Note 7 - Debt

12 Months Ended

Dec. 31, 2023

Notes To Financial Statements

DEBT

NOTE 7—DEBT

Our outstanding debt consisted of the following:

(In thousands)	December 31, 2023		December 31, 2022
Revolving Credit Facility	$	42,500	$	25,000
Equipment loans		2,983		8,396
Senior Notes, net		33,296		32,830
Financing of Ramaco Coal acquisition - Related party debt		—		40,000
Financing of Maben Coal acquisition		11,400		21,000
Total debt	$	90,179	$	127,226
Current portion of long-term debt		56,534		75,639
Long-term debt, net	$	33,645	$	51,587

Revolving Credit Facility—On February 15, 2023, the Company entered into the Second Amended and Restated Credit and Security Agreement, which includes KeyBank National Association (“KeyBank”), and multiple lending parties. The facility, which has a maturity date of February 15, 2026, provides an initial aggregate revolving commitment of $125.0 million as well as an accordion feature of $50 million subject to certain terms and conditions, including lender’s consent. The borrowing base at December 31, 2023 was $91.1 million based on eligible accounts receivable and inventory collateral and reserve requirements. The remaining availability under the facility at December 31, 2023, after $42.5 million of outstanding borrowings, was $48.6 million.

Revolving loans under the facility bear interest at either the base rate plus 1.50% or the Secured Overnight Financing Rate plus 2.00%. The base rate equals the highest of the administrative agent’s prime rate, the Federal Funds Effective Rate plus 0.5%, or 3%.

The terms of the facility include covenants limiting the ability of the Company to incur additional indebtedness, make investments or loans, incur liens, consummate mergers and similar fundamental changes, make restricted payments, and enter into transactions with affiliates. The terms of the facility also require the Company to maintain certain covenants, including fixed charge ratio and compensating balance requirements. A fixed charge coverage ratio of not less than 1.10:1.00, calculated as of the last day of each fiscal quarter, must be maintained by the Company. In addition, the Company must maintain an average daily cash balance of $5 million, as determined on a monthly basis, in a dedicated account as well as an additional $1 million in a separate dedicated account to assure future credit availability. At December 31, 2023, we were in compliance with all debt covenants under the Revolving Credit Facility.

Key Equipment Finance Loan—On April 16, 2020, we entered into an equipment loan with Key Equipment Finance, a division of KeyBank, as lender, in the principal amount of approximately $4.7 million for the financing of existing underground and surface equipment (the “Equipment Loan”). The Equipment Loan accrued interest at 7.45% per annum and was payable in 36 monthly installments. The outstanding principal balance was $0.6 million at December 31, 2022 and was repaid in full in April 2023.

J. H. Fletcher & Co. Loan—On July 23, 2021 and November 24, 2021, we entered into equipment loans with J. H. Fletcher & Co., as lender, in the principal amount of approximately $0.9 million and $3.9 million, respectively, for the financing of underground equipment (the “Fletcher Equipment Loan”). The Fletcher Equipment Loan bears interest at 0% per annum and is payable in 24 monthly installments totaling $200 thousand. In the third quarter of 2022, we obtained additional equipment loans of $4.4 million. The 2022 loans bear no interest and are payable in 24 monthly installments of $195 thousand. The total outstanding principal balance of the Fletcher Equipment Loans was $1.9 million at December 31, 2023 and is due in full in 2024.

Komatsu Financial Limited Partnership Loan—On August 16, 2021, we entered into an equipment loan with Komatsu Financial Limited Partnership, as lender, in the principal amount of approximately $1.0 million for the financing of surface equipment (the “Komatsu Equipment Loan”). Additional equipment loans of $0.7 million were entered into during October 2022. The Komatsu Equipment Loan bears interest at 4.6% per annum and is payable in 36

monthly installments of $36 thousand for the first six months and then at $28 thousand until maturity. The outstanding principal balance of the Komatsu Equipment Loan was $0.6 million at December 31, 2023.

