Long-Term Debt

12 Months Ended

Dec. 31, 2021

Note 9 – Long-Term Debt

The following table summarizes our long-term debt as of the dates presented:


	December 31, 2021		December 31, 2020
Credit Facility	$	208,000	$	314,400
Second Lien Term Loan	—		200,000
9.25% Senior Notes due 2026	400,000		—
Mortgage debt 1	8,438		—
Other 2	2,516		—
Total	618,954		514,400
Less: Unamortized discount 3	(3,720)		(1,604)
Less: Unamortized deferred issuance costs 3, 4	(9,853)		(3,299)
Total, net	$	605,381	$	509,497
Less: Current portion	(4,129)		—
Long-term debt, net	$	601,252	$	509,497

_______________________

1 The mortgage debt relates to the corporate office building and related assets acquired in connection with the Lonestar Acquisition for which assets are held as collateral for such debt. As of December 31, 2021, these assets met the held for sale criteria and were classified as Assets held for sale on the consolidated balance sheets.

2 Other includes approximately $2.2 million related to a PPP loan assumed in the Lonestar Acquisition which was fully forgiven subsequent to December 31, 2021.

3 Prior to the repayment of the Second Lien Term Loan as discussed below, discount and issuance costs of the Second Lien Term Loan were amortized over the term of the underlying loan using the effective-interest method. The discount and issuance costs of the 9.25% Senior Notes due 2026 are being amortized over its respective term using the effective-interest method.

4 Excludes issuance costs associated with the Credit Facility, which represent costs attributable to the access to credit over its contractual term, that have been presented as a component of Other assets (see Note 12) and are being amortized over the term of the Credit Facility using the straight-line method.

Credit Facility

As of December 31, 2021, the Credit Facility had a $1.0 billion revolving commitment and a $725 million borrowing base, with aggregate elected commitments of $400 million, and a $25 million sublimit for the issuance of letters of credit. Availability under the Credit Facility may not exceed the lesser of the aggregate elected commitments or the borrowing base less outstanding advances and letters of credit; The borrowing base under the Credit Facility is redetermined semi-annually, generally in the Spring and Fall of each year. Additionally, we and the Credit Facility lenders may, upon request, initiate a redetermination at any time during the six-month period between scheduled redeterminations. The Credit Facility is available to us for general corporate purposes, including working capital.

In August 2021, we entered into the Master Assignment, Agreement and Amendment No. 11 to Credit Agreement (the “Eleventh Amendment”). The Eleventh Amendment, in addition to other changes described therein, amended the Credit Facility to, effective on the closing of the Lonestar Acquisition and satisfaction of other conditions set forth therein, (1) increase the borrowing base from $375 million to $600 million, with aggregate elected commitments of $400 million, (2) remove certain availability restrictions, (3) remove minimum hedging requirements, (4) remove the first lien leverage ratio covenant, (5) remove the Partnership and PV Energy Holdings GP, LLC as guarantors, and (6) extend the maturity date from May 2024 to the date that is the four year anniversary of the date such amendment became effective, or October 6, 2025. Subsequent to the Eleventh Amendment, the borrowing base was further increased to $725 million effective December 31, 2021, with aggregate elected commitments remaining at $400 million.

The outstanding borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (a) a customary reference rate plus an applicable margin ranging from 1.50% to 2.50%, determined based on the utilization level under the Credit Facility or (b) a Eurodollar rate, including LIBOR through 2023, plus an applicable margin ranging from 2.50% to 3.50%, determined based on the utilization level under the Credit Facility. Interest on reference rate borrowings is payable quarterly in arrears and is computed on the basis of a year of 365/366 days, and interest on Eurodollar borrowings is payable every one, three or six months, at the election of the borrower, and is computed on the basis of a year of 360 days. As of December 31, 2021, the actual weighted-average interest rate on the outstanding borrowings under the Credit Facility was 3.26%. Unused commitment fees are charged at a rate of 0.50%.

The Credit Facility requires us to maintain (1) a minimum current ratio (as defined in the Credit Facility, which considers the unused portion of the total commitment as a current asset), measured as of the last day of each fiscal quarter of 1.00 to 1.00 and (2) a maximum leverage ratio (consolidated indebtedness to adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses, both as defined in the Credit Facility), measured as of the last day of each fiscal quarter, of 3.50 to 1.00.

The Credit Facility also contains other customary affirmative and negative covenants as well as events of default and remedies. If we do not comply with the financial and other covenants in the Credit Facility, the lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the Credit Facility.

