Note 5 - Bank Debt

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

(5)     BANK DEBT

On April 15, 2020, we executed an amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purposes of the amendment were to modify the allowable leverage ratio over the term of the loan to increase available liquidity.   As a result of the amendment, our maximum annual capital expenditures are limited to $30 million for 2020 and $25 million for each year thereafter with carryover provisions of unused expenditures, and our dividend is suspended until our leverage ratio falls below 2.0X.

On March 25, 2022, we executed another amendment to our credit agreement with PNC to return the allowable leverage ratio and debt service coverage ratio to their December 31, 2021 levels through September 30, 2022, with the debt service coverage ratio waived for March 31, 2022.

During 2021, we reduced our bank debt by $26.0 million through net cash payments, which as of December 31, 2021, was $111.7 million.  Bank debt is comprised of term debt ($31.2 million as of December 31, 2021) and a $120.0 million revolver ($80.5 million borrowed as of December 31, 2021).  The term debt amortization concludes with the final payment in March 2023.  The revolver matures 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 December 31, 2021, we had additional borrowing capacity of $33.4 million under the revolver and total liquidity of $35.9 million.  Our additional borrowing capacity is net of $5.7 million in outstanding letters of credit as of December 31, 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 costs incurred with the April 15, 2020 amendment were $1.9 million. 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 December 31, 2021 and 2020 were $4.0 million and $6.1 million, respectively.  

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

	December 31,
	2021			2020
Current bank debt	$	25,725		$	36,750
Less unamortized debt issuance cost		(2,627	)		(2,439	)
Net current portion	$	23,098		$	34,311
Long-term bank debt	$	86,013		$	100,988
Less unamortized debt issuance cost		(1,346	)		(3,681	)
Net long-term portion	$	84,667		$	97,307
Total bank debt	$	111,738		$	137,738
Less total unamortized debt issuance cost		(3,973	)		(6,120	)
Net bank debt	$	107,765		$	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
December 31, 2021	3.00 to 1.00
March 31, 2022, and each fiscal quarter thereafter	2.50 to 1.00

As of December 31, 2021, our Leverage Ratio of 2.34 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 December 31, 2021, our Debt Service Coverage Ratio of 1.11 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 declining term loan balance and on $52.7 million of the revolver. At December 31, 2021, we are paying LIBOR at the swap rate of 2.92% plus 3.50% for a total interest rate of 6.42% on the hedged amount ($83.9 million) and 3.5% on the remainder ($27.8 million).

Future Maturities (in thousands):
2022		25,725
2023		86,013
Total	$	111,738

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 is recognized as other income.

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 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.