Debt and Finance Lease Obligations

9 Months Ended

Sep. 30, 2021

Note 12. Debt and Finance Lease Obligations

The components of debt and finance lease obligations consisted of the following:


	September 30,			December 31,
(in thousands, except interest rates)	2021			2020
2021 Credit Facility, 5.5% weighted-average interest rate at September 30, 2021, due through 2028(1)	$	400,000		$	—
2018 Credit Facility, 4.5% weighted-average interest rate at December 31, 2020		—			266,762
FlyOver Iceland Credit Facility, 4.9% weighted-average interest rate at September 30, 2021 and December 31, 2020, due through 2023(1)		5,619			5,820
FlyOver Iceland Term Loans, 3.8% weighted-average interest rate at September 30, 2021 and December 31, 2020, due through 2024(1)		689			705
Less unamortized debt issuance costs		(15,525	)		(2,737	)
Total debt		390,783			270,550
Finance lease obligations, 9.1% weighted-average interest rate at September 30, 2021 and 8.0% at December 31, 2020, due through 2067(2)		63,597			23,141
Total debt and finance lease obligations (3)(4)		454,380			293,691
Current portion		(8,218	)		(8,335	)
Long-term debt and finance lease obligations	$	446,162		$	285,356

(1)

Represents the weighted-average interest rate in effect at the respective periods, including any applicable margin. The interest rates do not include amortization of debt issuance costs or commitment fees.

(2)

The increase in finance lease obligations is primarily due to the commencement of Pursuit’s new Sky Lagoon attraction in Iceland during the first quarter of 2021, which has a 46-year lease term.

(3)

The estimated fair value of total debt and finance leases was $310.5 million as of September 30, 2021 and $254.0 million as of December 31, 2020. The fair value of debt was estimated by discounting the future cash flows using rates currently available for debt of similar terms and maturity, which is a Level 2 measurement. Refer to Note 13 – Fair Value Measurements.

(4)

Cash paid for interest on debt was $14.9 million for the nine months ended September 30, 2021 and $12.1 million for the nine months ended September 30, 2020.

2021 Credit Facility

Effective July 30, 2021, we refinanced the 2018 Credit Facility with the new $500 million 2021 Credit Facility to provide for financial flexibility to support our growth initiatives. The 2021 Credit Facility provides for a $400 million Term Loan B with a maturity date of July 30, 2028 and a $100 million revolving credit facility with a maturity date of July 30, 2026. The loan proceeds of $400 million were offset in part by $14.8 million in fees. The proceeds from the Term Loan B were used to repay the 2018 Credit Facility and the remaining proceeds will be used to fund future acquisitions and growth initiatives and for general corporate purposes. The following are significant terms under the revolving credit facility:



Maintain minimum liquidity of $75 million through the earlier of (i) June 30, 2022 or (ii) the first fiscal quarter we are in compliance with the financial covenants;



Financial covenants will first be tested as of September 30, 2022 as described below;



Maintain an interest coverage ratio of not less than 2.00 to 1.00, with a step-up to 2.50 to 1.00 on or after December 31, 2022;



Maintain a total net leverage ratio of not greater than 4.50 to 1.00 with a step-down to 4.00 to 1.00 on or after December 31, 2022 and a step-up of 0.5x for four quarters for any material acquisition; and



Interest rate on the Term Loan B of London Interbank Offered Rate (“LIBOR”) plus 5.00%, with a LIBOR floor of 0.50%.

As a result of the refinance and the repayment of the 2018 Credit Facility, we recorded $2.1 million of interest expense related to the write-off of unamortized debt issuance costs during the three months ended September 30, 2021.

As of September 30, 2021, capacity remaining under the 2021 Credit Facility was $78.2 million, reflecting borrowings of $400.0 million under the Term Loan B and $21.8 million in outstanding letters of credit.

FlyOver Iceland Credit Facility

Effective February 15, 2019, FlyOver Iceland ehf., (“FlyOver Iceland”) a wholly-owned subsidiary of Esja, entered into a credit agreement with a €5.0 million (approximately $5.6 million U.S. dollars) credit facility (the “FlyOver Iceland Credit Facility”) with a maturity date of March 1, 2022. The loan proceeds were used to complete the development of the FlyOver Iceland attraction. In response to the COVID-19 pandemic, we entered into an addendum to the FlyOver Iceland Credit Facility effective January 8, 2021 wherein the

principal payments were deferred for twelve months beginning December 1, 2020, with the first payment due December 1, 2021. The addendum also extended the maturity date to September 1, 2023. There were no other changes to the terms of the FlyOver Iceland Credit Facility. During the first quarter of 2021, we obtained a waiver of certain covenants to the FlyOver Iceland Credit Facility through December 2021. We expect to be unable to meet our financial covenants under the FlyOver Iceland Credit Facility for the six months ending December 31, 2021. We have requested a waiver for our covenants.

FlyOver Iceland Term Loans

During 2020, FlyOver Iceland entered into three term loans totaling ISK 90.0 million (approximately $0.7 million U.S. dollars) (the “FlyOver Iceland Term Loans”). The first term loan for ISK 10.0 million was entered into effective October 15, 2020 with a maturity date of April 1, 2023 and bears interest on a seven-day term deposit at the Central Bank of Iceland. The second term loan for ISK 30.0 million was entered into effective October 15, 2020 with a maturity date of October 1, 2024 and bears interest on a seven-day term deposit at the Central Bank of Iceland plus 3.07%. The third term loan for ISK 50.0 million was entered into effective December 29, 2020 with a maturity date of February 1, 2023 and bears interest at one-month Reykjavik InterBank Offered Rate (“REIBOR”) plus 4.99%. The Icelandic State Treasury guarantees supplemental loans provided by credit institutions to companies impacted by the COVID-19 pandemic. Accordingly, the Icelandic State Treasury guaranteed the repayment of up to 85% of the principal and interest on the ISK 10.0 million and ISK 30.0 million term loans and 70% of the principal amount on the ISK 50.0 million term loan. Loan proceeds were used to fund FlyOver Iceland operations.