7. LONG-TERM DEBT

In connection with the Chapter 11 Cases, we entered into the DIP Credit Agreement. See Note 2. The DIP Credit Agreement replaces the ABL Credit Agreement, defined below.

The commencement of the Chapter 11 Cases constituted an event of default and caused the automatic and immediate acceleration of all debt outstanding under our various debt agreements. However, any efforts to enforce payment obligations under the debt agreements are automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the debt agreements are subject to the applicable provisions of the Bankruptcy Code.

As of March 29, 2020, all of our long‑term debt was in fixed rate obligations. As of March 29, 2020, and December 29, 2019, our outstanding long‑term debt consisted of senior secured notes, unsecured notes, and loans. Our outstanding long-term debt obligations are stated net of unamortized debt issuance costs, fair value adjustments and unamortized discounts, if applicable, totaling $12.6 million and $95.6 million as of March 29, 2020, and December 29, 2019, respectively. The unamortized discounts include fair value adjustments on unsecured debt acquired in 2006, as well as the Junior Term Loans and the 2026 Notes that included original issue discounts from our 2018 debt refinancing. Effective with the filing of the Chapter 11 Cases, all of the outstanding long-term debt, except for our first lien 2026 Notes, was reclassified to liabilities subject to compromise at face value. As such, during the quarter ended March 29, 2020, we recognized a $81.7 million write-off of unamortized debt issuance costs related to the notes, loans and debentures, that were all subordinate to the First Lien Notes, in reorganization items, net, on our condensed consolidated statements of operations.

Our previous ABL Credit Agreement had unamortized debt issuance costs of $1.4 million as of December 29, 2019, that were included in other assets on our condensed consolidated balance sheets. As discussed above, the ABL Credit Agreement was replaced with the DIP Credit Agreement in February 2020. Therefore, during the quarter ended March 29, 2020, we recognized a $1.4 million write-off of unamortized debt issues costs related to the ABL Credit Agreement in reorganization items, net on our condensed consolidated statements of operations.

Our long-term debt consisted of the following:


	Face Value at		Carrying Value
	March 29,		March 29,		December 29,
(in thousands)	2020		2020		2019
DIP Credit Agreement	$	—	$	—	$	—
ABL Credit Agreement		—		—		—
Notes:
9.000% senior secured notes due in 2026		262,851		250,292		249,793
7.795% junior term loan due in 2030		157,083		157,083		126,148
6.875% senior secured junior lien notes due in 2031		268,423		268,423		217,392
7.150% debentures due in 2027		7,105		7,105		6,855
6.875% debentures due in 2029		7,807		7,807		7,484
Long-term debt prior to reclassification to Liabilities subject to compromise	$	703,269	$	690,710	$	607,672
Less amounts reclassified to Liabilities subject to compromise		440,418		440,418		—
Total long-term debt	$	262,851	$	250,292	$	607,672

Debt Redemptions, Repurchases and Extinguishment of Debt

In March 2019, we issued $75.0 million aggregate principal amount of additional 6.875% senior secured junior lien notes due in 2031 (“2031 Notes”) in exchange for an equal principal amount of the unsecured 6.875% debentures due in 2029 (“2029 Debentures”). See Junior Lien Term Loan Agreement section below for additional discussion. This exchange was accounted for as a modification of debt with no gain or loss recorded in earnings.

Debtor-In-Possession Credit Facility

As discussed above, in February 2020 we entered into a $50.0 million DIP Credit Agreement. The DIP Credit Agreement, which replaces our former ABL Credit Agreement, provides for a DIP Facility consisting of a new revolving loan facility in an aggregate principal amount of up to $50.0 million, which is in the form of revolving loans and a sub-limit of $3.5 million, in the form of letters of credit. Our obligations under the DIP Facility will be secured by all of our assets, whether now existing or hereafter acquired. The maturity date of the DIP Facility is no longer than August 12, 2021.

The proceeds of the loans extended under the DIP Credit Agreement may be used for purposes permitted by orders of the Bankruptcy Court, including (i) for working capital and other general corporate purposes, (ii) to pay transaction costs, professional fees and other obligations and expenses incurred in connections with the DIP Facility, the Chapter 11 Cases and the transactions contemplated thereunder, and (iii) to pay adequate protection expenses, if any to the extent set forth in any order entered by the Bankruptcy Court. We have the right to prepay loans under the DIP Credit Agreement in whole or in part at any time without penalty. Subject to availability under the DIP Credit Agreement’s borrowing base, amounts repaid may be reborrowed.

Loans under the DIP Facility bear interest based upon the London Interbank Offered Rate (“LIBOR”) plus an applicable margin rate of 3.5%. Interest on loans is payable monthly in arrears. If LIBOR is discontinued or is no longer reliable, borrowings under the DIP Facility would bear interest using the Base Rate plus 1.5%. The Base Rate is considered the greatest of the federal funds rate plus 0.50%, 1.5%, or the Wells Fargo publicly announced prime rate.

Any portion of the available DIP Facility that is unused is assessed a fee of .50%, which is also due monthly and in arrears.

The DIP Facility carries an early termination fee of 1.5% of the commitment amount being terminated within the first year of the agreement.

As of March 29, 2020, under the DIP Credit Agreement we had $12.5 million of available credit. The borrowing base is recalculated twice monthly and calculated based on secured advertising accounts receivable and inventory balances. It is also subject to seasonality of advertising sales around year-end holiday periods (and resulting growth in advertising accounts receivable balances).

