Long-Term Debt

6 Months Ended

Jun. 30, 2020

(4)	Long-Term Debt

Long-term debt is comprised of the following:


	December 31, 2019			June 30, 2020
Credit facility - term loan facility	$	239,000,000		$	238,000,000
Credit facility - revolving credit facility		11,000,000			20,000,000
Promissory note		13,500,000			10,000,000

		263,500,000			268,000,000
Less unamortized debt issuance costs		(7,287,548	)		(6,101,956	)

		256,212,452			261,898,044
Less current installments		(7,500,000	)		(5,000,000	)

	$	248,712,452		$	256,898,044

As of June 30, 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 $20.0 million and a maximum commitment of $20.0 million. As of June 30, 2020, the Company had no available commitments under its revolving credit facility.

Following the entry into the Amendment as described below

, at

the Company’s option, the credit facility may bear interest at either (i) the London Interbank Offered Rate (“LIBOR”) plus a margin of 4.25% or (ii) the base rate (as defined in the credit agreement) plus a margin of 3.25%. 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 5.25% as of June 30, 2020 and matures on November 17, 2022. The term loan carried interest, based on LIBOR, at 5.25% as of June 30, 2020 and matures on November 1, 2023.

On June 30, 2020, the Company entered into the Amendment with certain of its lenders. The Amendment amended and modified the credit agreement to, among other things, (i) increase the interest rate applicable to the term loans and revolving credit facility by 25 basis points per annum, (ii) add fees of 300 b

asis points

payable on December 31, 2021 and 150 b

asis points

payable on December 31, 2022, if the credit agreement is not refinanced prior to such time, (iii) impose additional reporting requirements, (iv) revise the Excess Cash Flow prepayment requirement such that when the Total Leverage Ratio is greater than 4.5x, 75% of Excess Cash Flow must be prepaid, with such prepayment amounts stepping down to 50%, 25% and 0% upon achievement of certain Total Leverage Ratio milestones, and (v) reduce the flexibility to incur certain additional indebtedness, liens and investments and make certain restricted payments, subject to the achievement of certain leverage

based milestones. In connection with the Amendment, the Company recorded a loss on modification of long-term debt of $2.8 million during the second quarter of 2020.

Additionally, the Amendment modified the financial covenant to remove the maximum First Lien Leverage Ratio previously tested quarterly through the fiscal quarter ended March 31, 2020. In its place, the Amendment added (i) a minimum liquidity covenant of $8.5 million (the “Minimum Liquidity Amount”), which will be tested every other week until the Total Leverage Ratio is less than 5.0x, (ii) a minimum EBITDA (as defined in the credit agreement, as amended by the Amendment) covenant, which will be tested monthly

beginning October 31, 2020

through June 30, 2021 and (iii) a maximum First Lien Leverage Ratio covenant, which will be tested quarterly beginning with the fiscal quarter ending September 30, 2021. The Amendment also modifies the definition of Consolidated EBITDA to remove certain

add-backs

with respect to the calculation of Consolidated EBITDA

and EBI

TDA

for financial covenants and other similar calculations and reduces the amount of cash that can be netted for the calculation of the First Lien Leverage Ratio for purposes of testing the First Lien Leverage Ratio financial covenant, when applicable.

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 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 June 30, 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 $258.0 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.

Failure to comply with financial covenants, scheduled interest payments, scheduled principal repayments, or any other terms of the credit agreement, as amended by the Amendment, 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. The Company projects that it will be in compliance with all applicable financial covenants, as amended, for the next twelve months.

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 had a remaining balance of $13.5 million as of December 31, 2019. On June 30, 2020, the Company entered into

an amendment to

the

Promissory Note

(as amended, the “Amended Promissory Note”)

As of June 30, 2020,

he Amended Promissory Note had a balance of $10.0 million

On July 8, 2020, the Company issued an initial stock payment of 1,276,596 shares of Class A common stock at a fixed price of $2.35 per share that reduced the principal by $2.25

million

The Amended Promissory Note bears

cash-pay

interest at 5% per annum payable quarterly in arrears and additional

payment-in-kind

interest at 10% per annum and provides for a cash principal payment of $2.25 million on December 31, 2020.

For subsequent stock issuances, which begin on June 30, 2021, the principal reduction amount will be the lesser of (i) the value of the stock issued based on

20-day

moving average on the day prior to issuance or (ii) the “principal reduction amount,” which is 50% of the value of the stock based on a fixed price of $2.35 per share. The number of shares to be issued was fixed at the time of the signing of the note and will not exceed 3,191,489 in the aggregate (including the issuance on July 8, 2020). All accrued but unpaid interest and the then outstanding principal amount of the Amended Promissory Note will be paid in full in cash on December 31, 2023. The Amended Promissory Note will mature on December 31, 2023 and may be prepaid at any time at the option of the Company.

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


2020	$	4,500,000
2021		750,000
2022		21,250,000
2023		241,500,000

Total	$	268,000,000