Long-Term Debt

12 Months Ended

Dec. 31, 2020

(10)	Long-Term Debt

Long-term debt is comprised of the following:


	December 31, 2019			December 31, 2020
Credit facility - term loan	$	239,000,000		$	238,000,000
Credit facility - revolving credit facility		11,000,000			20,000,000
Promissory note		13,500,000			5,500,000

		263,500,000			263,500,000
Less unamortized debt issuance costs		(7,287,548	)		(5,154,620	)

		256,212,452			258,345,380
Less current installments		(7,500,000	)		—

	$	248,712,452		$	258,345,380

On February 2, 2021, the Company issued $300.0 million aggregate principal amount of 8.625% senior secured notes due on February 1, 2026 (the “Notes”) under an indenture dated February 2, 2021 (the “Indenture”). Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year, commencing on August 1, 2021. The Notes are secured on a first-lien priority basis by substantially all assets of the Company and its majority owned subsidiaries and are guaranteed jointly and severally by the Company and its majority owned subsidiaries. The Company used the net proceeds from the Notes, to refinance the credit facility and the Amended Promissory Note and to repay the loan from Mr. George Beasley (see Note 18) and related accrued interest, fees and expenses. The Indenture contains restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; make certain investments or acquisitions; sell, transfer or otherwise convey certain assets; create liens; enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of its subsidiaries. Current installments of long-term debt have been updated as of December 31, 2020 to reflect the subsequent refinancing of long-term debt.

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.

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 basis points payable on December 31, 2021 and 150 basis points payable on December 31, 2022, (provided the credit agreement was 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 was 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 was to be tested every other week until the Total Leverage Ratio was less than 5.0x, (ii) a minimum EBITDA (as defined in the credit agreement, as amended by the Amendment) covenant, which was to be tested monthly through June 30, 2021 and (iii) a maximum First Lien Leverage Ratio covenant, which was to be tested quarterly beginning with the fiscal quarter ending September 30, 2021. The Amendment also modified the definition of Consolidated EBITDA to remove certain

add-backs

with respect to the calculation of Consolidated EBITDA and EBITDA for financial covenants and other similar calculations and reduced the amount of cash that could 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, 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 December 31, 2020, the Company had no available commitments under its revolving credit facility. Following the entry into the Amendment as described above, at the Company’s option, the credit facility bore 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 was subject to a 1% floor and the base rate was subject to a 2% floor for the term loan facility and a 0% floor for the revolving credit facility. Interest payments were, for loans based on LIBOR, due at the end of each applicable interest period unless the interest period was longer than three months, in which case they were due at the end of each three-month period. Interest payments for loans based on the base rate were due quarterly. The revolving credit facility carried interest, based on LIBOR, at 4.4% as of December 31, 2020. The term loan carried interest, based on LIBOR, at 5.25% as of December 31, 2020. The credit facility was secured by substantially all assets of the Company and its subsidiaries and was guaranteed jointly and severally by the Company and its subsidiaries. As of December 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 $258.0 million. As noted above, the credit facility was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering.

Also, as a condition to entering into the Amendment, George Beasley, the Company’s Chairman, provided a $5.0 million loan to the Company that accrued

payment-in-kind

interest at 6% per annum with no cash payments due until the loan’s maturity in December 2023. Mr. Beasley and GGB Family Limited Partnership also each entered into standby letters of credit in combined aggregate face amount of $5.0 million in favor of U.S. Bank, National Association for the benefit of the Company as a source of backup liquidity in the event that the Company failed to maintain the Minimum Liquidity Amount. As noted above, the loan was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering.

On November 14, 2019, the Company acquired a majority interest in an esports team and issued the Promissory Note for $16.5 million to the seller. 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”) applicable to the remaining balance of $10.0 million. The Amended Promissory Note bore

cash-pay

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

payment-in-kind

interest at 10% per annum. 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 amount of the Amended Promissory Note by $2.25 million. The shares were issued at $1.99 per share and the $0.3 million difference between the fair value of the shares and the principal reduction was recorded as additional interest expense. For subsequent stock issuances, which were scheduled to begin on June 30, 2021, the principal reduction amount would have been 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 was 50% of the value of the stock based on a fixed price of $2.35 per

share. As noted above, the Amended Promissory Note was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering.