Note 5 - Bank Debt

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

(5) BANK DEBT

Bank debt is comprised of term debt ($49.6 million as of June 30, 2021) and a $120 million revolver ($80.5 million borrowed as of June 30, 2021).  The term debt amortization concludes with the final payment in March 2023.  The revolver matures in September 2023.  Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

Liquidity

As of June 30, 2021, we had additional borrowing capacity of $23.9 million and total liquidity of $26.5 million.  Our additional borrowing capacity is net of $5.7 million in outstanding letters of credit as of June 30, 2021 that were required to maintain surety bonds.  Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

Fees

Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $7.9 million as of our amendment in April 2020.  Additional fees of $0.4 million were incurred in May 2021 for a technical amendment related to our entry into the renewable power market.  These costs were deferred and are being amortized over the term of the loan. Unamortized costs as of June 30, 2021, and December 31, 2020, were $5.3 million and $6.1 million, respectively.

Bank debt, less debt issuance costs, is presented below (in thousands):

	June 30,			December 31,
	2021			2020
Current bank debt	$	33,075		$	36,750
Less unamortized debt issuance cost		(2,627	)		(2,439	)
Net current portion	$	30,448		$	34,311
Long-term bank debt	$	97,038		$	100,988
Less unamortized debt issuance cost		(2,660	)		(3,681	)
Net long-term portion	$	94,378		$	97,307
Total bank debt	$	130,113		$	137,738
Less total unamortized debt issuance cost		(5,287	)		(6,120	)
Net bank debt	$	124,826		$	131,618

Covenants

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed the amounts below:

Fiscal Periods Ending	Ratio
March 31, 2021 and June 30, 2021	3.25 to 1.00
September 30, 2021 and December 31, 2021	3.00 to 1.00
March 31, 2022 and each fiscal quarter thereafter	2.50 to 1.00

As of June 30, 2021, our Leverage Ratio of 2.76 was in compliance with the requirements of the credit agreement.

The credit facility also requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA / annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.05 to 1.00 through December 31, 2021, at which time it increases to 1.25 to 1.00 through the maturity of the credit facility.

As of June 30, 2021, our Debt Service Coverage Ratio of 1.06 was in compliance with the requirements of the credit agreement.

Interest Rate

The interest rate on the facility ranges from LIBOR plus 2.75% to LIBOR plus 4.00%, depending on our Leverage Ratio, with a LIBOR floor of 0.50%.  We entered into swap agreements to fix the LIBOR component of the interest rate at 2.92% on the entire amount of the declining term loan balance and on $53 million of the revolver. At June 30, 2021, we are paying LIBOR at the swap rate of 2.92% plus 4.0% for a total interest rate of 6.92% on the hedged amount ($102.3 million) and 4.0% on the remainder ($27.8 million).

Paycheck Protection Program

As previously reported in the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2020, we entered into a Paycheck Protection Program Promissory Note and Agreement on April 15, 2020, evidencing an unsecured $10 million loan (the “PPP Loan”) under the Paycheck Protection Program (or “PPP”) made through First Financial Bank, N.A., (the "Lender"). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”).

Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness. The SBA can grant forgiveness of all or a portion of loans made under the PPP if the recipients use the PPP loan proceeds for eligible purposes, including payroll costs, mortgage interest, rent or utility costs and meet other requirements regarding, among other things, the maintenance of employment and compensation levels. The Company used the PPP Loan proceeds for qualifying expenses and applied for the forgiveness of the PPP Loan in accordance with the terms of the CARES Act.

On July 23, 2021, we received a notification from the Lender that the SBA approved our PPP Loan forgiveness application for the entire PPP Loan balance of $10 million, together with interest accrued thereon. The Lender notified us that the forgiveness payment was received on July 26, 2021.  The forgiveness of the PPP Loan will be recognized during the Company’s third fiscal quarter ending September 30, 2021.

The SBA retains the right to review the Company's loan file for a period subsequent to the date the loan is forgiven, with the potential for the SBA to pursue legal remedies at its discretion.

At June 30, 2021, and December 31, 2020, the PPP loan totaling $10 million is presented as current and long-term liabilities on the condensed consolidated balance sheets based upon the schedule of repayments and excluding any possible forgiveness of the loan.