Long-term Debt

Long-term debt was comprised of the following at February 28, 2018 and May 31, 2018:



	February 28, 2018			May 31, 2018
2014 Credit Agreement debt :
Revolver	$	9,000		$	—
Term Loan	69,451			28,000
Total 2014 Credit Agreement debt	78,451			28,000
98.7FM non-recourse debt	53,919			52,337
Other non-recourse debt ⁽¹⁾	9,992			10,012
Less: Current maturities	(16,037		)	(34,724		)
Less: Unamortized original issue discount	(3,476		)	(2,240		)
Total long-term debt	$	122,849		$	53,385

⁽¹⁾ The face value of other non-recourse debt was $10.2 million at February 28, 2018 and May 31, 2018

2014 Credit Agreement

On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, Emmis Operating Company, 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 ($69.5 million and $28.0 million as of February 28, 2018 and May 31, 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 May 31, 2018. 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 periods presented in the accompanying condensed consolidated financial statements.

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 8.7% and 9.0% at February 28, 2018 and May 31, 2018, respectively.

Our 2014 Credit Agreement debt is carried net of an unamortized original issue discount of $0.6 million as of May 31, 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 while the revolving credit facility is outstanding.

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.

We were in compliance with all financial and non-financial covenants as of May 31, 2018. 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 May 31, 2018 were as follows:



	As of May 31, 2018
	Covenant Requirement			Actual Results
Minimum EBITDA Amount	$	8.4	million	$	10.8	million
Interest Coverage Ratio	1.60 : 1.00			2.60 : 1.00

98.7FM Non-recourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of non-recourse 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 and its 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%. The 98.7FM non-recourse notes are carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $1.7 million and $1.6 million as of February 28, 2018 and May 31, 2018, respectively, is being amortized as additional interest expense over the life of the notes.

Other Non-recourse Debt

Digonex non-recourse notes payable consist of notes payable issued by Digonex, which were recorded at fair value on June 16, 2014, the date that Emmis acquired a controlling interest in Digonex. The notes payable, some of which are secured by the assets of Digonex, are non-recourse to the rest of the Company and its subsidiaries. During the quarter ended August 31, 2017, Digonex noteholders agreed to extend the maturity date of the notes from December 31, 2017 to December 31, 2020. The notes accrue interest at 5.0% per annum with interest due at maturity. The face value of the notes payable is $6.2 million. The Company is accreting the difference between this face value and the original $3.6 million fair value of the notes payable recorded in the acquisition of its controlling interest of the business as interest expense over the remaining term of the notes payable.

NextRadio, LLC has issued $4.0 million of notes payable. As of May 31, 2018, the notes accrue 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 remains 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 May 31, 2018, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:



	2014 Credit Agreement				98.7FM Non-recourse Debt		Other Non-recourse Debt
Year ended February 28 (29),	Revolver		Term Loan		98.7FM Non-recourse Debt		Other Non-recourse Debt		Total Payments
Remainder of 2019	$	—	$	—	$	5,005	$	—	$	5,005
2020	—		28,000		7,150		—		35,150
2021	—		—		7,755		—		7,755
2022	—		—		8,394		6,239		14,633
2023	—		—		9,069		4,000		13,069
Thereafter	—		—		14,964		—		14,964
Total	$	—	$	28,000	$	52,337	$	10,239	$	90,576