| Debt | Note 8. Debt Our long-term debt consists of the following as of September 30, 2022 and December 31, 2021 (in thousands): September 30, December 31, 2022 2021 Prior Senior Secured Credit Facility $ — $ — ABL Facility — — Repeat Precision Promissory Note 25 — Finance leases 7,804 7,818 Total debt 7,829 7,818 Less: current portion ( 1,438 ) ( 1,483 ) Long-term debt $ 6,391 $ 6,335 The estimated fair value of total debt as of September 30, 2022 and December 31, 2021 was $ 7.1 million and $ 7.5 million, respectively. At September 30, 2022, the fair value of the Repeat Precision Promissory Note (as defined below) approximated the carrying value due to a variable interest rate and the ability to repay the note at any time. The fair value of the finance leases was estimated using Level 2 inputs by calculating the sum of the discounted future interest and principal payments at our incremental borrowing rate through the date of maturity. Below is a description of our financing arrangements. Prior Senior Secured Credit Facility On May 1, 2019, we entered into a Second Amended and Restated Credit Agreement (the “2019 Credit Agreement”) by and among NCS Multistage Holdings, Inc. (“NCSH”) with Pioneer Investment, Inc., as U.S. borrower (“Pioneer”), NCS Multistage Inc., as Canadian borrower (“NCS Canada”; together with Pioneer, the “Borrowers”), Pioneer Intermediate, Inc. (together with NCSH, the “Parent Guarantors”), the lenders party thereto, Wells Fargo Bank, National Association as administrative agent (the “Prior U.S. Agent”) in respect of the U.S. facility provided therein and Wells Fargo Bank, National Association, Canadian Branch, as administrative agent (the “Prior Canadian Agent”) in respect of the Canadian Facility provided therein. The 2019 Credit Agreement amended and restated our then-existing credit agreement in its entirety. On August 6, 2020, we entered into Amendment No. 1 to the Second Amended and Restated Credit Agreement (the “the 2020 Amendment”; the 2019 Credit Agreement, as amended by the 2020 Amendment, the “Prior Amended Credit Agreement”) with the Borrowers, Pioneer Intermediate, Inc., certain subsidiaries of the Borrowers, the lenders party thereto, the Prior U.S. Agent and the Prior Canadian Agent. The facility provided pursuant to the Prior Amended Credit Agreement is referred to herein as the “Prior Senior Secured Credit Facility”. The Prior Senior Secured Credit Facility consisted of a senior secured revolving credit facility in an aggregate principal amount of $ 25.0 million made available to Pioneer, of which up to $ 2.5 million was available for letters of credit and up to $ 2.5 million was available for swingline loans. NCS Canada could borrow under the Prior Senior Secured Credit Facility , subject to a $ 15.0 million sublimit. Total borrowings available to the Borrowers under the Prior Senior Secured Credit Facility were limited subject to a borrowing base calculated on eligible receivables, which did not include receivables at Repeat Precision. As of December 31, 2021, we had no outstanding indebtedness under the Prior Senior Secured Credit Facility, and we utilized letter of credit commitments of less than $ 0.1 million. Borrowings under the Prior Senior Secured Credit Facility could be made in U.S. dollars for Adjusted Base Rate Advances, and in U.S. dollars, Canadian dollars or Euros for Eurocurrency Rate Advances (each as defined in the Prior Amended Credit Agreement). Such advances bore interest at the Adjusted Base Rate or at the Eurocurrency Rate (each as defined in the Prior Amended Credit Agreement) plus an applicable interest margin between 2.75 % and 3.75 %, depending on our leverage ratio . We incurred interest expense related to the Prior Senior Secured Credit Facility, including commitment fees, of $ 28 thousand for the three months ended September 30, 2021 and $ 47 thousand and $ 0.1 million for the nine months ended September 30, 2022 and 2021, respectively. We incurred no interest expense, including commitment fees, pursuant to the Prior Senior Secured Credit Facility for the three months ended September 30, 2022. The obligations of the Borrowers under the Prior Senior Secured Credit Facility were guaranteed by the Parent Guarantors, as well as each of the other existing and future direct and indirect restricted subsidiaries of NCS organized under the laws of the United States and Canada (subject to certain exceptions), and were secured by substantially all of the assets of the Parent Guarantors, the Borrowers and such other subsidiary guarantors, in each case, subject to certain exceptions and permitted liens. We capitalized direct costs of $ 1.2 million in connection with the Prior Amended Credit Agreement, which were being amortized over the term of the Prior Senior Secured Credit Facility using the straight-line method. Concurrent with our entry on May 3, 2022, into a replacement asset-based revolving credit facility discussed below, the Prior Senior Secured Credit Facility and the Prior Amended Credit Agreement were terminated. Of the unamortized remaining deferred loan costs associated with the Prior Senior Secured Credit Facility totaling $ 0.3 million, we charged $ 0.2 million to interest expense, net during the second quarter of 2022, associated with the members of the lender group who did not continue with the new facility, and deferred $ 0.1 million, along with new deferred loan costs associated with the replacement facility , to be amortized over the term of the new facility. ABL Facility On May 3, 2022, we entered into a new secured