Debt Obligations

12 Months Ended

Dec. 31, 2019

Debt obligations consisted of the following:



	As of December 31,
	2019			2018
	(in thousands)
Credit facility at a floating rate of interest of one-month LIBOR plus 1.375% at December 31, 2019, secured by engines. The facility has a committed amount of $1.0 billion at December 31, 2019, which revolves until the maturity date of June 2024	$	397,000		$	427,000
WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines	307,014			323,075
WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines	43,859			46,154
WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines	257,754			274,205
WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines	36,860			39,212
WEST II Series A 2012 term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines	211,572			237,847
Note payable at three-month LIBOR plus a margin ranging from 1.85% to 2.50% at December 31, 2019, maturing in July 2022, secured by engines	7,286			—
Note payable at fixed rate of interest of 3.18%, maturing in July 2024, secured by an aircraft	9,124			10,937
	1,270,469			1,358,430
Less: unamortized debt issuance costs	(19,463		)	(21,081		)
Total debt obligations	$	1,251,006		$	1,337,349

One-month LIBOR was 1.76% and 2.50% as of December 31, 2019 and December 31, 2018, respectively. Three-month LIBOR was 1.91% as of December 31, 2019.

Principal outstanding at December 31, 2019, is expected to be repayable as follows:



Year	(in thousands)
2020	$	56,118
2021	56,415
2022 (includes $158.4 million outstanding on WEST II Series A 2012 term note)	207,994
2023	34,018
2024 (includes $397.0 million outstanding on revolving credit facility)	430,185
Thereafter	485,739
Total	$	1,270,469

At December 31, 2019, the Company had a revolving credit facility to finance the acquisition of equipment for lease as well as for general working capital purposes, with the amounts drawn under the facility not to exceed that which is allowed under the borrowing base as defined by the credit agreement. In April 2016, the Company entered into a Third Amended and Restated Credit Agreement with a revolving credit facility of $890.0 million and a term to April 2021. This $890.0 million revolving credit facility had an accordion feature which would expand the entire credit facility up to $1.0 billion.

In June 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) which increased the revolving credit facility from $890.0 million to $1.0 billion. The Amended Credit Agreement incorporates an accordion feature that can expand the credit facility up to $1.3 billion, extends the maturity of the credit facility to June 2024 and provides for certain other amendments to covenants, interest rates and commitment fees.

In connection with entering into the Amended Credit Agreement in June 2019, the Company incurred and deferred an additional $2.8 million of debt issuance costs, and recognized a loss on debt extinguishment of $0.2 million. Unamortized debt issuance costs are included as a reduction to “Debt Obligations” in the consolidated balance sheets and are amortized to “Interest expense” on a straight-line basis through the maturity date of the Amended Credit Agreement. Pursuant to the Amended Credit Agreement, all obligations under the revolving credit facility are collateralized by the title and interest of the Company and certain of its subsidiaries, and to substantially all of its assets and properties. In December 2019, the Company entered into Amendment No. 1 to the Fourth Amended and Restated Credit Agreement and Amendment No. 5 to the Security Agreement. The Amendments, which among other things, increase the maximum leverage ratio from 4.00:1.00 to 4.50:1.00 through December 31, 2020, if a permitted change in control is consummated.

As of December 31, 2019 and 2018, $603.0 million and $463.0 million were available under this facility, respectively. On a quarterly basis, the interest rate is adjusted based on the Company’s leverage ratio, as calculated under the terms of the revolving credit facility. Under the revolving credit facility, all subsidiaries except WEST II, WEST III, and WEST IV jointly and severally guarantee payment and performance of the terms of the loan agreement. The guarantee would be triggered by a default under the agreement.

At December 31, 2019 and 2018, $350.9 million and $369.2 million of WEST IV term notes were outstanding, respectively. At December 31, 2019 and 2018, $294.6 million and $313.4 million of WEST III term notes were outstanding, respectively. At December 31, 2019 and 2018, $211.6 million and $237.8 million of WEST II term notes were outstanding, respectively.

The assets of WEST II, WEST III and WEST IV are not available to satisfy the Company’s obligations other than the obligations specific to that WEST entity. WEST II, WEST III and WEST IV are consolidated for financial statement presentation purposes. WEST II, WEST III and WEST IV’s ability to make distributions and pay dividends to the Company is subject to the prior payments of their debt and other obligations and their maintenance of adequate reserves and capital. Under WEST II, WEST III and WEST IV, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. The WEST II, WEST III, and WEST IV indentures require that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts.

In July 2019, the Company’s note payable secured by a corporate aircraft was repriced at a fixed interest rate of 3.18% and will continue to mature in July 2024. The balance outstanding on these loans was $9.1 million and $10.9 million as of December 31, 2019 and December 31, 2018, respectively.

In February 2019, the Company entered into a new $8.1 million loan with a financial institution and has a maturity date of July 2022. Interest is payable at three-month LIBOR plus a margin ranging from 1.85% to 2.50% and principal and interest are paid quarterly. The loan is secured by two engines.

Virtually all of the above debt requires ongoing compliance with the covenants of each financing, including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic

concentration restrictions. The Company also has certain negative financial covenants such as liens, advances, change in business, sales of assets, dividends and stock repurchases. These covenants are tested either monthly or quarterly and the Company was in full compliance with all financial covenant requirements at December 31, 2019.