Debt

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



	December 31, 2018			December 31, 2017
Senior secured term loan	$	175,000		$	175,000
Senior notes	300,000			300,000
	475,000			475,000
Less unamortized discount (based on imputed interest rate of 10.46%)	(2,668		)	(3,387		)
Less unamortized debt issuance costs	(7,780		)	(9,948		)
	$	464,552		$	461,665

Senior Secured Term Loan

Our senior secured term loan (the “Term Loan”) entered into on November 8, 2017 provided for one drawing in the amount of $175 million, net of a 2% original issue discount. Proceeds from the issuance of the Term Loan were used to repay the entire outstanding balance under our previous credit facility, plus fees and accrued and unpaid interest, as well as the fees and expenses associated with entering into the Term Loan and ABL Facility, which is further described below. The remainder of the proceeds are available to be used for other general corporate purposes.

The Term Loan is not subject to amortization payments of principal. Interest on the principal amount accrues at the LIBOR rate or the base rate as defined in the agreement, at our option, plus an applicable margin of 7.75% and 6.75%, respectively. The Term Loan is set to mature on November 8, 2022, or earlier, subject to certain circumstances as described in the agreement, and including an earlier maturity date if the outstanding balance of the Senior Notes exceeds $15.0 million on December 14, 2021, at which time the Term Loan would then mature. However, the Term Loan may be prepaid, at our option, at any time, in whole or in part, subject to a minimum of $5 million, and subject to a declining call premium as defined in the agreement.

The Term Loan contains a financial covenant requiring the ratio of (i) the net orderly liquidation value of our fixed assets (based on appraisals obtained as required by our lenders), on a consolidated basis, in which the lenders under the Term Loan maintain a first priority security interest, plus proceeds of asset dispositions not required to be used to effect a prepayment of the Term Loan to (ii) the outstanding principal amount of the Term Loan, to be at least equal to 1.50 to 1.00 as of any June 30 or December 31 of any calendar year through maturity.

The Term Loan contains customary mandatory prepayments from the proceeds of certain transactions including certain asset dispositions and debt issuances, and has additional customary restrictions that, among other things, and subject to certain exceptions, limit our ability to:


•	incur additional debt;


•	incur or permit liens on assets;


•	make investments and acquisitions;


•	consolidate or merge with another company;


•	engage in asset sales; and


•	pay dividends or make distributions.

In addition, the Term Loan contains customary events of default, upon the occurrence and during the continuation of any of which the applicable margin would increase by 2% per year, including without limitation:


•	payment defaults;


•	covenant defaults;


•	material breaches of representations or warranties;


•	event of default under, or acceleration of, other material indebtedness;


•	bankruptcy or insolvency;


•	material judgments against us;


•	failure of any security document supporting the Term Loan; and


•	change of control.

Our obligations under the Term Loan are guaranteed by our wholly-owned domestic subsidiaries, and are secured by substantially all of our domestic assets, in each case, subject to certain exceptions and permitted liens.

Asset-based Lending Facility

In addition to entering into the Term Loan, on November 8, 2017, we also entered into a senior secured revolving asset-based credit facility (the “ABL Facility”) providing for borrowings in the aggregate principal amount of up to $75 million, subject to a borrowing base and including a $30 million sub-limit for letters of credit. The ABL Facility bears interest, at our option, at the LIBOR rate or the base rate as defined in the ABL Facility, plus an applicable margin ranging from 1.75% to 3.25%, based on average availability on the ABL Facility. The ABL Facility requires a commitment fee due monthly based on the average monthly unused amount of the commitments of the lenders, a fronting fee due for each letter of credit issued, and a monthly letter of credit fee due based on the average undrawn amount of letters of credit outstanding during such period. The ABL Facility is generally set to mature 90 days prior to the maturity of the Term Loan, subject to certain circumstances, including the future repayment, extinguishment or refinancing of our Term Loan and/or Senior Notes prior to their respective maturity dates. Availability under the ABL Facility is determined by reference to a borrowing base as defined in the agreement, generally comprised of a percentage of our accounts receivable and inventory.

We have not drawn upon the ABL Facility to date. As of December 31, 2018, we had $9.7 million in committed letters of credit, which, after borrowing base limitations, resulted in borrowing availability of $49.0 million. Borrowings available under the ABL Facility are available for general corporate purposes, and there are no limitations on our ability to access the borrowing capacity provided there is no default and compliance with the covenants under the ABL Facility is maintained. Additionally, if our availability under the ABL Facility is less than 15% of the maximum amount (or $11.25 million), we are required to maintain a minimum fixed charge coverage ratio, as defined in the ABL Facility, of at least 1.00 to 1.00, measured on a trailing 12 month basis.

The ABL Facility also contains customary restrictive covenants which, subject to certain exceptions, limit, among other things, our ability to:


•	declare dividends and make other distributions;


•	issue or sell certain equity interests;


•	optionally prepay, redeem or repurchase certain of our subordinated indebtedness;


•	make loans or investments (including acquisitions);


•	incur additional indebtedness or modify the terms of permitted indebtedness;


•	grant liens;


•	change our business or the business of our subsidiaries;


•	merge, consolidate, reorganize, recapitalize, or reclassify our equity interests;


•	sell our assets, and


•	enter into certain types of transactions with affiliates.

Our obligations under the ABL Facility are guaranteed by us and our domestic subsidiaries, subject to certain exceptions, and are secured by (i) a first-priority perfected security interest in all inventory and cash, and (ii) a second-priority perfected security in substantially all of our tangible and intangible assets, in each case, subject to certain exceptions and permitted liens.

Senior Notes

In 2014, we issued $300 million of unregistered senior notes at face value, with a coupon interest rate of 6.125% that are due in 2022 (the “Senior Notes”). The 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 Senior Notes, in whole or in part, 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.

In accordance with a registration rights agreement with the holders of our 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, subject to certain exceptions, 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;


•	borrow, pay dividends, 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 14, Guarantor/Non-Guarantor Condensed Consolidated Financial Statements.)

Debt Issuance Costs and Original Issue Discount

Costs incurred in connection with the issuance of our Senior Notes were capitalized and are being amortized using the effective interest method over the term of the Senior Notes which mature in March 2022. The original issue discount and costs incurred in connection with the issuance of the Term Loan were capitalized and are being amortized using the effective interest method over the expected term of the agreement. Costs incurred in connection with the ABL Facility were capitalized and are being amortized using the straight-line method over the expected term of the agreement.

Loss on Extinguishment of Debt

We recognized $1.5 million of loss on extinguishment of debt during 2017 for the write off of the unamortized debt issuance costs associated with the retirement of our previous credit agreement, which provided for a senior secured revolving credit facility up to an aggregate commitment amount of $150 million and was set to mature in March 2019. In connection with our entry into the Term Loan in November 2017, all indebtedness outstanding under the previous credit facility was repaid, together with related costs and expenses, and the previous credit facility was retired. During 2016, we recognized $0.3 million of loss on extinguishment of debt associated with the amendment of our previous credit facility which resulted in reduced borrowing capacity.