(10) Debt

Debt consists of the following at:

 

										December 31, 2013								December 31, 2012
		Interest Rate				Maturity Date				Unamortized Deferred Financing Costs				Debt				Debt
Amended Revolving Credit Facility (a)			4.61	%			Nov. 2017			$	6,115			$	135,990			$	146,990
2018 Notes (b)			9.875	%			Apr. 2018				14,691				400,000				400,000
Vehicle Financings (c)			3.30	%			Various				—				19,956				20,047
Total debt										$	20,806				555,946				567,037
Original issue discount (d)															(1,084	)			(1,277	)
Original issue premium (d)															315				366
Total debt, net															555,177				566,126
Less: current portion															(5,464	)			(4,699	)
Total long-term debt														$	549,713			$	561,427

 

(a)	The interest rate presented represents the interest rate on the $325.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) at December 31, 2013.

(b)

The interest rate presented represents the coupon rate on the Company’s outstanding $400 million aggregate principal amounts of 9.875% Senior Notes due 2018 (the “2018 Notes”), excluding the effect of deferred financing costs, original issue discounts and original issue premiums. Including the effect of these items, the effective interest rate on the 2018 Notes is approximately 11.0%.

(c)

Vehicle financings consist of installment notes payable and capital lease arrangements related to fleet purchases with a weighted-average annual interest rate of approximately 3.30%, which mature in varying installments between 2014 and 2017. Installment notes payable and capital lease obligations were $1.1 million and $18.8 million, respectively, at December 31, 2013 and $2.1 million and $17.9 million, respectively, at December 31, 2012.

(d)

The issuance discount represents the unamortized difference between the $250.0 million aggregate principal amount of the 2018 Notes issued in April 2012 and the proceeds received upon issuance (excluding interest and fees). The issuance premium represents the unamortized difference between the proceeds received in connection with the November 2012 issuance of the 2018 Notes (excluding interest and fees) and the $150.0 million aggregate principal amount thereunder.

The required principal payments for all borrowings for each of the five years following the balance sheet date are as follows:

 

2014		$	5,437
2015			4,940
2016			4,277
2017			140,090
2018			401,202
Thereafter			—
Total		$	555,946

As of December 31, 2013 the estimated fair value of the Company’s debt was as follows:

 

		Fair Value
Revolving Credit Facility		$	135,990
2018 Notes			404,000
Vehicle Financings			19,956
Total		$	559,946

The estimated fair value of the Company’s 2018 Notes is based on quoted market prices as of December 31, 2013. The Company’s Revolving Credit Facility and other debt obligations, including capital leases, bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

On April 10, 2012, the Company completed a private placement offering of $250.0 million aggregate principal amount of 9.875% senior unsecured notes due April 2018 (the “Notes”). Net proceeds from the issuance of the Notes, after deducting underwriters’ fees and offering expenses, totaled $240.8 million and were used to repay the outstanding principal balances of the Company’s old credit facility and to partially finance the acquisition of TFI. In connection with the repayment of the old credit facility, the Company wrote-off approximately $2.6 million of unamortized deferred financing costs, which is characterized as loss on extinguishment of debt in the accompanying consolidated statement of operations for the year ended December 31, 2012.

On November 5, 2012, the Company completed a private placement offering of $150.0 million aggregate principal amount of 9.875% senior unsecured notes due April 2018 (the “Additional Notes” and with the Notes, are collectively referred to as the “2018 Notes” ). Net proceeds from the issuance of the Additional Notes, after deducting underwriters’ fees and offering expenses, totaled approximately $147.0 million and were used to partially finance the merger with Power Fuels.

 

The 2018 Notes are redeemable, at the Company’s option, in whole or in part, at any time and from time to time on and after April 15, 2015 at the applicable redemption price set forth below, if redeemed during the 12-month period commencing on April 15 of the years set forth below:

 

Redemption Period		Price
2015			104.938	%
2016			102.469	%
2017 and thereafter			100.000	%

In addition, at any time on or prior to April 15, 2015, the Company may on any one or more occasions redeem up to 35% of the original aggregate principal amount of the 2018 Notes, with funds in an equal aggregate amount up to the aggregate proceeds of certain equity offerings of the Company, at a redemption price of 109.875%. The indentures governing the 2018 Notes also contain restrictive covenants that, among other things, limit the Company’s ability to transfer or sell assets; pay dividends or make certain distributions, buy subordinated indebtedness or securities, make certain investments or make other restricted payments; incur or guarantee additional indebtedness or issue preferred stock; create or incur liens securing indebtedness; incur dividend or other payment restrictions affecting subsidiary guarantors; consummate a merger, consolidation or sale of all or substantially all of our assets; enter into transactions with affiliates; engage in business other than a business that is the same or similar, reasonably related, complementary or incidental to our current business and/or that of our subsidiaries; and make certain acquisitions or investments. The Company was compliant with these covenants at December 31, 2013.

