Long-Term Debt

3 Months Ended

Mar. 31, 2020

(4)	Long-Term Debt

Long-term debt is comprised of the following:


	December 31, 2019			March 31, 2020
Credit facility - term loan facility	$	239,000,000		$	238,000,000
Credit facility - revolving credit facility		11,000,000			18,500,000
Promissory note		13,500,000			10,500,000

		263,500,000			267,000,000
Less unamortized debt issuance costs		(7,287,548	)		(6,803,565	)

		256,212,452			260,196,435
Less current installments		(7,500,000	)		(2,750,000	)

	$	248,712,452		$	257,446,435

As of March 31, 2020, the credit facility consisted of a term loan facility with a remaining balance of $238.0 million and a revolving credit facility with an outstanding balance of $18.5 million and a maximum commitment of $20.0 million. As of March 31, 2020, the Company had $1.5 million in available commitments under its revolving credit facility. At the Company’s option, the credit facility may bear interest at either (i) the London Interbank Offered Rate (“LIBOR”) plus a margin of 4.0% or (ii) the base rate (as defined in the credit agreement) plus a margin of 3.0%. The LIBOR interest rate for the term loan is subject to a 1% floor and the base rate is subject to a 2% floor. Interest payments are, for loans based on LIBOR, due at the end of each applicable interest period unless the interest period is longer than three months, in which case they are due at the end of each three-month period. Interest payments for loans based on the base rate are due quarterly. The revolving credit facility carried interest, based on LIBOR, at 4.9% as of March 31, 2020 and matures on November 17, 2022. The term loan carried interest, based on LIBOR, at 4.9% as of March 31, 2020 and matures on November 1, 2023.

On March 26, 2020 and April 7, 2020, the Company borrowed $7.5 million and $1.5 million, respectively, from the revolving credit facility as a precautionary measure to increase its cash position and preserve financial flexibility due to the uncertainty of economic conditions in the U.S. resulting from the

COVID-19

pandemic. Following the April 7, 2020 borrowing, the Company had no available commitments under its revolving credit facility.

As of December 31, 2019, the credit facility consisted of a term loan facility with a remaining balance of $239.0 million and a revolving credit facility with an outstanding balance of $11.0 million and a maximum commitment of $20.0 million. The term loan facility and revolving credit facility carried interest, based on LIBOR, at 5.8% as of December 31, 2019.

The credit agreement requires mandatory prepayments equal to 50% of Excess Cash Flow (as defined in the credit agreement) when the Company’s Total Leverage Ratio (as defined in the credit agreement) is greater than 3.5x; mandatory prepayments equal to 25% of Excess Cash Flow when the Total Leverage Ratio is less than or equal to 3.5x but greater than 3.0x; and no mandatory prepayments when the Total Leverage Ratio is less than or equal to 3.0x. Mandatory prepayments of Excess Cash Flow are due approximately 95 days after year end. The credit agreement also requires mandatory prepayments for defined amounts from net proceeds of asset sales, net insurance proceeds, and net proceeds of certain debt issuances.

The credit facility is secured by substantially all assets of the Company and its subsidiaries and is guaranteed jointly and severally by the Company and its subsidiaries. If the Company defaults under the terms of the credit agreement, the Company and its subsidiaries may be required to perform under their guarantees. As of March 31, 2020, the maximum amount of undiscounted payments the Company and its applicable subsidiaries would have been required to make in the event of default was $256.5 million. The guarantees for the credit facility expire on November 17, 2022 for the revolving credit facility and on November 1, 2023 for the term loan facility.

The credit agreement requires the Company to comply with certain financial covenants which are defined in the credit agreement. These financial covenants include a First Lien Leverage Ratio that will be tested at the end of each quarter. The maximum First Lien Leverage Ratio was 5.25x for March 31, 2020. Failure to comply with financial covenants, scheduled interest payments, scheduled principal repayments, or any other terms of the credit agreement could result in the acceleration of the maturity of the Company’s outstanding debt, which could have a material adverse effect on the Company’s business or results of operations. As of March 31, 2020, the Company was in compliance with all applicable financial covenants under the credit agreement. However, due to the impact of the

COVID-19

pandemic on the Company’s financial performance, the Company projected that it would not be in compliance with the First Lien Leverage Ratio financial covenant as of June 30, 2020. On June

, 2020, the Company entered into the Amendment to its credit agreement and now projects that it will be in compliance with all applicable financial covenants, as amended, through June 30, 2021. See Note 10 for additional information regarding the Amendment.

The aggregate scheduled principal repayments of the credit facility for the remainder of 2020 and the next three years are as follows:


2020	$	—
2021		—
2022		18,500,000
2023		238,000,000

Total	$	256,500,000

On November 14, 2019, the Company acquired a majority interest in an esports team and issued a promissory note for $16.5 million to the seller

(the “Promissory Note”). The Promissory Note

bears interest at 5% per annum and had a remaining balance of $13.5 million and $10.5 million as of December 31, 2019 and March 31, 2020, respectively. Interest is payable quarterly in arrears. Principal payments are due each quarter until repaid in full on December 31, 2021.

On June

, 2020 the Company entered into an amendment to the Promissory Note (the “Amended Promissory Note”). See Note 10 for additional information regarding the Amended Promissory Note.