Note 5 - Bank Debt

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

(5) BANK DEBT

On March 13, 2023, we executed an amendment to our credit agreement with PNC Bank, National Association (in its capacity as administrative agent, "PNC"), administrative agent for our lenders under our credit agreement, which was accounted for as a debt modification. The primary purpose of the amendment was to convert $35.0 million of the outstanding balance on the revolver into a new term loan with a maturity of March 31, 2024, and extend the maturity date of the revolver to May 31, 2024. The amendment reduced the total capacity under the revolver to $85.0 million from $120.0 million, waived the maximum annual capital expenditure covenant for 2022, and increased the covenant for 2023 to $75.0 million.

On August 2, 2023, we executed an additional amendment to our credit agreement with PNC, which was accounted for as a debt extinguishment. The primary purpose of the amendment was to convert $65.0 million of the outstanding funded debt into a new term loan with a maturity of March 31, 2026, and enter into a revolver of $75.0 million with a maturity of July 31, 2026. The amendment increased the maximum annual capital expenditure limit to $100.0 million.

Bank debt was reduced by $14.5 million during the three months ended March 31, 2024.  Under the terms of the August 2, 2023 amendment, bank debt is comprised of term debt ($58.5 million as of March 31, 2024) and a $75.0 million revolver ($18.5 million borrowed as of March 31, 2024).  The term debt requires quarterly payments of $6.5 million in April 2024 through maturity. 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 March 31, 2024, we had an additional borrowing capacity of $37.9 million and total liquidity of $39.5 million.  Our additional borrowing capacity is net of $18.6 million in outstanding letters of credit as of March 31, 2024, 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 $2.5 million as of December 31, 2022. During 2023, we recognized a loss on extinguishment of debt of $1.5 million for the write-off of unamortized loan fees related to the August 2, 2023 amendment to our credit agreement, which was accounted for as a debt extinguishment. Unamortized bank fees incurred with the March 13, 2023 and August 2, 2023 amendments totaled $1.6 million and $4.3 million, respectively.  The remaining costs were deferred and are being amortized over the term of the loan. Unamortized costs as of March 31, 2024, and December 31, 2023, were $3.2 million and $3.6 million, respectively. 

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

	March 31,			December 31,
	2024			2023
Current bank debt	$	26,000		$	26,000
Less unamortized debt issuance cost		(1,562	)		(1,562	)
Net current portion	$	24,438		$	24,438
Long-term bank debt	$	51,000		$	65,500
Less unamortized debt issuance cost		(1,657	)		(2,047	)
Net long-term portion	$	49,343		$	63,453
Total bank debt	$	77,000		$	91,500
Less total unamortized debt issuance cost		(3,219	)		(3,609	)
Net bank debt	$	73,781		$	87,891

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 2.25 to 1.00.

As of March 31, 2024, our Leverage Ratio of 1.58 was in compliance with the requirements of the credit agreement.

The credit facility 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 1.25 to 1.00 through the credit facility's maturity. As of March 31, 2024, our Debt Service Coverage Ratio of 2.88 was in compliance with the requirements of the credit agreement.

As of March 31, 2024, we were in compliance with all other covenants defined in the credit agreement.

Interest Rate

The interest rate on the facility ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our Leverage Ratio.  As of  March 31, 2024, we were paying SOFR plus 4.50% on the outstanding bank debt which equates to an all in rate of 10.0%.