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Note 7 - Loan Payable | 9 Months Ended
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Sep. 30, 2018
Notes to Financial Statements |
Debt Disclosure [Text Block] | 7. Loan payable: 2017 Amended Credit Facility On January 20, 2017, the Company entered into an amended and restated secured Credit Agreement (the “2017 Amended Credit Agreement”) with Bank of Montreal (“BMO”), Royal Bank of Canada and Bank of Nova Scotia (collectively with “Lenders”) under which the Company increased its access to funds to an aggregate of $140 million. This amendment and restatement to the Company’s 2016 Credit Facility (defined below), among other things, reduced the existing Tucows non-revolving facility (such existing non-revolving facility, together with other existing facilities, the “Existing Facilities”) from $40.0 million to $35.5 million, and established a new non-revolving credit facility of $84.5 million (the “Facility D”). The Company immediately drew down $84.5 million under Facility D to fund the acquisition of eNom. See note 4 – Acquisitions for more information. The “2016 Credit Facility” refers to the credit facility established under the Company’s secured credit agreement among the Company, BMO and the Lenders, dated as of August 18, 2016. In connection with the 2017 Amended Credit Agreement, the Company incurred $0.6 million of fees paid to lenders and debt issuance costs, which have been reflected as a reduction to the carrying amount of the loan payable and will be amortized over the term of the credit facility agreement. The obligations of the Company under the 2017 Amended Credit Facility are secured by a first priority lien on substantially all of the personal property and assets of the Company. The 2017 Amended Credit Facility has a four -year term. Under the 2017 Amended Credit Facility, the Company has access to an aggregate of up to $140 million in funds that are available as follows:
| ● | a $5 million revolving credit facility (“Facility A”);
| ● | a $15 million revolving reducing term facility (“Facility B”);
| ● | a $35.5 million non-revolving facility (“Facility C”); and
| ● | a $84.5 million non-revolving facility (“Facility D”).
Borrowings under the 2017 Amended Credit Facility accrue interest and standby fees at variable rates based on borrowing elections by the Company and the Company’s Total Funded Debt to EBITDA as described below. The purpose of Facility A is for general working capital and general corporate requirements, while Facility B and Facility C support share repurchases, acquisitions and capital expenditures associated with the Company’s Fiber to the Home program (“FTTH”). Facility D was provided and used for the acquisition of eNom. The repayment terms for Facility A require monthly interest payments with any final principal payment becoming due upon maturity of the 2017 Amended Credit Facility. Under the repayment terms for Facility B, at December 31st of each year, balances drawn during the year that remain outstanding will become payable on a quarterly basis commencing the first quarter of the following year, for the period of amortization based on the purpose of the draw. For Facilities C and D, each draw will become payable beginning the first full quarter post initial draw for the period of amortization based on the purpose of the draw. The amortization periods for Facilities B, C and D are based on the purposes of the draws as follows: draws for share repurchases are repaid over four years, draws for acquisitions over five years and draws for FTTH capital expenditures over seven years. The 2017 Amended Credit Facility also includes a mechanism that is triggered based on the Company’s Total Funded Debt to EBITDA calculation at the end of each fiscal year. If Total Funded Debt to EBITDA exceeds 2.25:1 at December 31 of each year during the term, the Company is obligated to make a repayment of 50% of Excess Cash Flow as defined under the agreement. The 2017 Amended Credit Facility contains customary representations and warranties, affirmative and negative covenants, and events of default. The 2017 Amended Credit Facility requires that the Company to comply with the following financial covenants at all times, which are to be calculated on a rolling four quarter basis: (i) maximum Total Funded Debt to EBITDA Ratio of 2.50:1 until September 30, 2018 and 2.25:1 thereafter; and (ii) minimum Fixed