As of December 31, 2021 and 2020, we had $0.9 million and $0.4 million in letters of credit outstanding under the Credit Facility. In the years ended December 31, 2021 and 2020, we incurred and capitalized issue costs of $2.6 million and $0.1 million, respectively, in connection with amendments to the Credit Facility. Additionally, during 2021, we wrote off $0.8 million of previously deferred debt issue costs associated with the Eleventh Amendment and during 2020, we wrote off $0.9 million of previously deferred debt issue costs due to a decrease in the borrowing base associated with an amendment during the first half of 2020.

Second Lien Term Loan

We entered into the $200 million Second Lien Term Loan in September 2017 to fund a significant acquisition as well as related fees and expenses. In January 2021, the amendment dated November 2, 2020 (the “Second Lien Amendment”) became effective at which time we made a $50.0 million prepayment as well as a $1.3 million principal payment to a single participant lender to liquidate their interest in the Second Lien Term Loan. The Second Lien Amendment provided for (i) the extension of the maturity date of the Second Lien Term Loan to September 29, 2024, (ii) an increase to the margin applicable to advances under the Second Lien Term Loan; (iii) the imposition of certain limitations on capital expenditures, acquisitions and investments if the Asset Coverage Ratio (as defined therein) at the end of any fiscal quarter is less than 1.25 to 1.00, (iv) the requirement for maximum and, in certain circumstances as described therein, minimum hedging arrangements, (v) beginning in 2021, a requirement to make quarterly amortization payments equal to $1.875 million and (vi) a provision for the replacement of the LIBOR interest rate upon its expiration. During 2021, we incurred and capitalized $1.4 million of issue costs in connection with the Second Lien Amendment and wrote off $1.2 million of previously capitalized issue costs and original issue discount allocable to the aforementioned prepayments as a loss on extinguishment of debt.

The outstanding borrowings under the Second Lien Term Loan bore interest at a rate equal to, at our option, either (a) a customary reference rate plus an applicable margin of 7.25% or (b) a Eurodollar rate, including LIBOR, with a floor of 1.00%, plus an applicable margin of 8.25%; provided that the applicable margin would increase to 8.25% and 9.25%, respectively, during any quarter in which the quarterly amortization payment was not made. Interest on reference rate borrowings was payable quarterly in arrears and computed on the basis of a year of 365/366 days, and interest on Eurodollar borrowings was payable every one or three months (including in three month intervals if we select a six-month interest period), at our election and computed on the basis of a 360-day year.

The Second Lien Term Loan was collateralized by substantially all of our operating subsidiaries’ assets with lien priority subordinated to the liens securing the Credit Facility.

On October 5, 2021, Holdings repaid all of its outstanding obligations under the Second Lien Term Loan and terminated the Second Lien Term Loan. In accordance with the Second Lien Term Loan, we incurred a prepayment premium of 102% as a result of repayment. In connection with the repayment of the Second Lien Term Loan, we incurred costs related to the premium and write off of unamortized discount and issuance costs of $6.9 million recorded as a loss on extinguishment of debt.

9.25% Senior Notes due 2026

On August 10, 2021, our indirect, wholly-owned subsidiary Penn Virginia Escrow LLC (the “Escrow Issuer”) completed an offering of $400 million aggregate principal amount of senior unsecured notes due 2026 (the “9.25% Senior Notes due 2026”) that bear interest at 9.25% and were sold at 99.018% of par. The proceeds of the offering, net of discount, and other funds were initially deposited in an escrow account pending satisfaction of certain conditions, including the consummation of the Lonestar Acquisition on or prior to November 26, 2021.

In connection with the consummation of the Lonestar Acquisition, the net proceeds from the offering of the 9.25% Senior Notes due 2026 and certain additional funds totaling $411.5 million were released from escrow on October 5, 2021. Obligations under the 9.25% Senior Notes due 2026 were assumed by Holdings, as borrower, and are guaranteed by the subsidiaries of Holdings that guarantee the Credit Facility.

The net proceeds from the 9.25% Senior Notes due 2026 were used to repay and discharge $249.8 million of Lonestar’s long-term debt including accrued interest and related expenses, and the remainder, along with cash on hand, of $146.2 million was used to repay the Second Lien Term Loan including a prepayment premium and accrued interest and related expenses. During 2021, we incurred and capitalized $10.4 million of issue costs in connection with the 9.25% Senior Notes due 2026. See Note 4 for additional information.

The indenture governing the 9.25% Senior Notes due 2026 (the “Indenture”) also contains other customary affirmative and negative covenants as well as events of default and remedies.

As of December 31, 2021, the Company was in compliance with all debt covenants.