DEBT | NOTE 10. DEBT ā Long-term debt consisted of the following: ā ā ā ā ā ā ā ā ā ā March 31, ā December 31, $s in thousands 2022 2021 Revolving credit facility ā $ 303,000 ā $ 303,000 Term loan ā ā 439,875 ā ā 441,000 Unamortized term loan discount and debt issuance costs ā ā (5,231) ā ā (5,516) Total debt ā ā 737,644 ā ā 738,484 Current portion of long-term debt ā ā (3,359) ā ā (3,359) Long-term debt ā $ 734,285 ā $ 735,125 ā Credit Agreement ā On April 18, 2017, US Ecology Holdings, Inc. (f/k/a US Ecology, Inc.) (āPredecessor US Ecologyā), now a wholly-owned subsidiary of the Company, entered into a new senior secured credit agreement (as amended, restated, supplemented or otherwise modified through the date hereof, the āCredit Agreementā) with Wells Fargo Bank, National Association (āWells Fargoā), as administrative agent for the lenders, swingline lender and issuing lender, and Bank of America, N.A., as an issuing lender, that initially provided for a $500.0 million, five-year revolving credit facility (the āRevolving Credit Facilityā). ā On August 6, 2019, Predecessor US Ecology entered into the first amendment (the āFirst Amendmentā) to the Credit Agreement. Effective November 1, 2019, the First Amendment, among other things, extended the expiration of the Revolving Credit Facility to November 1, 2024, permitted the issuance of a $400.0 million incremental term loan to be used to refinance the indebtedness of NRC and pay related transaction expenses in connection with the NRC Merger, modified the accordion feature allowing Predecessor US Ecology to request up to the greater of (x) $250.0 million and (y) 100% of Consolidated EBITDA (as defined in the Credit Agreement) plus certain additional amounts, increased the sublimit for the issuance of swingline loans to $40.0 million and increased the maximum consolidated total net leverage ratio to 4.00 to 1.00. ā On November 1, 2019, Predecessor US Ecology entered into the lender joinder agreement and second amendment (the āSecond Amendmentā) to the Credit Agreement. Effective November 1, 2019, the Second Amendment, among other things, amended the Credit Agreement to increase the capacity for incremental term loans by $50.0 million and provided for Wells Fargo lending $450.0 million in incremental term loans to Predecessor US Ecology to pay off the existing debt of NRC in connection with the NRC Merger, to pay certain fees, costs and expenses incurred in connection with the NRC Merger and to repay outstanding borrowings under the Revolving Credit Facility. The seven-year incremental term loan matures November 1, 2026, requires principal repayment of 1% annually, and bears interest at London Inter-Bank Offered Rate (āLIBORā) plus 2.25% or a base rate plus 1.25% (with a step-up to LIBOR plus 2.50% or a base rate plus 1.50% in the event that US Ecology credit ratings are not BB (with a stable or better outlook) or better from S&P and Ba2 (with a stable or better outlook) or better from Moodyās). During the three months ended March 31, 2022, the effective interest rate on the term loan, including the impact of the amortization of debt issuance costs, was 2.91%. ā On June 26, 2020, Predecessor US Ecology entered into the third amendment (the āThird Amendmentā) to the Credit Agreement. Among other things, the Third Amendment amended the Credit Agreement to provide a covenant relief period through the earlier of March 31, 2022 and the date Predecessor US Ecology elects to end such covenant relief period pursuant to the terms therein. During the covenant relief period, the Third Amendment increased Predecessor US Ecologyās consolidated total net leverage ratio requirement as of the end of each fiscal quarter to certain ratios above the 4.00 to 1.00 ratio in effect immediately before giving effect to the Third Amendment, subject to compliance with certain restrictions on restricted payments and permitted acquisitions during such covenant relief period. ā On June 29, 2021, Predecessor US Ecology entered into the fourth amendment (the āFourth Amendmentā) to the Credit Agreement. Among other things, the Fourth Amendment amended the Credit Agreement to extend the maturity date for the existing revolving credit facility to June 29, 2026 (or such earlier date as the revolving credit facility may otherwise terminate pursuant to the terms of the Credit Agreement). The Fourth Amendment also amended the Credit Agreement (i) to extend the existing covenant relief period to end on the earlier of December 31, 2022 and the date Predecessor US Ecology elects to end such covenant relief period pursuant to the terms therein and (ii) to permanently increase Predecessor US Ecologyās consolidated total net leverage ratio requirement as of the end of each fiscal quarter ending on and after December 31, 2022 to 4.50 to 1.00. During the covenant relief period until the fiscal quarter ending December 31, 2022, the Fourth Amendment increased Predecessor US Ecologyās consolidated total net leverage ratio requirement as of the end of each fiscal quarter to certain ratios above the 4.50 to 1.00 ratio otherwise in effect after giving effect to the Fourth Amendment, subject to compliance with certain restrictions on restricted payments and permitted acquisitions during such covenant relief period. Furthermore, after giving effect to the Fourth Amendment and whether or not the covenant relief period is in effect, (i) if the Borrowerās consolidated total net leverage ratio is equal to or greater than 4.00 to 1.00 but less than 4.50 to 1.00, the interest rate on all outstanding borrowings of revolving credit loans under the Credit Agreement will step-up to the LIBOR plus 2.25% or a base rate plus 1.25% and the commitment fee will step-up to 0.375% and (ii) if Predecessor US Ecologyās consolidated total net leverage ratio is greater than 4.50 to 1.00, the interest rate on all outstanding borrowings of revolving credit loans under the Credit Agreement will step-up to LIBOR plus 2.50% or a base rate plus 1.50% and the commitment fee will step-up to 0.40%, in each case, pursuant to the terms of the Credit Agreement. The Fourth Amendment also reset any outstanding usage of certain negative covenant baskets, including baskets in connection with the indebtedness, liens, investments, asset dispositions, restricted payments and affiliate transactions negative covenants. ā The Revolving Credit Facility provides up to $500.0 million of revolving credit loans or letters of credit with the use of proceeds restricted solely for working capital and other general corporate purposes (including acquisitions and capital expenditures). As modified by the Fourth Amendment, under the Revolving Credit Facility, revolving credit loans are available based on a base rate (as defined in the Credit Agreement) or LIBOR, at the Companyās option, plus an applicable margin which is determined according to a pricing grid under which the interest rate decreases or increases based on our ratio of funded debt to Consolidated EBITDA (as defined in the Credit Agreement), as set forth in the table below: ā ā ā ā Consolidated Total Net Leverage Ratio LIBOR Rate Loans Interest Margin Base Rate Loans Interest Margin Equal to or greater than 4.50 to 1.00 2.50% 1.50% Equal to or greater than 4.00 to 1.00, but less than 4.50 to 1.00 2.25% 1.25% Equal to or greater than 3.25 to 1.00, but less than 4.00 to 1.00 2.00% 1.00% Equal to or greater than 2.50 to 1.00, but less than 3.25 to 1.00 1.75% 0.75% Equal to or greater than 1.75 to 1.00, but less than 2.50 to 1.00 1.50% 0.50% Equal to or greater than 1.00 to 1.00, but less than 1.75 to 1.00 1.25% 0.25% Less than 1.00 to 1.00 1.00% 0.00% ā During the three months ended March 31, 2022, the effective interest rate on the Revolving Credit Facility, after giving effect to the impact of our interest rate swap and the amortization of the loan discount and debt issuance costs, was 3.94%. Interest only payments are due either quarterly or on the last day of any interest period, as applicable. ā As modified by the Fourth Amendment, Predecessor US Ecology is required to pay a commitment fee ranging from 0.175% to 0.40% on the average daily unused portion of the Revolving Credit Facility, with such commitment fee to be based upon Predecessor US Ecologyās total net leverage ratio (as defined in the Credit Agreement). At March 31, 2022, there were $303.0 million of revolving credit loans outstanding on the Revolving Credit Facility, which are presented as long-term debt in the consolidated balance sheets. ā Predecessor US Ecology has entered into a sweep arrangement whereby day-to-day cash requirements in excess of available cash balances are advanced to the Company on an as-needed basis with repayments of these advances automatically made from subsequent deposits to our cash operating accounts (the āSweep Arrangementā). Total advances outstanding under the Sweep Arrangement are subject to the $40.0 million swingline loan sublimit under the Revolving Credit Facility. Predecessor US Ecologyās revolving credit loans outstanding under the Revolving Credit Facility are not subject to repayment through the Sweep Arrangement. As of March 31, 2022, there were no borrowings outstanding subject to the Sweep Arrangement. ā As of March 31, 2022, the availability under the Revolving Credit Facility was $27.7 million, subject to our leverage covenant limitation, with $12.2 million of the Revolving Credit Facility issued in the form of standby letters of credit utilized as collateral for closure and post-closure financial assurance and other assurance obligations. ā Predecessor US Ecology may at any time and from time to time prepay revolving credit loans and swingline loans, in whole or in part, without premium or penalty, subject to the obligation to indemnify each of the lenders against any actual loss or expense (including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain a LIBOR Rate Loan (as defined in the Credit Agreement) or from fees payable to terminate the deposits from which such funds were obtained) with respect to the early termination of any LIBOR Rate Loan. The Credit Agreement provides for mandatory prepayment at any time if the Revolving Credit Outstandings exceed the Revolving Credit Commitment (as such terms are defined in the Credit Agreement), in an amount equal to such excess. Subject to certain exceptions, the Credit Agreement provides for mandatory prepayment upon certain asset dispositions, casualty events and issuances of indebtedness. ā Predecessor US Ecologyās obligations under the Credit Agreement are (or will be) jointly and severally and fully and unconditionally guaranteed on a senior basis by all of the Companyās existing and certain future domestic subsidiaries and are secured by substantially all of the assets of Predecessor US Ecology and the Companyās existing and certain future domestic subsidiaries (subject to certain exclusions), including 100% of the equity interests of the Companyās domestic subsidiaries and 65% of the voting equity interests of the Companyās directly owned foreign subsidiaries (and 100% of the non-voting equity interests of the Companyās directly owned foreign subsidiaries). ā The Credit Agreement contains customary restrictive covenants, subject to certain permitted amounts and exceptions, including covenants limiting the ability of the Company to incur additional indebtedness, pay dividends and make other restricted payments, repurchase shares of our outstanding stock and create certain liens. Upon the occurrence of an Event of Default (as defined in the Credit Agreement), among other things, amounts outstanding under the Credit Agreement may be accelerated and the commitments may be terminated. ā The Credit Agreement also contains as financial maintenance covenants a maximum consolidated total net leverage ratio and a consolidated interest coverage ratio. Except as further modified by the Third Amendment and Fourth Amendment as described above, our consolidated total net leverage ratio as of the last day of each fiscal quarter may not exceed 4.50:1:00. Our consolidated interest coverage ratio as of the last day of any fiscal quarter may not be less than 3.00 to 1.00. At March 31, 2022, we were in compliance with all of the financial covenants in the Credit Agreement. It is currently expected that all outstanding borrowings under the Credit Agreement will be repaid and the Credit Agreement will be terminated in connection with the consummation of the Merger. ā Interest Rate Swap ā In March 2020, the Company entered into an interest rate swap agreement with Wells Fargo, effectively fixing the interest rate on $430.0 million, or approximately 58%, of the Revolving Credit Facility and term loan borrowings outstanding as of March 31, 2022. In connection with our entry into the March 2020 interest rate swap, we terminated our existing interest rate swap prior to its scheduled maturity date of June 2021. As the original hedged forecasted transaction (periodic interest payments on our variable-rate debt) remained probable, the $1.8 million net loss related to the terminated swap reported in AOCI at the termination date was amortized as additional interest expense over its original maturity. |