INDEBTEDNESS

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Indebtedness

INDEBTEDNESS

Long-term debt consisted of the following as of June 30, 2021 (in thousands):

	Principal Amount		Discount		Debt Issuance Costs		Net Balance
ABL facility	$	—	$	—	$	—	$	—
First lien term loan	1,159,862		(9,149)		(19,480)		1,131,233
Second lien notes	—		—		—		—
	$	1,159,862	$	(9,149)	$	(19,480)	1,131,233
Less: current portion							(11,775)
Total long-term debt							$	1,119,458

Long-term debt consisted of the following as of December 31, 2020 (in thousands):

	Principal Amount		Discount		Debt Issuance Costs		Net Balance
ABL facility	$	—	$	—	$	—	$	—
First lien term loan	915,750		(7,253)		(19,710)		888,787
Second lien notes	245,781		(6,102)		(4,113)		235,566
	$	1,161,531	$	(13,355)	$	(23,823)	1,124,353
Less: current portion							(9,250)
Total long-term debt							$	1,115,103

In January 2021, the Company entered into an amendment on the First Lien Term Loan (the “First Lien Credit Agreement Amendment”). The First Lien Credit Agreement Amendment resulted in an additional $250.0 million of incremental First Lien Term Loan indebtedness being issued and reduced the interest rate on all outstanding First Lien Term Loan indebtedness from LIBOR plus 4.25% to LIBOR plus 3.75%. The proceeds of the $250.0 million incremental First Lien Term Loan indebtedness were used to prepay the remaining $245.8 million outstanding balance of the Second Lien Notes. Following the First Lien Credit Agreement Amendment, the First Lien Term Loan is repayable in quarterly installments of $2.9 million plus interest, with a final payment of all remaining outstanding principal due on August 6, 2026.

The Company assessed whether the repayment of the Second Lien Notes by issuing incremental First Lien Term Loan indebtedness resulted in an insubstantial modification or an extinguishment of the existing debt for each loan in the syndication by grouping lenders as follows: (i) Lenders participating in both the First Lien Term Loan and Second Lien Notes; (ii) previous lenders that exited; and (iii) new lenders. The Company determined that $161.2 million of the First Lien Term Loan was extinguished and $122.9 million of the Second Lien Term Loan was extinguished, which is disclosed as an outflow from financing activities in the condensed consolidated statements of cash flows. The First Lien Term Loan and Second Lien Notes had insubstantial modifications for lenders that participated in both debt instruments, which resulted in a cash outflow from financing activities of $352.0 million in the condensed consolidated statements of cash flows. The Company determined that $356.2 million of new debt was issued related to the First Lien Term Loan, which is disclosed as an inflow from financing activities in the condensed consolidated statements of cash flows. In connection with the prepayment of the Second Lien Notes and incremental First Lien Term Loan indebtedness, the Company incurred $7.2 million in debt issuance costs and third-party fees, of which $3.7 million was capitalized, $0.9 million was expensed as a component of other expense and $2.6 million was expensed as a loss on extinguishment as a component of other expense in the condensed consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. Further, $1.0 million of the total fees incurred of $7.2 million was netted against the $356.2 million of proceeds from debt as a component of the cash flows from financing activities, $2.9 million was presented as deferred financing costs as a component of cash flows from financing activities, $2.4 million was presented as debt prepayment fees as a component of cash flows from financing activities, and the remaining $0.9 million was included in cash flows from operating activities in the condensed consolidated statements of cash flows.

The Company recognized a loss on extinguishment of debt of $12.4 million included in the line entitled “Other, net” in the unaudited condensed consolidated statements of comprehensive income (loss) for the six months ended June 31, 2021, of which $2.6 million related to debt issue costs incurred with the incremental First Lien Term Loan indebtedness and prepayment of the Second Lien Notes, as discussed above, and $9.8 million related to existing deferred financing fees that were written off upon extinguishment. All remaining deferred financing fees that existed prior to the First Lien Credit Agreement Amendment were attributed to modified loans, and were capitalized and amortized over the remaining term of the First Lien Term Loan.

The interest rate on the First Lien Term loan was 3.85% and 4.40% as of June 30, 2021 and December 31, 2020, respectively. The weighted average interest rate incurred on the First Lien Term Loan was 3.85% and 3.91% for the three and six months ended June 30, 2021. The weighted average interest rate incurred on the previous First Lien Term Loan was 5.02% and 5.60% for the three and six months ended June 30, 2020, respectively. The interest rate on the Second Lien Notes was 8.98% as of December 31, 2020. The weighted average interest rate incurred on the Second Lien Notes was 8.98% for the period January 1, 2021 through January 20, 2021, prior to the repayment of the outstanding balance. The weighted average interest rate incurred on the Second Lien Notes was 10.33% and 10.44% for the three and six months ended June 30, 2020.

Long-term debt matures as follows (in thousands):

Year Ending December 31,	Minimum Payments
2021	$	5,888
2022	11,775
2023	11,775
2024	11,775
2025	11,775
Thereafter	1,106,874
Total	$	1,159,862

During the three and six months ended June 30, 2021 and 2020, the Company engaged in hedging activities to limit its exposure to changes in interest rates. See Note 11, Derivative Instruments, for further discussion.

The following table presents the estimated fair values of the Company’s debt obligations as of June 30, 2021 (in thousands):

Financial Instrument	Carrying Value as of June 30, 2021		Markets for Identical Item (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
First lien term loan	$	1,131,233	$	—	$	1,159,862	$	—
Second lien notes	—		—		—		—
Total debt instruments	$	1,131,233	$	—	$	1,159,862	$	—

The following table sets forth the changes in Level 3 measurements for the three months ended March 31, 2021 (in thousands). As the Second Lien Notes were prepaid in Q1, there was no change in the fair value for the three months ended June 30, 2021.

	Level 3 Measurements
Second lien notes fair value as of January 1, 2021	$	266,438
Principal prepayment	(245,781)
Change in fair value	(20,657)
Second lien notes fair value as of March 31, 2021	$	—

See Note 12, Fair Value Measurements, for further discussion.