On November 23, 2011, the Company entered into a new credit agreement with a syndicate of lenders for a $425 million senior secured credit facility (the “Credit Facility”), that is comprised of: (a) a $50 million revolving credit facility (the “Revolver”) that matures on November 23, 2016; and (b) a $375 million term loan (the “Term B Loan”) that matures on November 23, 2018.

As of September 30, 2012, the amount outstanding under the Revolver was $16.0 million and the amount outstanding under the Term B Loan was $353.5 million. The undrawn amount of the Revolver was $33.4 million as of September 30, 2012. The amount of the Revolver available to the Company is a function of covenant compliance at the time of borrowing.

The Term B Loan requires mandatory prepayments equal to 50% of Excess Cash Flow, as defined within the agreement, subject to incremental step-downs to 0%, depending on the Consolidated Leverage Ratio. The Excess Cash Flow payment is due in the first quarter of each year and the amount of the payment is based on the Excess Cash Flow and Leverage Ratio for the prior year. The Company estimates that the Excess Cash Flow payment will be approximately $11 million, which is net of prepayments made through September 30, 2012, and is due in the first quarter of 2013. This amount was classified under the current portion of long-term debt. The amount of the Excess Cash Flow prepayment required is subject to change based on actual results, which could differ materially from the Company's financial projections as of September 30, 2012. The Company expects to fund the payment using cash from operating activities.

As of September 30, 2012, the Company is in compliance with all financial covenants and all other terms of the Credit Facility in all material respects. The Company's ability to maintain compliance with its covenants is highly dependent on its results of operations. Management believes that over the next 12 months the Company can continue to maintain compliance. Management believes that cash on hand and cash from operating activities, together with available borrowings under the Revolver, will be sufficient to permit the Company to meet its liquidity requirements over the next 12 months, including its debt repayments. The Company's operating cash flow is positive, and management believes that it is adequate to fund the Company's operating needs. As a result, the Company has not been required to rely upon, and the Company does not anticipate being required to rely upon, the Revolver to fund its operations.

Failure to comply with the Company's financial covenants or other terms of its Credit Facility and any subsequent failure to negotiate and obtain any required relief from its lenders could result in a default under the Company's Credit Facility. Any event of default could have a material adverse effect on our business and financial condition. In addition, a default under either the Company's Credit Facility or the indenture governing the Company's Senior Notes could cause a cross default in the other and result in the acceleration of the maturity of all outstanding debt. Under these circumstances, the acceleration of the Company's debt could have a material adverse effect on its business. The Company may seek from time to time to amend its Credit Facility or obtain other funding or additional funding, which may result in higher interest rates.

As of September 30, 2012, the Company's Consolidated Leverage Ratio was 5.1 times versus a covenant limit of 7.0 times and the Consolidated Interest Coverage Ratio was 2.5 times versus a covenant minimum of 1.5 times. These covenants become more restrictive over time.

Simultaneously with entering into the Credit Facility on November 23, 2011, the Company issued $220 million of 10.5% unsecured senior notes (the “Senior Notes”), which mature on December 1, 2019. The Company received net proceeds of $212.7 million, which included a discount of $2.9 million, and incurred deferred financing costs of $6.1 million. These amounts are amortized over the term under the effective interest rate method. Interest on the Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year

	Net Interest Expense
	Nine Months Ended
	September 30,
	2012		2011
	(amounts in thousands)

Interest expense	$	36,005	$	7,973
Amortization of deferred financing costs		3,283		2,825
Amortization of original issue discount of senior notes		182		-
Interest expense on interest rate hedging agreements		1,392		5,706
Interest income and other investment income		(8)		(27)
Total net interest expense	$	40,854	$	16,477

	Net Interest Expense
	Three Months Ended
	September 30,
	2012		2011
		(amounts in thousands)

Interest expense	$	12,114	$	2,618
Amortization of deferred financing costs		1,111		941
Amortization of original issue discount of senior notes		62		-
Interest expense on interest rate hedging agreements		-		1,712
Interest income and other investment income		(2)		(20)
Total net interest expense	$	13,285	$	5,251

The Company's interest expense was higher in 2012 primarily due to the higher borrowing costs under the Credit Facility and Senior Notes as compared to the Company's former credit agreement.