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Note 7 - Loan Payable
 3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

7. Loan Payable:

 

Amended 2019 Credit Facility

 

On  June 14, 2019, the Company and its wholly-owned subsidiaries, Tucows.com Co., Ting Fiber, Inc., Ting Inc., Tucows (Delaware) Inc. and Tucows (Emerald), LLC entered into an Amended and Restated Senior Secured Credit Agreement (the “Amended 2019 Credit Facility”) with Royal Bank (“RBC”), as administrative agent, and lenders party thereto (collectively with RBC, the “Lenders”) under which the Company had access to an aggregate of up to $240 million in funds, which consisted of $180 million guaranteed credit facility and a $60 million accordion facility. The Amended 2019 Credit Facility replaced the Company’s 2017 Amended Credit Facility.

 

In connection with the Amended 2019 Credit Facility, the Company incurred $0.3 million of fees paid to the Lenders and $0.2 million of legal fees related to the debt issuance. Of these fees, $0.4 million are 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 and $0.1 million were recorded in General and administrative expenses for the year ended  December 31, 2019. 

 

The obligations of the Company under the Amended 2019 Credit Agreement are secured by a first priority lien on substantially all of the personal property and assets of the Company and has a four-year term, maturing on  June 13, 2023.

 

Second Amended 2019 Credit Facility

 

On  October 26, 2021, the Company entered into a Second Amended and Restated Senior Secured Credit Agreement (the “Second Amended 2019 Credit Agreement”) with the Lenders and Toronto-Dominion Bank (collectively the “New Lenders”) to, among other things, increase the existing revolving credit facility from $180 million to $240 million. The Second Amended Credit Agreement provides the Company with access to an aggregate of $240 million in committed funds. The Second Amended Credit Agreement also provides for two additional interest rate tiers if the Company exceeds a 3.50x Total Funded Debt to Adjusted EBITDA Ratio.

 

In connection with the Second Amended 2019 Credit Facility, the Company incurred $0.3 million of fees related to the debt issuance, 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. 

 

Credit Facility Terms

 

The Second Amended 2019 Credit Facility is revolving with interest only payments with no scheduled repayments during the term.

 

The Second Amended 2019 Credit Facility contains customary representations and warranties, affirmative and negative covenants, and events of default. The Second Amended 2019 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 Adjusted EBITDA Ratio of 4.50:1.00 until  March 31, 2023 and 4.00:1.00 thereafter; and (ii) minimum Interest Coverage Ratio of 3.00:1.00. During the three months ended March 31, 2022, and the three months ended March 31, 2021 the Company was in compliance with these covenants. The Second Amended 2019 Credit Facility agreement definition of Adjusted EBITDA which is used to calculate the Company's compliance with covenants was amended in March of 2022 to align to the definition of Adjusted EBITDA used in Note 13 – Segment Accounting

 

Borrowings under the Second Amended 2019 Credit Facility will accrue interest and standby fees based on the Company’s Total Funded Debt to Adjusted EBITDA ratio and the availment type as follows: 

 

  

If Total Funded Debt to EBITDA is:

 

Availment type or fee

 

Less than 2.00

  

Greater than or equal to 2.00 and less than 2.50

  

Greater than or equal to 2.50 and less than 3.00

  

Greater than or equal to 3.00 and less than 3.50

  

Greater than or equal to 3.50 and less than 4.00

  

Greater than or equal to 4.00

 

Canadian dollar borrowings based on Bankers’ Acceptance or U.S. dollar borrowings based on LIBOR (Margin)

  1.75%  2.25%  2.50%  2.75%  3.00%  3.25%

Canadian or U.S. dollar borrowings based on Prime Rate or U.S. dollar borrowings based on Base Rate (Margin)

  0.50%  1.00%  1.25%  1.50%  1.75%  2.00%

Standby fees

  0.35%  0.45%  0.50%  0.55%  0.60%  0.65%

 

The following table summarizes the Company’s borrowings under the credit facilities (Dollar amounts in thousands of U.S. dollars): 

 

  

March 31, 2022

  

December 31, 2021

 
         

Revolver

 $207,900  $191,400 

Less: unamortized debt discount and issuance costs

  (717)  (652)

Total loan payable

  207,183   190,748 

Less: loan payable, current portion

  -   - 

Loan payable, long-term portion

 $207,183  $190,748 

 

The following table summarizes our scheduled principal repayments as of  March 31, 2022 (Dollar amounts in thousands of U.S. dollars):

 

Remainder of 2022

 $- 

2023

  207,900 
  $207,900