Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

Our Credit Agreement, dated July 1, 2021 (the “Credit Agreement”) contains (i) a $100 million, five-year undrawn revolving credit facility (the “Revolver”), (ii) a $150 million five-year delayed draw amortizing term loan (“Term Loan A-1”) and (iii) a $150 million seven-year delayed draw amortizing term loan (“Term Loan A-2” and collectively with Term Loan A-1, the “Term Loans”). The following loans were outstanding under the Credit Agreement:

(in thousands)	June 30, 2023		December 31, 2022
Term loan A-1	$	62,500	$	37,500
Term loan A-2	62,500		37,500
Total debt	125,000		75,000
Less: unamortized loan fees	(149)		(46)
Total debt, net of unamortized loan fees	$	124,851	$	74,954

In May 2023, Shentel amended the Credit Agreement resulting in (a) a change of the floating index rate from the one-month term London Inter-Bank Offered Rate (“LIBOR”) to the one-month term Secured Overnight Financing Rate (“SOFR”), (b) an extension of the borrowing deadline under the Term Loans from June 30, 2023 to December 31, 2023, and (c) an extension of the first principal repayment date for the Term Loans from September 30, 2023 to March 31, 2024. Management evaluated the amendment and concluded that the amendment event represents a modification of the existing Credit Agreement; therefore, modification accounting was applied.

Both Term Loan A-1 and Term Loan A-2 bore interest at one-month LIBOR plus a margin of 1.50% until May 2023 and now bear interest at one-month term SOFR plus a margin of 1.50%. The margin of 1.50% is variable and determined by the Company’s net leverage ratio. The interest rate was 6.64% and 5.89% at June 30, 2023 and December 31, 2022, respectively. The Company’s cash payments for interest were $1.8 million during the three months ended June 30, 2023 and $3.1 million during the six months ended June 30, 2023. Shentel had no debt outstanding during the three and six months ended June 30, 2022; therefore, the Company made no interest payments during the three and six months ended June 30, 2022. Shentel is charged commitment fees on unutilized portions of its Revolver and Term Loans. The Company recorded $0.1 million and $0.2 million related to these fees for the three months ended June 30, 2023 and 2022, respectively, and $0.3 million and $0.4 million related to these fees for the six months ended June 30, 2023 and 2022, respectively, which is included in other income (expense), net in the unaudited condensed consolidated statements of comprehensive income (loss).

The Credit Agreement contains a borrowing deadline of December 31, 2023, after which the Company will not be able to borrow against the undrawn portion of the Term Loans.

The Credit Agreement includes various covenants, including total net leverage ratio and debt service coverage ratio financial covenants.

Shentel’s Term Loans require quarterly payments based on a percentage of the outstanding balance. Based on the outstanding balance as of June 30, 2023, Term Loan A-1 requires quarterly principal repayments of $0.4 million from March 31, 2024 through June 30, 2024; then increasing to $0.8 million quarterly from September 30, 2024 through March 31, 2026, with the remaining balance due June 30, 2026. Based on the outstanding balance as of June 30, 2023, Term Loan A-2 requires quarterly principal repayments of $0.2 million from March 31, 2024 through March 31, 2028, with the remaining balance due June 30, 2028.

The following table summarizes the expected payments of Shentel’s outstanding borrowings as of June 30, 2023:

(in thousands)	Amount
2023	$	—
2024	2,969
2025	3,750
2026	57,656
2027	625
2028	60,000
Total	$	125,000

The Credit Agreement is fully secured by a pledge and unconditional guarantee from the Company and all of its subsidiaries, except Shenandoah Telephone Company. This provides the lenders a security interest in substantially all of the assets of the Company.