Debt

Our debt consists of the following (amounts in thousands):



	September 30, 2015		December 31, 2014
Senior secured revolving credit facility	$	110,000	$	155,000
Senior notes	300,000		300,000
Other	—		80
	410,000		455,080
Less current portion	—		(27		)
	$	410,000	$	455,053

Senior Secured Revolving Credit Facility

We have a credit agreement, as amended on September 15, 2015, with Wells Fargo Bank, N.A. and a syndicate of lenders which provides for a senior secured revolving credit facility, with sub-limits for letters of credit and swing-line loans, of up to an aggregate principal amount of $300 million, all of which matures in September 2019 (the “Revolving Credit Facility”). The Revolving Credit Facility contains customary mandatory prepayments from the proceeds of certain asset dispositions or debt issuances, which are applied to reduce outstanding revolving and swing-line loans and letter of credit exposure, but in no event will reduce the borrowing availability under the Revolving Credit Facility to less than $300 million.

Borrowings under the Revolving Credit Facility bear interest, at our option, at the LIBOR rate or at the bank prime rate, plus an applicable per annum margin that ranges from 2.25% to 4.5% and 1.25% to 3.5%, respectively. The LIBOR margin and bank prime rate margin currently in effect are 2.25% and 1.25%, respectively. The Revolving Credit Facility requires a commitment fee due quarterly based on the average daily unused amount of the commitments of the lenders, a fronting fee due for each letter of credit issued, and a quarterly letter of credit fee due based on the average undrawn amount of letters of credit outstanding during such period.

Our obligations under the Revolving Credit Facility are secured by substantially all of our domestic assets (including equity interests in Pioneer Global Holdings, Inc. and 65% of the outstanding equity interests of any first-tier foreign subsidiaries owned by Pioneer Global Holdings, Inc., but excluding any equity interest in, and any assets of, Pioneer Services Holdings, LLC) and are guaranteed by certain of our domestic subsidiaries, including Pioneer Global Holdings, Inc. Borrowings under the Revolving Credit Facility are available for acquisitions, working capital and other general corporate purposes.

As of September 30, 2015, we had $110.0 million outstanding under our Revolving Credit Facility and $17.3 million in committed letters of credit, which resulted in borrowing availability of $172.7 million under our Revolving Credit Facility. There are no limitations on our ability to access the borrowing capacity provided there is no default, all representations and warranties are true and correct, and compliance with financial covenants under the Revolving Credit Facility is maintained. At September 30, 2015, we were in compliance with our financial covenants under the Revolving Credit Facility. Our total consolidated leverage ratio was 2.7 to 1.0, our senior consolidated leverage ratio was 0.8 to 1.0, and our interest coverage ratio was 6.9 to 1.0. The financial covenants contained in our Revolving Credit Facility include the following:

•

A maximum total leverage ratio at the end of forthcoming fiscal quarters that cannot exceed: 4.00 to 1.00 on September 30, 2015, 4.50 to 1.00 on December 31, 2015, 5.00 to 1.00 on March 31, 2016, 5.50 to 1.00 during the period commencing June 30, 2016 through and including March 31, 2017, 5.25 to 1.00 on June 30, 2017, 5.00 to 1.00 on September 30, 2017, 4.50 to 1.00 on December 31, 2017, and 4.00 to 1.00 at any time thereafter;


•	A maximum senior consolidated leverage ratio, which excludes unsecured and subordinated debt, that cannot exceed 2.50 to 1.00;


•	A minimum interest coverage ratio that cannot be less than 2.50 to 1.00; and


•	If our senior consolidated leverage ratio is greater than 2.00 to 1.00 at the end of any fiscal quarter, our minimum asset coverage ratio cannot be less than 1.00 to 1.00.

The Revolving Credit Facility does not restrict repurchases of capital stock as long as the following conditions are met: (a) no event of default under the Revolving Credit Facility exists or would result from such repurchase, (b) if such repurchase occurs prior to the date on which financial statements for the fiscal quarter ending December 31, 2017 are delivered, after giving effect to such repurchase there is availability under the Revolving Credit Facility of at least $50 million, and the total leverage ratio as of the end of the most recent reported fiscal quarter is not more than 2.50 to 1.00, and (c) if such repurchase occurs on or after such date, after giving effect to such repurchase, there is availability under the Revolving Credit Facility of at least $25 million, and the senior consolidated leverage ratio as of the end of the most recently completed fiscal quarter prior to such repurchase is not greater than 2.00 to 1.00. In addition, the repurchase of capital stock requires, on a pro-forma basis, compliance with the maximum total leverage ratio, minimum interest coverage ratio, and, if applicable, the minimum asset coverage ratio as set forth in the Revolving Credit Facility, both before and after giving effect to such repurchase.

The Revolving Credit Facility also does not restrict capital expenditures as long as (a) no event of default under the Revolving Credit Facility exists or would result from such expenditures, and (b) after giving effect to such expenditures, there is availability under the Revolving Credit Facility of at least $50 million. If the senior consolidated leverage ratio as of the end of the most recent reported fiscal quarter is equal to or greater than 2.00 to 1.00, then capital expenditures are limited to $100 million for the fiscal year. The capital expenditure threshold may be increased by any unused portion of the capital expenditure threshold from the immediate preceding fiscal year up to $30 million.

At September 30, 2015, our senior consolidated leverage ratio was not greater than 2.00 to 1.00 and therefore, we were not subject to the capital expenditure threshold restrictions listed above.