The DIP Credit Agreement contains customary representations, warranties and covenants that are typical and customary for debtor-in-possession facilities of this type, including, but not limited to specified restrictions on indebtedness, liens, guarantee obligations, mergers, acquisitions, consolidations, liquidations and dissolutions, sales of assets, leases, payment of dividends and other restricted payments, voluntary payments of other indebtedness, investments, loans and advances, transactions with affiliates, sale and leaseback transactions and compliance with case milestones. The DIP Credit Agreement also contains customary events of default, including as a result of certain events occurring in the Chapter 11 Cases. The DIP Credit Agreement was subject to approval by the Bankruptcy Court.

ABL Credit Agreement and LOC Facility

The ABL Credit Agreement entered into in July 2018, among the Company, the subsidiaries of the Company party thereto, as borrowers, the lenders party thereto, and Wells Fargo, as administrative agent (“ABL Credit Agreement”) provided for up to $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provided for a $35.0 million cash secured letter of credit facility (“LOC Facility”). As discussed above, the ABL Credit Agreement was in effect until the Petition Date and then was replaced by the DIP Credit Agreement. As of the petition date, the ABL Credit Agreement was terminated other than for Surviving Obligations. Surviving Obligations include the ability to continue the previously collateralized letters of credit to maturity and continue with treasury and commercial card programs. In consideration for the Surviving Obligations, we agreed to provide additional cash collateral for those programs and the letters of credit outstanding.

As of March 29, 2020, we had $26.7 million standby letters of credit secured under the Surviving Obligations. As of March 29, 2020, and December 29, 2019, we were required to provide cash collateral equal to 102% and 100%, respectively, of the aggregate stated amount of each outstanding letter of credit. Cash collateral associated with the standby letters of credit, under the Surviving Obligations, is considered restricted cash and is classified in other assets on our condensed consolidated balance sheets.

2026 Senior Secured Notes and Indenture

We entered into an Indenture (“2026 Notes Indenture”) in July 2018, among the Company, guarantor subsidiaries of the Company and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (“2026 Notes Trustee”), pursuant to which we issued $310.0 million aggregate principal amount of 2026 Notes. We are required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture). As of December 29, 2019, there was no excess cash flow redemption due.

If we experience specified changes of control triggering events, we must offer to repurchase the 2026 Notes at a repurchase price equal to 101% of the principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding the applicable repurchase date.

The 2026 Notes Indenture contains covenants that, among other things, restrict our ability and our restricted subsidiaries to:

incur certain additional indebtedness and issue preferred stock;

make certain distributions, investments and other restricted payments;

sell assets;

agree to any restrictions on the ability of restricted subsidiaries to make payments to us;

create liens;

merge, consolidate or sell substantially all of our assets, taken as a whole; and

enter into certain transactions with affiliates.

These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture.

The 2026 Notes Indenture provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements, or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2026 Notes under the 2026 Notes Indenture becomes due and payable immediately without further action or notice. If any other event of default under the 2026 Notes Indenture occurs or is continuing, the 2026 Notes Trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2026 Notes under the 2026 Notes Indenture may declare all of such 2026 Notes to be due and payable immediately. Due to the automatic stay provisions in the Chapter 11 Cases, ASC 852 confirms that it is unnecessary to reclassify these 2026 Notes to current and therefore, they remain in long-term liabilities as of March 29, 2020.

2031 Senior Secured Junior Lien Notes and Indenture

Under the terms of the Junior Term Loan Agreement (discussed below), upon written notice to us, affiliates of Chatham Asset Management, LLC (“Chatham”) could elect to convert up to $75.0 million in aggregate principal amount of 2029 Debentures owned by them into an equal principal amount of Tranche B Junior Term Loans or notes with terms substantially similar to the Tranche B Junior Term Loans. As discussed previously, in March 2019, Chatham notified us of their election to convert approximately $75.0 million aggregate principal amount of 2029 Debentures to additional 2031 Notes. The additional 2031 Notes have identical terms, other than with respect to the date of issuance, to the 2031 Notes and will be treated as a single class for all purposes under the applicable indenture. These 2031 Notes have substantially the same terms as the Tranche A Junior Term Loan.

We have the right to prepay notes under the 2031 Notes, in whole or in part, at any time, at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any. Amounts prepaid may not be reborrowed.

In accordance with ASC 852, we stopped accruing interest on our 2031 Notes as of the Petition Date. As of March 29, 2020, all accrued and unpaid interest on our 2031 Notes was classified as liabilities subject to compromise on the condensed consolidated balance sheet. See Note 2.

Junior Term Loan Agreement

The Junior Term Loan Agreement provides for a $157.1 million secured term loan (“Junior Term Loan”) that matures on July 15, 2030. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes.

We have the right to prepay loans under the Junior Term Loan Agreement, in whole or in part, at any time, at specified prices that decline over time, plus accrued and unpaid interest, if any, of the Junior Term Loan. Amounts prepaid may not be reborrowed.

The Junior Term Loan bears interest at a rate per annum equal to 7.795%. In accordance with ASC 852, we stopped accruing interest on our Junior Term Loan Agreement as of the Petition Date. As of March 29, 2020, all accrued and unpaid interest on our Junior Term Loan has been classified as liabilities subject to compromise on the condensed consolidated balance sheet. See Note 2.

Other Debt

After giving effect to the 2031 Notes, we have $7.1 million aggregate principal amount of 2027 Debentures and $7.8 million aggregate principal amount of 2029 Debentures outstanding as of March 29, 2020. As of March 29, 2020, all accrued and unpaid interest on the 2027 Debentures and the 2027 Debentures has been classified as liabilities subject to compromise on the condensed consolidated balance sheet. See Note 2.