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Note 6 - Loan Payable
 3 Months Ended
Mar. 31, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

6. Loan Payable:

 

Third Amended 2019 Credit Facility 

 

On June 14, 2019, the Company and its wholly owned subsidiaries, Tucows.com Co, Ting Fiber, 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. 

 

On August 8, 2022, the Company entered into a Third Amended and Restated Senior Secured Credit Agreement (the “Amended Credit Agreement”) with its existing lenders. The Amended Credit Agreement continues to provide the Company with access to an aggregate of $240 million in committed funds (the Credit Facility). Under the Amended Credit Agreement, and in connection with the Unit Purchase Agreement (as defined in Note 18 - Redeemable preferred shares), the Lenders agreed that Ting Fiber Inc. (converted to Ting LLC) and its wholly owned subsidiaries ceased to be Guarantors under the Credit Facility and shall automatically be released from the respective guarantee and security documents, including a release of the Lenders' security interests and liens upon the assets of such entities. The terms of the LLC agreement with Generate prohibit Tucows from funding the operations or capital investments in Ting LLC with funds generated by its subsidiaries outside of Ting LLC or its wholly owned subsidiaries ("Excluding-Ting"). Additionally, the Amended Credit Agreement has extended the maturity of the Credit Facility to June 14, 2024. Excluding-Ting was subject to 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 4.00:1.00 until September 29, 2023 and 3.75:1.00 thereafter; and (ii) minimum Interest Coverage Ratio of 3.00:1.00. The Amended Credit Agreement also requires Excluding-Ting to comply with other customary terms and conditions. Both the maturity date and maximum Total Funded Debt to Adjusted EBITDA Ratio covenant were subsequently amended on March 14, 2023 described more fully below. The Amended Credit Agreement added SOFR Loans as a form of advance available under the Credit Facility to replace LIBOR Rate Advances, and such SOFR Loans may bear interest based on Adjusted Daily Simple SOFR (defined to be the applicable SOFR rate published by the Federal Reserve bank of New York plus 0.10% per annum subject to a floor of zero) or Adjusted Term SOFR (defined to be the applicable SOFR rate published by CME Group Benchmark Administration Limited plus 0.10% for one-month, 0.15% for three-months, and 0.25% for six-months per annum).

 

Amending Agreement No.2 to the Third Amended and Restated Senior Secured Credit Agreement

 

On March 14, 2023 Excluding-Ting entered into an Amending Agreement No.2 (the "Credit Agreement Amendment") to the Third Amended and Restated Senior Secured Credit Agreement with its existing syndicate of lenders (The "Credit Agreement Amendment"). The Credit Agreement Amendment continues to provide Excluding-Ting with access to an aggregate of $240 million in committed funds, however there is a suspension to the $60 million accordion during the relief period (the "Leverage Step Up Period"), which is defined as from Closing ( March 14, 2023) to the date that Excluding-Ting delivers a compliance certificate for the period ending on December 31, 2023 demonstrating compliance with financial covenants. Additionally, the Credit Agreement Amendment has extended the maturity of the Credit Facility to September 30, 2024. As a result of the closing of the Credit Agreement, Excluding-Ting is subject to the following financial covenants at all times, with monthly testing during the Leverage Step Up Period and reverting to quarterly tests thereafter: (i) maximum Total Funded Debt to Adjusted EBITDA Ratio of 4.50:1.00 from March 14, 2023 up to and including September 29, 2023; 4.00:1.00 from September 30, 2023 up to and including December 30, 2023; and 3.75:1.00 thereafter; and (ii) minimum Interest Coverage Ratio of 3.00:1.00. On March 14, 2023, Excluding-Ting made a repayment of $2.8 million on the Credit Facility.

 

Credit Facility Terms

 

During the three months ended March 31, 2023, and the three months ended March 31, 2022 Excluding-Ting was in compliance with the covenants under the credit agreements in effect at the time.  

 

Borrowings under the Amended Credit Agreement will accrue interest and standby fees based on Excluding-Ting’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 1.75

  

Greater than or equal to 1.75 and less than 2.25

  

Greater than or equal to 2.25 and less than 2.75

  

Greater than or equal to 2.75 and less than 3.25

  

Greater than or equal to 3.25 and less than 3.75

  

Greater than or equal to 3.75 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 SOFR (Margin)

  1.50%  1.75%  2.25%  2.50%  2.75%  3.00%  3.50%

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

  0.25%  0.50%  1.0%  1.25%  1.50%  1.75%  2.25%

Standby fees

  0.30%  0.35%  0.45%  0.50%  0.55%  0.60%  0.70%

 

The following table summarizes Excluding-Ting's borrowings under the credit facilities (Dollar amounts in thousands of U.S. dollars): 

 

  

March 31, 2023

  

December 31, 2022

 
         

Revolver

 $236,900  $239,700 

Less: unamortized debt discount and issuance costs

  (875)  (770)

Total loan payable

  236,025   238,930 

Less: loan payable, current portion

  -   - 

Loan payable, long-term portion

 $236,025  $238,930 

 

The following table summarizes our scheduled principal repayments as of  March 31, 2023 (Dollar amounts in thousands of U.S. dollars):

 

Remainder of 2023

 $- 

2024

  236,900 
  $236,900