Quarterly report pursuant to Section 13 or 15(d)

LONG-TERM DEBT

v3.19.1
LONG-TERM DEBT
 3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
LONG-TERM DEBT
LONG-TERM DEBT
 
Long-term debt, related discounts and issuance costs consist of the following:

(In thousands)
March 31,
2019
 
December 31, 2018
 
(Unaudited)
 
 
Senior Secured Notes
$
98,750

 
$
99,000

Less: Unamortized discounts and debt issuance costs
(3,620
)
 
(3,806
)
 
95,130

 
95,194

Less: Current portion of long-term debt
(1,000
)
 
(1,000
)
 
$
94,130

 
$
94,194



Senior Secured Notes. The Notes bear interest at the greater of the three-month London Interbank Offered Rate (“LIBOR”) or 1.0%, plus a margin rate of 7.0%. Interest on the Notes is payable quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year until the Notes mature on February 2, 2024. On each interest payment date, we are required to make principal payments of $250,000 with a balloon payment for the remaining $94 million due upon maturity.

On or after February 2, 2019, the Company may redeem all or a part of the Notes plus the premium as set forth below, plus accrued and applicable unpaid interest:

Redemption Periods
 
Percentage Premium
On February 2, 2019 to February 1, 2020
 
2.0%
On February 2, 2020 to February 1, 2021
 
1.5%
On February 2, 2021 to February 1, 2022
 
0.5%
On or after February 2, 2022
 
—%


The Notes are collateralized by substantially all of our assets and are guaranteed by all of our material subsidiaries.

Interest Rate Cap Agreement. We maintain an Interest Rate Cap from Capital One, N.A. (“Capital One”) in order to manage expected interest rate increases on the Notes. The agreement is for a notional amount of $50 million and expires on March 31, 2021. The Interest Rate Cap has a strike rate of 3.00% and resets every three months at the end of March, June, September, and December. If the three-month LIBOR exceeds the strike rate at the end of any covered period, the Company will receive cash payments from Capital One.

Covenants. The indenture governing the Notes contains customary representations and warranties, events of default, and positive and negative covenants, including financial covenants. We are required to maintain a total leverage ratio (as defined below), which measures Consolidated EBITDA (as defined in the indenture) against outstanding debt. We are allowed to deduct up to $15 million of our cash and equivalents (beyond estimated cash utilized in daily operations) in calculating the numerator of such ratio. For the remainder of this year, the total leverage covenant ratio requirements are 5.00x through June 30, 2019, and 4.75x through December 31, 2019.

We were in compliance with our covenants as of March 31, 2019. However, there can be no assurances that we will remain in compliance with all covenants in the future and/or that we would be successful in obtaining waivers or modifications in the event of noncompliance.