LONG-TERM DEBT |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONG-TERM DEBT |
LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
First and Second Lien Credit Facilities. During 2012, we entered into the First Lien Credit Facility with Capital One Bank, N.A., ("Capital One") which included the First Term Loan and Revolving Loan, and the Second Lien Credit Facility with ABC Funding, LLC to complete our acquisition of Silver Slipper Casino. The First and Second Lien Credit Facilities are secured by substantially all of our assets, and our wholly-owned subsidiaries, except for FHR-Colorado LLC which was formed to acquire Bronco Billy's, guarantee our obligation under the agreements. The Second Lien Credit Facility is subordinate to the lien of the First Lien Credit Facility.
First Lien Credit Facility
The First Lien Credit Facility, as amended, provided for the First Term Loan in an amount up to $56.3 million which included a $10 million construction term loan to build the hotel at Silver Slipper Casino & Hotel, and the Revolving Loan for up to $5 million. Interest-only payments are due monthly, and quarterly scheduled principal payments of $1.5 million, which include $0.25 million for the construction term loan, began October 1, 2015.
We have elected to pay interest on the First Lien Credit Facility based on the greater of the elected London Interbank Offered Rate (“LIBOR”) rate or 1.0%, plus a margin rate. LIBOR rate elections can be made based on a 30-day, 60-day, 90-day or 180-day LIBOR, and margins are adjusted quarterly. As of December 31, 2015, the interest rate was 4.75% on the balance outstanding on the First Lien Credit Facility, based on the minimum, plus a 3.75% margin.
As of December 31, 2015, commensurate with the completion of the hotel at Silver Slipper Casino & Hotel, we had drawn all of the proceeds of the $10 million construction term loan. The final costs related to the construction are still being resolved, and approximately $569,000 of those proceeds remain in a trust account and will be used to fund the remaining construction costs.
During 2015 and 2014, the First Lien Credit Facility was amended as follows:
On July 18, 2014, we entered into the First Lien 2nd Amendment effective as of June 30, 2014 which:
On January 9, 2015 we entered into the First Lien 3rd Amendment effective as of December 31, 2014 which:
We entered into the First Lien 4th Amendment effective as of May 31, 2015 which:
On August 5, 2015 we entered into the First Lien 5th Amendment effective as of June 30, 2015 which:
As disclosed in Footnote 15, the maturity of the First Lien Credit Facility was extended to April 1, 2017, and, as a result, the Company revised the debt maturities schedule.
Second Lien Credit Facility
The Second Lien Credit Facility provided for a term loan in an amount up to $20 million, and was amended during 2015 and 2014 as follows:
On July 18, 2014, we entered into the Second Lien 2nd Amendment which:
On January 9, 2015, we entered into the Second Lien 3rd Amendment, which became effective December 31, 2014, which:
On August 5, 2015, we entered into the Second Lien 4th Amendment effective June 30, 2015, which:
The First Lien Credit Facility and Second Lien Credit Facility contain customary negative covenants, including, but not limited to, restrictions on our and our subsidiaries’ ability to: incur indebtedness; grant liens; pay dividends and make other restricted payments; make investments; make fundamental changes; dispose of assets; and change the nature of our business. The First Lien Credit Facility and Second Lien Credit Facility require that we maintain specified financial covenants, including a total leverage ratio, a first lien leverage ratio, and a fixed charge coverage ratio, all of which measure Adjusted EBITDA (as defined in the agreements) against outstanding debt and fixed charges (as defined in the agreements). A capital expenditure ratio must also be maintained which requires we invest at least 1.5%, and no more than 5%, of our prior-year revenues, excluding costs related to the Silver Slipper hotel project. The First Lien Credit Facility and Second Lien Credit Facility currently define Adjusted EBITDA as net income (loss) plus (a) interest expense, (b) provisions for income taxes, and (c) depreciation and amortization, and further adjusted to eliminate the impact of certain items that are either non-cash items or are not indicative of ongoing operating performance such as (d) extraordinary gains and losses (including non-cash impairment charges), (e) non-cash stock compensation expense, (f) certain acquisition costs, including the Company’s canceled acquisition of the Fitz Tunica Casino & Hotel (g) costs related to the Company’s canceled S-1 registration statement filed in early 2014, (h) board and management transition expenses from the changes enacted in 2014 (i) pre-opening and development costs for the construction of the hotel at Silver Slipper, and (j) joint venture net income, unless such net income has actually been received by the Company in the form of cash dividends or distributions. For purposes of our covenants, we also received pro forma credit for gaming tax reductions implemented in Indiana in 2014 and the first quarter of 2015.
The revised financial covenant ratios, as detailed in the First Lien 5th Amendment and Second Lien 4th Amendment, are stated in the tables below:
We were in compliance with our covenants as of December 31, 2015; however, there can be no assurances that we will remain in compliance with all covenants in the future. The First Lien Credit Facility and Second Lien Credit Facility also include customary events of default, including, among other things: non-payment; breach of covenant; breach of representation or warranty; cross-default under certain other indebtedness or guarantees; commencement of insolvency proceedings; inability to pay debts; entry of certain material judgments against us or our subsidiaries; occurrence of certain ERISA events; re-purchase of our own stock and certain changes of control. A breach of a covenant or other events of default could cause the loans to be immediately due and payable, terminate commitments for additional loan funds, or the lenders could exercise any other remedy available under the First Lien Credit Facility or Second Lien Credit Facility or by law. If a breach of covenants or other event of default were to occur, we would seek modifications to covenants or a temporary waiver or waivers from the First Lien Credit Facility and Second Lien Credit Facility lenders. No assurance can be given that we would be successful in obtaining such modifications.
We are required to make prepayments under the First Lien Credit Facility, under certain conditions defined in the agreement, in addition to the scheduled principal installments for any fiscal year ending December 31, 2012 or thereafter. Prepayment penalties will be assessed in the event that prepayments are made on the Second Lien Credit Facility prior to the discharge of the First Lien Credit Facility.
As noted above, the maturities schedule presented below has been adjusted for the subsequent amendment to the First Lien Credit Facility, as discussed in Footnote 15. Scheduled debt repayments based on this amendment for the debt outstanding at December 31, 2015 are as follows, for the annual periods ended December 31 (in thousands):
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