| Long-Term Debt |
5. LONG-TERM DEBT The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands: | | | | | | | | | As of | | | March 31, 2024 | | December 31, 2023 | 3.625% Senior Notes due 2029 | | $ | 400,000 | | $ | 400,000 | 4.125% Senior Notes due 2032 | | | 500,000 | | | 500,000 | Term loan due 2026 | | | 521,250 | | | 532,500 | Equipment notes | | | 1,230 | | | 2,039 | Unamortized debt issuance costs | | | (13,752) | | | (14,472) | Total debt, net of unamortized debt issuance costs | | | 1,408,728 | | | 1,420,067 | Less: current portion of long-term debt | | | 46,230 | | | 47,039 | Total long-term debt | | $ | 1,362,498 | | $ | 1,373,028 |
The following table sets forth our remaining principal payments for our outstanding debt balances as of March 31, 2024, in thousands: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total | 3.625% Senior Notes | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | 400,000 | | $ | 400,000 | 4.125% Senior Notes | | | - | | | - | | | - | | | - | | | - | | | 500,000 | | | 500,000 | Term loan | | | 33,750 | | | 48,750 | | | 438,750 | | | - | | | - | | | - | | | 521,250 | Equipment notes | | | 1,230 | | | - | | | - | | | - | | | - | | | - | | | 1,230 | Total | | $ | 34,980 | | $ | 48,750 | | $ | 438,750 | | $ | - | | $ | - | | $ | 900,000 | | $ | 1,422,480 |
Credit Agreement On July 26, 2023, we entered into Amendment No. 4 to our Credit Agreement, which provided for a new $550.0 million Term Facility Two, the proceeds of which were intended to be used, in part, to finance the acquisition of SPI, including the payment of related fees and expenses. Refer to Note 14 – Subsequent Events for details regarding the termination of our agreement to acquire SPI and Term Facility Two. The following table outlines the key terms of the Credit Agreement (dollars in thousands): | | | | Senior secured term loan facility | $ | 600,000 | | | | | | Revolving facility (a) | $ | 500,000 | | Sublimit for issuance of letters of credit under revolving facility | $ | 100,000 | | Sublimit for swingline loans under revolving facility | $ | 35,000 | | | | | | Interest rate as of March 31, 2024 | | 6.43 | % | Scheduled maturity date | | 10/7/2026 | |
| (a) | Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the revolving facility. |
Interest expense on borrowings under the Credit Agreement is based on an applicable margin rate plus, at our option, either: | ● | A base rate determined by reference to the highest of either (i) the federal funds rate plus 0.50 percent, (ii) BofA’s “prime rate,” and (iii) the SOFR rate for U.S. dollar deposits with a term of one month, plus 1.00 percent (Term Facility One); or |
| ● | A SOFR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowings, subject to a floor of 0%. |
The applicable margin rate is determined based on our Secured Leverage Ratio. In the case of base rate borrowings, the applicable margin rate ranges from 0.00 percent to 1.50 percent for Term Facility One and in the case of SOFR rate borrowings, the applicable margin ranges from 1.00 percent to 2.50 percent for Term Facility One. Borrowings under the Credit Agreement are prepayable at the Company’s option without premium or penalty. The Company is required to make prepayments with the net cash proceeds of certain asset sales and certain extraordinary receipts. Revolving Facility The Company has outstanding standby letters of credit that secure our financial obligations related to our workers’ compensation, general insurance, and auto liability programs. These standby letters of credit, as well as any outstanding amount borrowed under our revolving facility, reduce the availability under the revolving facility. The following table summarizes our availability under the revolving facility, in thousands: | | | | | | | | | As of | | | March 31, 2024 | | December 31, 2023 | Revolving facility | | $ | 500,000 | | $ | 500,000 | Less: standby letters of credit | | | (63,770) | | | (63,770) | Availability under revolving facility | | $ | 436,230 | | $ | 436,230 |
We are required to pay commitment fees to the Lenders in respect of any unutilized commitments. The commitment fees range from 0.15 percent to 0.275 percent per annum, depending on our Secured Leverage Ratio. We must also pay customary fees on outstanding letters of credit. 3.625% Senior Notes The 3.625% Senior Notes are $400.0 million senior unsecured obligations and bear interest at 3.625% per year, payable semiannually in arrears on March 15 and September 15, beginning on September 15, 2021. The 3.625% Senior Notes mature on March 15, 2029, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 3.625% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. The Company may redeem the 3.625% Senior Notes, in whole or in part, at any time on or after March 15, 2024 at the redemption prices specified in the notes. 4.125% Senior Notes The 4.125% Senior Notes are $500.0 million senior unsecured obligations and bear interest at 4.125% per year, payable semiannually in arrears on February 15 and August 15, beginning on August 15, 2022. The 4.125% Senior Notes mature on February 15, 2032, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 4.125% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. The Company may redeem the 4.125% Senior Notes, in whole or in part, at any time on or after October 15, 2026 at the redemption prices specified in the notes plus accrued and unpaid interest if redeemed during the 12 month period commencing on October 15 of the years set for: 2026 – 102.063%, 2027 – 101.375%, 2028 – 100.688%, 2029 and thereafter – 100.000%. The Company may also redeem a make-whole redemption of the 4.125% Senior Notes at any time prior to October 15, 2026 at the treasury rate plus 50 basis points. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the 4.125% Senior Notes prior to October 15, 2024 with the net cash proceeds of certain sales of its capital stock at 104.125% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 60% of the aggregate principal amount of the notes originally issued remains outstanding. Equipment Notes We did not issue equipment notes during the three months ended March 31, 2024. The balance of equipment notes, which were issued for the purpose of financing vehicles and equipment, was $1.2 million as of March 31, 2024. The Company’s equipment notes each have a five year term maturing in 2024 and bear interest at fixed rates between 2.8% and 4.4%. Covenant Compliance The indentures governing our 3.625% Senior Notes and our 4.125% Senior Notes (together, our “Senior Notes”) contain restrictive covenants that, among other things, generally limit the ability of the Company and certain of its subsidiaries (subject to certain exceptions) to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates, and (vii) effect mergers. The indentures provide for customary events of default which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest; breach of covenants or other agreements in the indenture; defaults in failure to pay certain other indebtedness; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is continuing under the indenture, the trustee or the holders of at least 30% in aggregate principal amount of each of our Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on the Senior Notes subject to such declaration immediately due and payable. The Senior Notes and related guarantees have not been registered under the Securities Act of 1933, and we are not required to register either the Senior Notes or the guarantees in the future. The Credit Agreement contains certain covenants that limit, among other things, the ability of the Company to incur additional indebtedness or liens; to make certain investments or loans; to make certain restricted payments; to enter into consolidations, mergers, sales of material assets, and other fundamental changes; to transact with affiliates; to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends; or to make certain accounting changes. The Credit Agreement contains customary affirmative covenants and events of default. The Credit Agreement requires that we maintain a Net Leverage Ratio and minimum Interest Coverage Ratio throughout the term of the agreement. The following table outlines the key financial covenants effective for the period covered by this Quarterly Report: | | | | | As of March 31, 2024 | Maximum Net Leverage Ratio | | 3.50:1.00 | Minimum Interest Coverage Ratio | | 3.00:1.00 | Compliance as of period end | | In Compliance |
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