Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

v3.19.2
Long-Term Debt
6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Long-Term Debt

Note 6 – Long-Term Debt

Long-term debt consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

June 30, 

 

December 31, 

 

 

2019

 

2018

Term loan agreements

 

$

10,000

 

$

3,828

Revolving credit facility

 

 

2,150

 

 

Equipment financing agreements

 

 

569

 

 

752

Promissory notes

 

 

 —

 

 

6,250

Total long-term debt

 

 

12,719

 

 

10,830

Less: current portion of long-term debt

 

 

(1,065)

 

 

(3,201)

Less: debt issuance costs

 

 

(416)

 

 

(32)

Less: discounts on warrants, net

 

 

 —

 

 

(479)

Total long-term debt, net of current portion

 

$

11,238

 

$

7,118

 

Interest expense for all the Company’s debt arrangements, excluding the loss on early debt extinguishment and the amortization of debt issuance costs,  other discounts and fees, was approximately $0.2 million and $0.2 million for the three months ended June 30, 2019 and 2018 and $0.4 million and $0.5 million for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, the Company had $1.3 million in letters of credit outstanding for certain restaurants, including $36.9 thousand of standby letters of credit and $1.3 million of cash collateralized letters of credit, which are recorded as a component of security deposits on the consolidated balance sheet as of June 30, 2019.

Bank of America, N.A. Credit Agreement

 

On May 15, 2019, the Company entered into a Credit Agreement with Bank of America, N.A (“Credit Agreement”). The Credit Agreement provides for a secured revolving credit facility of $10.0 million and a $10.0 million term loan. The term loan is payable in quarterly installments, with the final payment due in May 2024. The revolving credit facility also matures in May 2024. In conjunction with entering into the Credit Agreement, the Company incurred $0.4 million of debt issuance costs, which were capitalized and are recorded as a direct deduction to the long-term debt, net of current portion, on the consolidated balance sheets.

 

The Credit Agreement contains several financial covenants, including (a) a maximum consolidated leverage ratio of (i) 4.75 to 1.00 as of the end of any fiscal quarter ending on or prior to June 30, 2020 and (ii) 4.50 to 1.00 as of the end of any fiscal quarter thereafter and (b) a minimum consolidated fixed charge coverage ratio of 1.35 to 1.00.

 

The Credit Agreement has several borrowing and interest rate options, including the following: (a) a LIBOR rate (or a comparable successor rate) or (b) a base rate equal to the greater of the prime rate, the federal funds rate plus 0.50% or the LIBOR rate for a one-month period plus 1.00%; provided that the base rate may not be less than zero. Loans under the Credit Agreement bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of between 2.75% and 3.50% (for LIBOR rate loans) and 1.75% and 2.50% (for base rate loans).

 

The Credit Agreement contains customary representations, warranties and conditions to borrowing including customary affirmative and negative covenants, which include covenants that limit or restrict the Company’s ability to incur indebtedness and other obligations, grant liens to secure obligations, make investments, merge or consolidate, and dispose of assets outside the ordinary course of business, in each case subject to customary exceptions for credit facilities of this size and type. As of June 30, 2019, the Company is in compliance with the covenants required by the Credit Agreement.

 

Debt Extinguishment

 

In conjunction with entering into the Credit Agreement on May 15, 2019, the Company prepaid the outstanding debt balances to early extinguish the $2.6 million of outstanding term loans with BankUnited, the $5.3 million of outstanding promissory notes with Anson Investments Master Fund LP, and the $1.0 million outstanding promissory note with 2235570 Ontario Limited. The Company recognized a $0.4 million loss on early debt extinguishment within other expenses, net on the consolidated statements of operations and comprehensive income, primarily caused by the recognition of the unamortized discounts related to warrants issued with the promissory notes and the recognition of unamortized debt issuance costs related to the debt extinguished. Additionally, the Company prepaid the $1.2 million of outstanding cash advances due to the TOG Liquidation Trust, a related party. Please refer to Note 9 for additional details on transactions with related parties.