Brandeis Machinery & Supply Company—On January 11, 2022, we entered into equipment loans with Brandeis Machinery & Supply Company, as lender, in the principal amount of $1.4 million for the financing of surface equipment (the “Brandeis Equipment Loans”). The Brandeis Equipment Loans bear interest at 4.8% per annum and are payable in 48 monthly installments. The outstanding principal balance of the Brandeis Equipment Loans was $0.5 million at December 31, 2023.

9.00% Senior Unsecured Notes due 2026—On July 13, 2021, we completed an offering of $34.5 million, in the aggregate, of the Company’s 9.00% Senior Unsecured Notes due 2026 (the “Senior Notes”), less $2.4 million for issuance costs. The Senior Notes mature on July 30, 2026, unless redeemed prior to maturity. The Senior Notes bear interest at a rate of 9.00% per annum, payable quarterly in arrears on the 30th day of January, April, July and October of each year, commencing on July 30, 2021. We may redeem the Senior Notes in whole or in part, at our option, at any time on or after July 30, 2023, or upon certain change of control events, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to, but not including, the date of redemption. Issuance costs for the Senior Notes included underwriters’ fees, attorney, accounting and filing costs totaling $2.4 million. These issuance costs are reported as a debt discount which is being amortized over the Senior Notes term using an effective rate method. The outstanding principal remains at $34.5 million; however, the balance of the Senior Notes reported at December 31, 2023 was $33.3 million, which is net of unamortized discounts and issuance costs of $1.2 million. The effective interest rate is approximately 10.45%.

Ramaco Coal Deferred Purchase Price—On April 29, 2022, we acquired the assets of Ramaco Coal (see Note 4) and entered into an agreement whereby an investment fund managed by Yorktown Partners, as lender, provided financing for the acquisition in the principal amount of $55.0 (the “Ramaco Coal Loan”). The Ramaco Coal Loan accrued interest at 9% per annum and was payable in seven quarterly installments of $5 million for each remaining quarter in 2022 and $10 million for each quarter in 2023 until maturity. The outstanding principal balance of the Ramaco Coal Loan was $40.0 million at December 31, 2022. The loan was repaid in full during 2023.

Financing of Maben Coal Acquisition – On September 23, 2022, we acquired 100% of the equity interests of Maben Coal, LLC (see Note 4) and entered into a secured loan with Investec Bank PLC in the amount of $21.0 million to pay a portion of the purchase price. The loan bears interest at the applicable secured overnight financing rate (“SOFR”) plus a margin of 3.0% payable in cash, compounded monthly. In January 2023, the Company started making monthly repayments of the outstanding principal in the amount of $800 thousand per month and will continue to do so until making a balloon payment for the remaining amount on the maturity date of September 23, 2024. The outstanding principal balance was $11.4 million at December 31, 2023.

The loan contains certain financial covenants, including minimum cash balance, leverage ratio, and interest coverage ratio requirements. At December 31, 2023, we were in compliance with the financial covenants related to the loan.

Current portion of long-term debt – The Company’s short-term debt at December 31, 2023 was comprised of $42.5 million borrowed under the Revolving Credit Facility, which was repaid shortly after the balance sheet date using funds from current operations, $11.4 million of unpaid financing associated with the Maben Coal Acquisition, and $2.6 million due under equipment loans. The weighted average interest rate on these borrowings is approximately 7.4%.

Insurance financing—The Company financed premium payments of $5.8 million associated with various insurance policies, which must be repaid to a third-party finance company in monthly installments over a one-year term. The outstanding debt balance was $4.0 million at December 31, 2023, which is not reflected in the tables above or below.

Maturities of our debt are presented below, which are $1.2 million higher than total debt on the balance sheet due to discounts and issuance costs to be accreted over future periods.

(In thousands)
Years ending December 31:
2024	$	56,534
2025		335
2026		34,514
2027		—
2028		—
Total debt	$	91,383