LONG-TERM DEBT

Long-term debt was comprised of the following at February 28, 2017 and 2018:



	As of February 28, 2017			As of February 28, 2018
Revolver	$	—		$	9,000
Term Loan	152,245			69,451
Total 2014 Credit Agreement debt	152,245			78,451
Other nonrecourse debt ⁽¹⁾	8,807			9,992
98.7FM nonrecourse debt	59,958			53,919
Current maturities	(23,600		)	(16,037		)
Unamortized original issue discount	(7,038		)	(3,476		)
Total long-term debt	$	190,372		$	122,849

⁽¹⁾ The face value of other nonrecourse debt was $9.5 million and $10.2 million at February 28, 2017 and 2018, respectively.

On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, EOC, as borrower (the “Borrower”), certain other subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”) and the lenders party thereto. Capitalized terms in this section not defined elsewhere in this 10-K are defined in the 2014 Credit Agreement and related amendments.

The 2014 Credit Agreement consists of remaining balances of a term loan ($152.2 million and $69.5 million as of February 28, 2017 and 2018, respectively) and a revolving credit facility with a maximum commitment of $20.0 million. Outstanding revolver borrowings as of February 28, 2018 were $9.0 million. No revolver borrowings were outstanding as of February 28, 2017. The revolving credit facility includes a sub-facility for the issuance of up to $5.0 million of letters of credit. No letters of credit were outstanding during the three years ended February 28, 2018.

The term loan is due not later than April 18, 2019 and the revolving credit facility expires on August 31, 2018. The Company is not required to make scheduled principal payments under the term loan or revolving credit facility prior to these dates. Amounts outstanding under the 2014 Credit Agreement bear interest, at the Company’s option, at either (i) the Alternate Base Rate (but not less than 2.00%) plus 6.00% or (ii) the Adjusted LIBO Rate plus 7.00%. The Company pays an unused commitment fee of 75 basis points per annum on the average unused amount of the revolving credit facility. If the Company has not refinanced the 2014 Credit Agreement by July 18, 2018, any principal payments on the term loans thereafter must be accompanied by a fee to the lenders equal to 2% of the amount being repaid. In addition, on each ninety day anniversary after July 18, 2018, such fee increases by an additional 0.5% and the interest rate on amounts outstanding increases by 0.5%. The weighted average borrowing rate of amounts outstanding related to the 2014 Credit Agreement was 7.0% and 8.7% at February 28, 2017 and 2018, respectively.

Our 2014 Credit Agreement debt is carried net of an unamortized original issue discount of $1.8 million as of February 28, 2018. The original issue discount is being amortized as additional interest expense over the life of the 2014 Credit Agreement.

The 2014 Credit Agreement requires mandatory prepayments for, among other things, proceeds from the sale of assets, insurance proceeds and Consolidated Excess Cash Flow (as defined in the 2014 Credit Agreement).

The 2014 Credit Agreement requires the Company to comply with certain financial and non-financial covenants. These covenants include a minimum EBITDA amount covenant through May 31, 2018. Subsequent to the quarter ending May 31, 2018, the Company is required to comply with a Total Leverage Ratio covenant of 4.00:1.00. Additionally, the Company is required to meet a minimum Interest Coverage Ratio of at least 1.60:1.00.

The obligations under the 2014 Credit Agreement are secured by a perfected first priority security interest in substantially all of the assets of the Company, the Borrower and the Subsidiary Guarantors.

2014 Credit Agreement Covenants

We were in compliance with all financial and non-financial covenants as of February 28, 2018. Based on the Company’s projections of cash and cash equivalents on hand, projected cash flows from operations and other factors, management believes the Company will be in compliance with its debt covenants through the end of fiscal year 2019.

Our Minimum EBITDA Amount and Interest Coverage Ratio (each as defined in the 2014 Credit Agreement and related amendments) requirements and actual amounts as of February 28, 2018 were as follows:



	As of February 28, 2018
	Covenant Requirement			Actual Results
Minimum EBITDA Amount	$	8.4	million	$	11.3	million
Interest Coverage Ratio	1.60 : 1.00			2.63 : 1.00

98.7FM Nonrecourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of nonrecourse notes. Teachers Insurance and Annuity Association of America, through a participation agreement with Wells Fargo Bank Northwest, National Association, is entitled to receive payments made on the notes. The notes are obligations only of the newly-created subsidiaries, are non-recourse to the rest of the Company’s subsidiaries and are secured by the assets of the newly-created subsidiaries, including the payments made to the newly-created subsidiary related to the 98.7FM LMA, which are guaranteed by Disney Enterprises, Inc. The notes bear interest at 4.1%.

Our 98.7FM nonrecourse debt is carried net of an unamortized original issue discount of $1.7 million as of February 28, 2018. The original issue discount is being amortized as additional interest expense over the life of the 98.7FM nonrecourse debt.

Other Nonrecourse Debt

Digonex issued $6.2 million of notes payable prior to Emmis’ acquisition of a controlling interest of Digonex on June 16, 2014. Emmis recorded these notes at fair value in its purchase price allocation as of June 16, 2014. The difference between the fair value recorded on June 16, 2014 and the face value of the notes is being accreted as additional interest expense through the maturity date of the notes. The notes are obligations of Digonex only and are non-recourse to the rest of Emmis’ subsidiaries. Approximately $1.5 million of the Digonex notes are secured by the assets of Digonex and the remaining $4.7 million are unsecured. The notes bear simple interest at 5% with interest due at maturity of the notes on December 31, 2020.

NextRadio, LLC issued $4.0 million of notes payable. As of February 28, 2018, these notes bear interest at 6.0% with interest due quarterly beginning in August 2018. The notes mature on December 23, 2021 and are to be repaid through revenues generated by enhanced advertisement revenues earned by NextRadio LLC. If any portion of the notes remain unpaid at maturity, the lender has the option to exchange the notes for senior preferred equity of NextRadio LLC’s parent entity, TagStation, LLC. These notes are obligations of NextRadio LLC and TagStation, LLC and are non-recourse to the rest of Emmis’ subsidiaries.

Based on amounts outstanding at February 28, 2018, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:



	2014 Credit Agreement
Year ended February 28 (29),	Revolver		Term Loan		98.7FM Debt		Other Nonrecourse Debt		Total
2019	$	9,000	$	450	$	6,587	$	—	$	16,037
2020	—		69,001		7,150		—		76,151
2021	—		—		7,755		6,239		13,994
2022	—		—		8,394		4,000		12,394
2023	—		—		9,069		—		9,069
Thereafter	—		—		14,964		—		14,964
Total	$	9,000	$	69,451	$	53,919	$	10,239	$	142,609