| Long-Term Debt | NOTE 8. LONG-TERM DEBT
September 30, December 31,
(in
thousands)
Term loan payable under the 2016 Credit Agreement $ 243,975 $ 263,975
Other debt 529
—
Fees, costs and original issue discount (13,037 ) (16,102 )
Long-term debt 231,467 247,873
Less current portion of long-term debt (290 )
—
Long-term debt, less current portion $ 231,177 $ 247,873
2016 Credit Agreement
On February 16, 2016, we entered into a Credit Agreement
(“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. The weighted average all-in
On February 17, 2017, we entered into an amendment of our 2016
Credit Agreement (“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 September 30, 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 third 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
September 30, 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 (“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 September 30, 2017, the face value of debt outstanding
under the 2016 Credit Agreement was $244.0 million, and
accrued interest was $0.4 million. During the third quarter of
2017, we made voluntary prepayments of outstanding borrowings under
the term-loan portion of the 2016 Credit Agreement totaling
$20.0 million, composed of a payment of $8.0 million made
on September 29, 2017, and of $12.0 million made on
July 7, 2017.
Other Debt
In July 2017, we entered into a two-year
The activity relating to third-party fees and costs, lender fees
and discount for the three months ended September 30, 2017,
are as follows. As a result of the voluntary prepayments of debt
discussed above, we accelerated the amortization of lenders fees
and discount relating to the term-loan portion of the 2016 Credit
Agreement of $1.0 million, which is included in interest
expense in the accompanying condensed consolidated statements of
operations for the three and nine months ended September 30,
2017. 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 (1,726 )
Less: Accelerated amortization relating to debt prepayments (980 )
At end of period $ 13,037
Estimated amortization expense relating to third-party fees and
costs, lender fees and discount for the years indicated as of
September 30, 2017, is as follows:
(in thousands) Total
Remainder of 2017 $ 670
2018 2,785
2019 2,966
2020 3,224
2021 3,011
2022 381
Total $ 13,037
As a result of the voluntary prepayments totaling
$20.0 million we made during the third quarter of 2017, we
have no future scheduled repayments under the 2016 Credit Agreement
until the maturity of the facility on February 21, 2022. The
contractual future maturities of long-term debt outstanding,
including the financing arrangement described as other debt, as of
September 30, 2017, are as follows (at face value):
(in thousands)
Remainder of 2017 $ 71
2018 295
2019 163
2020
—
2021
—
2022 243,975
Total $ 244,504 |