Concurrent with the April 10, 2012 repayment and termination of its previous credit facility, the Company entered into a new $150.0 million senior revolving credit agreement (the “Revolving Credit Facility”) with Wells Fargo Bank as Administrative Agent and the lenders party thereto. The Revolving Credit Facility contained an uncommitted “accordion” feature, which allowed the Company to increase borrowings by up to an additional $100.0 million. On November 30, 2012, the Company amended this senior revolving credit agreement (the “Amended Revolving Credit Facility”) to increase the commitment from $150.0 million to $325.0 million and extend the maturity from April 10, 2017 to November 30, 2017. Together with the $100.0 million uncommitted “accordion” feature under the agreement (which was not affected by the amendment), the Amended Revolving Credit Facility provided for total maximum potential borrowings of $425.0 million. Interest on the Amended Revolving Credit Facility accrued based generally on London inter-bank offered rate (“LIBOR”) plus a margin of between 2.50% and 3.75% based on a ratio of the Company’s total debt to EBITDA, or an alternate interest rate equal to the higher of the Federal Funds Rate as published by the Federal Reserve Bank of New York plus ¹/₂ of 1.00%, the prime commercial lending rate of the administrative agent under the Credit Agreement, and monthly LIBOR plus 1.00%, plus a margin of between 1.50% and 2.75% based on the Company’s total debt to EBITDA. As of December 31, 2012, the Company had $177.0 million available for borrowing under the Amended Revolving Credit Facility. A portion of the Amended Revolving Credit Facility was available for the issuance of letters of credit up to $20.0 million in the aggregate and swingline loans, which are three day loans that can be drawn on the same day as requested for an amount not to exceed $30.0 million. The Company was required to pay fees on the unused commitments of the lenders under the Amended Revolving Credit Facility, a letter of credit fee on the outstanding stated amount of letters of credit plus facing fees for the letter of credit issuing banks and any other customary fees.

In September 2013, the Company executed an amendment to the an Amended Revolving Credit Facility (the “Amendment”) to increase the permissible maximum total debt leverage ratio for the periods ending September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014. The pricing of the Amended Revolving Credit Facility was unchanged by the Amendment. In connection with the Amendment, the Company incurred lender and third party fees of approximately $0.6 million.

In February 2014, the Company entered into a new asset-based revolving credit facility (“ABL Facility”) with Wells Fargo Bank as Administrative Agent and other lenders which amended and replaced its Amended Revolving Credit Facility. Initially, the ABL Facility provides a maximum credit amount of $200.0 million, which can be increased to $225.0 million through a $25.0 million accordion feature. Initial borrowings under the ABL Facility were used to refinance amounts outstanding under the Amended Revolving Credit Facility and fund certain related fees and expenses. The ABL Facility will be used to support ongoing working capital needs and other general corporate purposes, including growth initiatives and the potential repurchase of a portion of the Company’s currently outstanding 2018 Notes. The ABL Facility, which matures at the earlier of five years from the closing date or 90 days prior to the maturity of other material indebtedness including the 2018 Notes, is secured by substantially all of the Company’s assets.

The terms of the ABL Facility limit the amount the Company can borrow to the lesser of (a) $200.0 million or (b) 85% of the amount of the Company’s eligible accounts receivable plus the lower of (i) 95% of the net book value of the Company’s eligible rental equipment, tractors and trailers, and (ii) 85% times the appraised net orderly liquidation value of the Company’s eligible rental equipment, tractors and trailers, less any customary reserves. The borrowing base is evaluated monthly. The full $200.00 million facility is available to the Company based on the borrowing base as of the closing date and subsequent levels of eligible receivables and equipment continue to support $200.0 million of availability under the facility. The ABL Facility includes a letter of credit sub-limit of $10.0 million and a swingline facility sub-limit equal to 10% of the total facility size for more immediate cash needs.

Interest will accrue on outstanding loans under the ABL Facility at a floating rate based on, at the Company’s election, (i) the greater of (a) the prime lending rate as publicly announced by Wells Fargo or (b) the Federal Funds rate plus  ¹/₂% or (c) the one month LIBOR plus one percent plus an applicable margin percentage of 0.75% to 1.50% or (ii) the LIBOR rate plus the applicable margin of 1.75% to 2.50%. The Company is also required to pay fees on the unused commitments of the lenders under the ABL Facility, fees for outstanding letters of credit and other customary fees.

Covenants under the Amended Revolving Credit Facility, as described in our Quarterly Report on Form 10-Q for the period ended September 30, 2013, were effectively extinguished as of December 31, 2013 by the ABL Facility, and as a result any failure of the Company to comply with the covenants under the Amended Revolving Credit Facility as of December 31, 2013 would have had no effect. The ABL Facility contains certain financial covenants that require the Company to maintain a senior leverage ratio and, upon the occurrence of certain specified conditions, a fixed charge coverage ratio as well as certain customary limitations on the Company’s ability to, among other things, incur debt, grant liens, make acquisitions and other investments, make certain restricted payments such as dividends, dispose of assets or undergo a change in control. The senior leverage ratio is calculated as the ratio of senior secured debt to adjusted EBITDA (as defined), and is limited to 3.0 to 1.0. The Company’s $400.0 million of 2018 Notes are not secured and thus are excluded from the calculation of this ratio. The fixed charge coverage ratio, which only applies at such time the total amount drawn under the credit facility exceeds 87.5 percent of the total facility amount, requires the ratio of adjusted EBITDA (as defined) less capital expenditures to fixed charges (as defined) to be at least 1.1 to 1.0.

Costs associated with the ABL Facility totaling approximately $3.5 million will be capitalized as deferred financing costs in the three months ending March 31, 2014, and the Company expects to write-off unamortized deferred financing costs associated with its Amended Revolving Credit Facility of approximately $3.0 million in the same period.