maturity date of December 31, 2019. The Credit Facility also provided for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million (the “Accordion”). Amounts borrowed under the Credit Facility bore interest at a rate equal to, at the Company’s option, either (i) the London Interbank Offered Rate (LIBOR) plus an applicable margin ranging between 1.50% to 1.75% or (ii) a base rate plus an applicable margin ranging from 0.50% to 0.75%. Swingline loans bore interest at the base rate plus the applicable margin for base rate loans. The base rate was equal to the higher of (i) 1.00% plus the higher of (x) the one-week LIBOR and (y) the one-month LIBOR; (ii) the federal funds effective rate (as defined in the Credit Facility) plus 0.50% per annum; and (iii) the prime rate (as defined in the Credit Facility). The applicable margin was determined based on the ratio (as further defined in the Credit Facility) of the Company’s indebtedness to EBITDA. Under the terms of the Credit Facility, the Company also paid a fee ranging from 0.175% to 0.250% of the average daily-unused portion of the Credit Facility over each calendar quarter. The Credit Facility contained customary representations, warranties and covenants, including a financial covenant that imposed a maximum ratio of indebtedness to EBITDA as well as covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. The Company’s investment in “unrestricted” subsidiaries was limited to $400 Million less the aggregate amount of certain dividend payments to its stockholders. Amounts borrowed under the Accordion were also subject to proforma compliance with a net leverage ratio financial covenant. As of March 31, 2019, the Company was in compliance with all of the financial covenant s and had no borrowings under the Credit Facility. On April 10, 2019, the Company entered into a Third Amendment and Confirmation Agreement, with CoBank, ACB and the same syndicate of lenders to modify the terms of the Credit Facility (the “New Credit Facility”), which provide for a $200 million revolving credit facility that includes (i) up to $75 million under the New Credit Facility for standby or trade letters of credit and (ii) up to $10 million under a swingline sub-facility. Upon the closing of the New Credit Facility, approximately $8.0 million of performance letters of credit were issued, outstanding and undrawn. The New Credit Facility continues to provide for the Accordion. The New Credit Facility matures on April 10, 2024. Amounts borrowed under the New Credit Facility bear interest at a rate equal to, at the Company’s option, either (i) the LIBOR plus an applicable margin ranging between 1.25% to 2.25% or (ii) a base rate plus an applicable margin ranging from 0.25% to 1.25%. Swingline loans will bear interest at the base rate plus the applicable margin for base rate loans. The base rate is equal to the higher of (i) 1.00% plus the higher of (x) the LIBOR (as defined in the Credit Agreement) for an interest period of one month and (y) the LIBOR for an interest period of one week; (ii) the Federal Funds Effective Rate (as defined in the New Credit Facility) plus 0.50% per annum; and (iii) the Prime Rate (as defined in the New Credit Facility). The applicable margin is determined based on the Company’s Total Net Leverage Ratio (as defined in the New Credit Facility). Under the terms of the New Credit Facility, the Company must also pay a fee ranging from 0.150% to 0.375% of the average daily unused portion of the New Credit Facility over each calendar quarter. The New Credit Facility contains customary representations, warranties and covenants, including a financial covenant that imposes a maximum ratio of indebtedness to EBITDA as well as covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. The Company’s investments in “unrestricted” subsidiaries and certain dividend payments to its stockholders are not limited unless the Company’s Total Net Leverage Ratio is equal to or greater than 1.75:1.0. The Total Net Leverage Ratio provides limited relief in the event of a Qualifying Acquisition (as defined in the New Credit Facility). Amounts borrowed under the Accordion are also subject to proforma compliance with a net leverage ratio financial covenant. Viya Debt The Company, and certain of its subsidiaries, have entered into a $60.0 million loan agreement (the “Viya Debt”) with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limits the maximum ratio of indebtedness to annual operating cash flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual basis at the end of each fiscal year. Interest is paid quarterly at a fixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt may be subject to a fee under certain circumstances. The debt is secured by certain assets of the Viya subsidiaries and is guaranteed by the Company. With RTFC’s consent, the Company funded the restoration of Viya’s network, following the Hurricanes, through an intercompany loan arrangement with a $75.0 million limit. The Company was not in compliance with the Net Leverage Ratio covenant for the year ending December 31, 2018 and received a waiver from the RTFC on February 25, 2019. The Company paid a fee of $0.9 million in 2016 to lock the interest rate at 4% per annum over the term of the Viya debt. The fee was recorded as a reduction to the Viya debt carrying amount and will be amortized over the life of the loan. As of March 31, 2019, $60.0 million of the Viya Debt remained outstanding and $0.7 million of the rate lock fee was unamortized. One Communications Debt The Company has an outstanding loan from HSBC Bank Bermuda Limited (the “One Communications Debt”) which is scheduled to mature on May 22, 2022 and bears interest at the one-month LIBOR plus a margin ranging between 2.5% to 2.75% paid quarterly. The One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and financial covenants that limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (net cash generated from operating activities plus interest expense less net capital expenditures to debt repayments plus interest expense). The Company was in compliance with its covenants as of March 31, 2019. As a condition of the One Communications Debt, the Company was required to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstanding loan balance and a term corresponding to the term of the One Communications Debt. As such, the Company entered into an amortizing interest rate swap that has been designated as a cash flow hedge, had an original notional amount of $11.0 million, an interest rate of 1.874%, and expires in March 2022. As of March 31, 2019, the swap has an unamortized notional amount of $9.3 million. The Company capitalized $0.3 million of fees associated with the One Communications Debt which are amortized over the life of the debt and are recorded as a reduction to the debt carrying amount. As of March 31, 2019, $30.9 million of the One Communications Debt was outstanding, there were no borrowings under the overdraft facility, and $0.2 million of the capitalized fees remain unamortized. Ahana Debt The Company’s US solar operations were issued $20.6 million in aggregate principal amount of 4.427% senior notes due in 2029 (the “Series A Notes”) and $45.2 million in aggregate principal amount of 5.327% senior notes due in 2031 (the “Series B Notes”). These operations were also issued a loan from Public Service Electric & Gas (the “PSE&G Loan” and collectively with the Series A Notes and Series B notes, the “Ahana Debt”) which bore interest at 11.3% due in 2027. For the Series A Notes and Series B Notes, interest and principal were payable semi-annually, until their respective maturity dates, and were secured by certain US solar assets and guaranteed by certain subsidiaries. Repayment of the PSE&G Loan Debt could have been made in either cash or Solar Renewable Energy Credits (“SRECs”), at the Company’s discretion, with the value of the SRECs being fixed at the time of the loan’s closing. Historically, the Company made all repayments of the PSE&G Loan using SRECs. The Company capitalized $2.8 million of fees associated with the Ahana Debt which were recorded as a reduction to the debt carrying amount and amortized over the life of the notes. On November 6, 2018, the Company consummated the US Solar Transaction which included the transfer of the Ahana Debt to the purchaser.

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