| Long-Term Debt | NOTE 8. LONG-TERM DEBT
On February 16, 2016, we entered into a Credit Agreement (the
“2016 Credit Agreement”), among us, the lending
institutions identified in the 2016 Credit Agreement, and Deutsche
Bank AG New York Branch, as Administrative Agent and Collateral
Agent. The 2016 Credit Agreement establishes senior secured credit
facilities in an aggregate amount of $310.0 million,
consisting of a $270.0 million Term B term loan facility
maturing in six years that will amortize on a basis of 1% annually
during the six-year
Interest on all loans under the 2016 Credit Agreement is payable
either quarterly or at the expiration of any LIBOR interest period
applicable thereto. Prior to amending the 2016 Credit Agreement on
February 17, 2017, as described below, borrowings under the
term loans and the revolving credit facility accrued interest at a
rate equal to, at our option, LIBOR (with a floor of 100 basis
points in respect of the term loan), or a base rate (with a floor
of 200 basis points in respect of the term loan) plus an applicable
margin. The applicable margin was 575 basis points in the case
of LIBOR and 475 basis points in the case of the base rate. We will
pay quarterly fees on the unused portion of the revolving credit
facility equal to 50 basis points per annum as well as a quarterly
letter of credit fee at 575 basis points per annum plus a 12.5
basis point facing fee per annum on the face amount of any
outstanding letters of credit.
On February 17, 2017, we entered into an amendment of our 2016
Credit Agreement (the “First Amendment”). The First
Amendment, among other things, (a) decreases the applicable
interest rate margins for the Initial Term Loans (as defined in the
Credit Agreement) from (i) 4.75% to 3.75%, in the case of the Base
Rate Loans (as defined in the Credit Agreement), and (ii) 5.75% to
4.75%, in the case of the Eurodollar Loans (as defined in the
Credit Agreement), and (b) adds a soft call premium equal to
1.0% of the principal repaid or repriced if the Initial Term Loans
are voluntarily refinanced or repriced pursuant to certain
refinancing transactions within [twelve months] of the effective
date of the First Amendment.
The 2016 Credit Agreement contains a springing financial covenant,
if we draw in excess of twenty percent (20%) of the revolving
facility, which requires us to maintain a maximum total net
leverage ratio (based on the ratio of total debt for borrowed money
to trailing EBITDA, each as defined in the 2016 Credit Agreement),
and will be tested quarterly based on the last four fiscal quarters
and is set at levels as described in the 2016 Credit Agreement. As
of April 1, 2017, no such test is required as we have not
exceeded 20% of our revolving capacity. We believe that our total
net leverage ratio during the first quarter of 2017 was in
compliance with the 2016 Credit Agreement, and that we are in
compliance with all covenants.
The 2016 Credit Agreement also contains a number of affirmative and
restrictive covenants, including limitations on the incurrence of
additional debt, liens on property, acquisitions and investments,
loans and guarantees, mergers, consolidations, liquidations and
dissolutions, asset sales, dividends and other payments in respect
of our capital stock, prepayments of certain debt and transactions
with affiliates. The 2016 Credit Agreement also contains customary
events of default. Upon the occurrence of an event of default, the
amounts outstanding under the 2016 Credit Agreement may be
accelerated and may become immediately due and payable. As of
April 1, 2017, we were in compliance with all affirmative and
restrictive covenants.
In connection with entering into the 2016 Credit Agreement, on
February 16, 2016, we terminated our prior credit agreement,
dated as of September 22, 2014, among PGT Industries, Inc., as
the borrower, the Company, as guarantor, the lenders from time to
time party thereto and Deutsche Bank, as administrative agent and
collateral agent (the “2014 Credit Agreement”). Along
with cash on hand, proceeds from the term loan facility under the
2016 Credit Agreement were used to repay amounts outstanding under
the 2014 Credit Agreement, acquire WinDoor, and pay certain fees
and expenses.
As of April 1, 2017, the face value of debt outstanding under
the 2016 Credit Agreement was $264.0 million, and accrued
interest was $0.9 million.
The activity relating to third-party fees and costs, lender fees
and discount for the three months ended April 1, 2017, are as
follows. All debt-related fees, costs and original issue discount
are classified as a reduction of the carrying value of long-term
debt:
(in thousands) Total
At beginning of year $ 16,102
Amortization expense through February 17, 2017 (359 )
At time of repricing 15,743
Less: Amortization expense after repricing (332 )
At end of period $ 15,411
Estimated amortization expense relating to third-party fees and
costs, lender fees and discount for the years indicated as of
April 1, 2017, is as follows:
(in thousands) Total
Remainder of 2017 $ 2,164
2018 3,036
2019 3,195
2020 3,430
2021 3,185
2022 401
Total $ 15,411
As a result of a voluntary prepayment of $4.0 million we made
in the third quarter of 2016, our next scheduled repayment is not
until the first quarter of 2018. The contractual future maturities
of long-term debt outstanding as of April 1, 2017, are as
follows (at face value):
(in thousands)
Remainder of 2017 $
—
2018 2,075
2019 2,700
2020 2,700
2021 2,700
2022 253,800
Total $ 263,975 |