Charge Coverage Ratio of 1.20:1. Further, the Company’s maximum annual Capital Expenditures cannot exceed $50.0 million per year, which limit will be reviewed on an annual basis. In addition, funded share repurchases are not to exceed $20 million, or up to $40 million so long as the total loans related to share repurchases do not exceed 1.5 times of trailing twelve months EBITDA. As at and for the periods ending September 30, 2018, and September 30, 2017, the Company was in compliance with these covenants. On January 24, 2018, the Company entered into the Second Interim Amendment to First Amended and Restated Credit Agreement (the “Second Interim Amendment”) with BMO and the Lenders. The Second Interim Amendment provides that certain defined terms in Section 1.01 of the Credit Agreement are added and updated to reflect the inclusion of liabilities to Sprint Mobile similar to the previous inclusion of T-Mobile liabilities. The Second Interim Amendment also permits Tucows to retain bank accounts with Silicon Valley Bank with the aggregate amount held in such accounts not to exceed $3.0 million. Borrowings under the 2017 Amended Credit Facility will accrue interest and standby fees based on the Company’s Total Funded Debt to EBITDA ratio and the availment type as follows:
|  | If Total Funded Debt to EBITDA is: |
Availment type or fee |  | Less than 1.00 |  |  | Greater than or equal to 1.00 and less than 2.00 |  |  | Greater than or equal to 2.00 and less than 2.25 |  |  | Greater than or equal to 2.25 |
Canadian dollar borrowings based on Bankers’ Acceptance or U.S. dollar borrowings based on LIBOR (Margin) |  |  | 2.00 | % |  |  | 2.25 | % |  |  | 2.75 | % |  |  | 3.25 | %
Canadian or U.S. dollar borrowings based on Prime Rate or U.S. dollar borrowings based on Base Rate (Margin) |  |  | 0.75 | % |  |  | 1.00 | % |  |  | 1.50 | % |  |  | 2.00 | %
Standby fees |  |  | 0.40 | % |  |  | 0.45 | % |  |  | 0.55 | % |  |  | 0.65 | %
The following table summarizes the Company’s borrowings under the credit facilities (Dollar amounts in thousands of U.S. dollars ) :
|  | September 30, 2018 |  |  | December 31, 2017 |
Facility B |  |  | 2,500 |  |  |  | - |
Facility C |  |  | 3,393 |  |  |  | 5,930 |
Facility D |  |  | 59,148 |  |  |  | 71,823 |
Less: unamortized debt discount and issuance costs |  |  | (626 | ) |  |  | (829 | )
Total loan payable |  |  | 64,415 |  |  |  | 76,924 |
Less: loan payable, current portion |  |  | 17,810 |  |  |  | 18,290 |
Loan payable, long-term portion |  |  | 46,605 |  |  |  | 58,634 |
The following table summarizes our scheduled principal repayments as of September 30, 2018 ( Dollar amounts in thousands of U.S. dollars):
Remainder of 2018 |  |  | 4,386 |
2019 |  |  | 17,900 |
2020 |  |  | 17,900 |
2021 |  |  | 24,855 |
|  | $ | 65,041 |
Other Credit Facilities Prior to the Company entering into the 2016 Credit Facility, the Company had credit agreements (collectively the “Amended Credit Facility”) with BMO that were amended on November 19, 2012, and which provided it with access to two revolving demand loan facilities, a treasury risk management facility, an operating demand loan and a credit card facility. The Company continues to have access to the treasury risk management facility and credit card facility, with the remaining loan facilities having been extinguished. The treasury risk management facility under the Amended Credit Facility provides for a $3.5 million settlement risk line to assist the Company with hedging Canadian dollar exposure through foreign exchange forward contracts and/or currency options. Under the terms of the Amended Credit Facility, the Company may enter into such agreements at market rates with terms not to exceed 18 months. As of September 30, 2018, the Company held contracts in the amount of $10.7 million to trade U.S. dollars in exchange for Canadian dollars. See note 5 – Derivative instruments and hedging activities for more information. In the fourth quarter of, 2017, the Company entered into a corporate credit card program with the Bank of Nova Scotia and the Lenders. The program provides that BMO and the Bank of Nova Scotia may establish corporate credit card facilities with the Company in an amount of up to $5 million, which was established in the fourth quarter of 2017.

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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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