asset-based revolving credit facility (the “ABL Facility”) under which credit availability is subject to a borrowing base calculation. The ABL Facility is governed by the Credit Agreement dated as of May 3, 2022, by and between NCSH, Pioneer, NCS Multistage, LLC, NCS Canada, the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and as a lender under the facility provided therein (the “Credit Agreement”). The ABL Facility consists of a revolving credit facility in an aggregate principal amount of $ 35.0 million made available to borrowers, of which up to $ 10.0 million may be made in Canadian dollars and $ 7.5 million may be made available for letters of credit. Total borrowings available to the borrowers under the ABL Facility may be limited subject to a borrowing base calculated on the sum of cash in a specified pledged account, eligible accounts receivable and eligible inventory, provided it does not include credit for the assets of Repeat Precision. Our borrowing base under the ABL Facility at September 30, 2022 was $ 23.8 million. The ABL Facility will mature on May 3, 2027 . As of September 30, 2022, we had no outstanding indebtedness under the ABL Facility. Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “CDOR Rate” (each as defined in the Credit Agreement). Borrowings bear interest plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between 1.40 % and 2.40 %, and (ii) for Adjusted Daily Simple SOFR, Adjusted Term SOFR Rate, Canadian Prime Rate, and CDOR Rate, between 2.40 % and 3.40 %. We must also pay a monthly commitment fee of 0.25 % to 0.50 % per year, based on unused commitments. The applicable interest rate at September 30, 2022 was 5.4 %. We incurred interest expense related to the ABL Facility, including commitment fees, of $ 44 thousand and $ 0.1 million for the three and nine months ended September 30, 2022. The obligations of the borrowers under the ABL Facility are guaranteed by NCSH and each of our U.S. and Canada subsidiaries (other than Repeat Precision), as well as each of our future direct and indirect subsidiaries organized under the laws of the United States or Canada (subject to certain exceptions), and are secured by substantially all of the assets of NCSH and its subsidiaries, in each case, subject to certain exceptions and permitted liens. The Credit Agreement requires, as a condition to borrowing, that available cash on hand after borrowings does not exceed $ 10.0 million. The Credit Agreement also requires us to (i) maintain, for quarters during which liquidity is less than 20 % of the aggregate revolving commitments, a fixed charge coverage ratio of at least 1.0 to 1.0 and (ii) to prepay advances to the extent that the outstanding loans and letter of credit amounts exceed the most recently calculated borrowing base. As of September 30, 2022, we were in compliance with these financial covenants. The Credit Agreement also contains customary affirmative and negative covenants, including, among other things, restrictions on the creation of liens, the incurrence of indebtedness, investments, dividends and other restricted payments, dispositions and transactions with affiliates. The Credit Agreement includes customary events of default for facilities of this type (with customary materiality thresholds and grace periods, as applicable). If an event of default occurs, the lenders party to the Credit Agreement may elect (after the expiration of any applicable notice or grace periods) to declare all outstanding borrowings under such facility, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. The lenders party to the Credit Agreement also have the right upon an event of default thereunder to terminate any commitments to provide further borrowings, or to provide additional financing in excess of the borrowing base limit, or to proceed against the collateral securing the ABL Facility. We capitalized direct costs of $ 1.0 million in connection with the Credit Agreement, which are being amortized over the term of the ABL Facility using the straight-line method. Amortization of the deferred financing charges of $ 0.1 million was included in interest expense, net for the three and nine months ended September 30, 2022. Repeat Precision Promissory Note On February 27, 2017, Repeat Precision entered into a promissory note with Security State Bank & Trust, Fredericksburg (the “Repeat Precision Promissory Note”). The note bears interest at a variable interest rate based on prime plus 1.00 %. The Repeat Precision Promissory Note is collateralized by certain equipment, inventory and receivables. The Repeat Precision Promissory Note was renewed on February 16, 2018 for an aggregate borrowing capacity of $ 4.3 million and continues to be renewed on an annual basis. The note is currently s cheduled to mature on February 11, 2023 . Total borrowings may be limited subject to a borrowing base calculation which includes a portion of Repeat Precision’s eligible receivables, inventory and equipment. As of September 30, 2022, Repeat Precision had $ 25 thousand of outstanding indebtedness under the note. There was no outstanding indebtedness under the Repeat Precision Promissory Note at December 31, 2021. Repeat Precision’s indebtedness is not guaranteed by the other NCS entities. Finance Leases Finance leases cover buildings including an office and laboratory in Tulsa, Oklahoma, as well as facilities in Odessa, Texas. We also maintain a vehicle leasing arrangement with a fleet management company through which we lease light vehicles and trucks that meet the finance lease criteria. |