The Revolving Credit Facility has additional restrictive covenants that, among other things, limit the incurrence of additional debt, investments, liens, dividends, acquisitions, prepayments of indebtedness, asset dispositions, mergers and consolidations, transactions with affiliates, hedging contracts, sale leasebacks and other matters customarily restricted in such agreements. In addition, the Revolving Credit Facility contains customary events of default, including without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain other material indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, judgment defaults in excess of specified amounts, failure of any guaranty or security document supporting the credit agreement and change of control.

Senior Notes

In March 2010 and November 2011, we issued an aggregate $425 million of unregistered senior notes with a coupon interest rate of 9.875% that were set to mature in 2018 (the “2010 and 2011 Senior Notes”). The net proceeds from the 2010 issuance were used to repay a portion of the borrowings outstanding under our Revolving Credit Facility and a portion of the net proceeds from the 2011 issuance were used to fund the acquisition of the coiled tubing business in December 2011. In order to reduce our overall interest expense and lengthen the overall maturity of our senior indebtedness, during 2014, we redeemed all of our outstanding 2010 and 2011 Senior Notes, funded primarily by proceeds from the issuance of our 2014 Senior Notes and additional borrowings under our Revolving Credit Facility, as well as some cash on hand.

In March 2014, we issued $300 million of unregistered senior notes with a coupon interest rate of 6.125% that are due in 2022 (the “2014 Senior Notes”). The 2014 Senior Notes were sold at 100% of their face value. After deductions were made for the $6.1 million for underwriters’ fees and other debt offering costs, we received $293.9 million of net proceeds which were used to fund the repayment of $300 million of aggregate principal amount of 2010 and 2011 Senior Notes in March and May 2014. During the nine months ended September 30, 2014, we recognized a loss on debt extinguishment of $22.5 million for the redemption of $300 million of 2010 and 2011 Senior Notes, which included redemption premiums of $15.4 million, $3.6 million of net unamortized discount and $3.5 million of unamortized debt issuance costs.

The 2014 Senior Notes will mature on March 15, 2022 with interest due semi-annually in arrears on March 15 and September 15 of each year. We have the option to redeem the 2014 Senior Notes, in whole or in part, at any time on or after March 15, 2017 in each case at the redemption price specified in the Indenture dated March 18, 2014 (the Indenture) plus any accrued and unpaid interest and any additional interest (as defined in the Indenture) thereon to the date of redemption. Prior to March 15, 2017, we may also redeem the 2014 Senior Notes, in whole or in part, at a “make-whole” redemption price specified in the 2014 Indenture, plus any accrued and unpaid interest and any additional interest thereon to the date of redemption. In addition, prior to March 15, 2017, we may, on one or more occasions, redeem up to 35% of the aggregate principal amount of the 2014 Senior Notes at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the redemption date, with the net cash proceeds of certain equity offerings, provided that at least 65% of the aggregate principal amount of the 2014 Senior Notes remains outstanding after the occurrence of such redemption and that the redemption occurs within 120 days of the date of the closing of such equity offering.

In accordance with a registration rights agreement with the holders of our 2014 Senior Notes, we filed an exchange offer registration statement on Form S-4 with the Securities and Exchange Commission that became effective on October 2, 2014. The exchange offer registration statement enabled the holders of our Senior Notes to exchange their senior notes for publicly registered notes with substantially identical terms. References to the “Senior Notes” herein include the senior notes issued in the exchange offer.

If we experience a change of control (as defined in the Indenture), we will be required to make an offer to each holder of the Senior Notes to repurchase all or any part of the Senior Notes at a purchase price equal to 101% of the principal amount of each Senior Note, plus accrued and unpaid interest, if any, to the date of repurchase. If we engage in certain asset sales, within 365 days of such sale we will be required to use the net cash proceeds from such sale, to the extent we do not reinvest those proceeds in our business, to make an offer to repurchase the Senior Notes at a price equal to 100% of the principal amount of each Senior Note, plus accrued and unpaid interest to the repurchase date.

The Indenture, among other things, limits us and certain of our subsidiaries in our ability to:


•	pay dividends on stock, repurchase stock, redeem subordinated indebtedness or make other restricted payments and investments;


•	incur, assume or guarantee additional indebtedness or issue preferred or disqualified stock;


•	create liens on our or their assets;


•	enter into sale and leaseback transactions;


•	sell or transfer assets;


•	pay dividends, engage in loans, or transfer other assets from certain of our subsidiaries;


•	consolidate with or merge with or into, or sell all or substantially all of our properties to any other person;


•	enter into transactions with affiliates; and


•	enter into new lines of business.

The Senior Notes are not subject to any sinking fund requirements. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by certain of our existing domestic subsidiaries and by certain of our future domestic subsidiaries. (See Note 10, Guarantor/Non-Guarantor Condensed Consolidated Financial Statements.)

Debt Issuance Costs

Costs incurred in connection with the Revolving Credit Facility were capitalized and are being amortized using the straight-line method over the term of the Revolving Credit Facility which matures in September 2019. Costs incurred in connection with the issuance of our 2014 Senior Notes were capitalized and are being amortized using the straight-line method (which approximates amortization using the interest method) over the term of the Senior Notes which mature in March 2022.

Capitalized debt costs related to the issuance of our long-term debt were $9.0 million and $9.8 million as of September 30, 2015 and December 31, 2014, respectively. We recognized $1.7 million of associated amortization during the nine months ended September 30, 2015, which includes the write-off of $0.5 million of debt issuance costs associated with the reduced borrowing capacity of the Revolving Credit Facility that was amended in September 2015, and we recognized $1.5 million of associated amortization during the nine months ended September 30, 2014.