Note 9 - Long Term Debt and Revolving Lines of Credit
|3 Months Ended|
Jan. 31, 2020
|Notes to Financial Statements|
|Debt Disclosure [Text Block]||
9.Long Term Debt and Revolving Lines of Credit
As part of the Business Combination, the Predecessor’s Revolver, U.K. Revolver, Senior secured notes, and Seller notes (see Predecessor section below for a discussion of these agreements) were all extinguished and the Company entered into (i) a term loan agreement, dated
December 6, 2018,among the Company, certain subsidiaries of the Company, Credit Suisse AG, Cayman Islands Branch as administrative agent and Credit Suisse Loan Funding LLC, Jefferies Finance LLC and Stifel Nicolaus & Company Incorporated LLC as joint lead arrangers and joint bookrunners, and the other Lenders party thereto and (the “Term Loan Agreement”) (ii) a Credit Agreement, dated
December 6, 2018,among the Company, certain subsidiaries of the Company, Wells Fargo Bank, National Association, as agent, sole lead arranger and sole bookrunner, the other Lenders party thereto, and the other parties thereto (“ABL Credit Agreement”). In addition, in order to finance the acquisition of Capital, the Company added
$60.0million of incremental term loans under the Term Loan Agreement in
May 2019.Summarized terms of these facilities are included below.
Term Loan Agreement
Summarized terms of the Term Loan Agreement are as follows:
The outstanding balance under the Term Loan Agreement as of
January 31, 2020
$396.9million and as of that date, the Company was in compliance with all debt covenants. The Company’s interest on borrowings under the Term Loan Agreement bear interest using the London Inter-bank Offered Rate (LIBOR) as the base rate plus an applicable margin in line with the summarized terms of the Term Loan Agreement as described above.
Future maturities of the term loans for fiscal years ending
October 31and thereafter is as follows:
ABL Credit Agreement
Summarized terms of the ABL Credit Agreement are as follows:
The outstanding balance under the ABL Credit Agreement as of
January 31, 2020
$38.7million and as of that date, the Company was in compliance with all debt covenants.
Revolving line of credit
The Predecessor had a revolving loan agreement (the "Revolver"). Summarized terms of the Revolver were as follows:
The Predecessor had a revolving loan agreement (the “U.K. Revolver”) associated with the acquisition of Camfaud in
November 2016.The U.K. Revolver had a maximum borrowing capacity of approximately
$28.0million and bore interest at LIBOR plus
2.00%.The U.K. Revolver required the Predecessor maintain a maximum ratio of total fixed charges.
Senior secured notes
August 2014,the Predecessor issued
$140.0million in senior secured notes through a high-yield bond offering under SEC Rule
144A(“Senior Notes”). In
November 2016,the Predecessor issued additional senior secured notes of
$40.0million as an incremental borrowing with the same terms and form as the original Senior Notes.
Summarized terms of the Senior Notes were as follows:
Over the period of
September 2017,the Predecessor repurchased and retired approximately
$26.0million, in the aggregate, of principal of the Senior Notes.
September 2017,the Predecessor completed an exchange of substantially all outstanding existing Senior Notes for newly issued senior secured notes (“New Senior Notes”). The terms of the New Senior Notes were identical to the Senior Notes except that the maturity date was extended to
September 1, 2023.
In conjunction with the acquisition of the O’Brien Companies (See Note
4- Business Combinations) in
April 2018,the Predecessor issued additional New Senior Notes with a principal amount of
$15.0million at a
104percent premium for a total purchase price of
$0.6million has been recorded by the Company as a debt premium and will be amortized over the life of the New Senior Notes using the effective interest method.
In connection with the acquisitions of the Camfaud and Reilly Concrete Pumping Limited (“Reilly”) in
July 2017,respectively, the Predecessor entered into separate loan agreements with the former owners of Camfaud and Reilly for
$1.9million, respectively (collectively, the “Seller Notes”). The Seller Note with respect to Camfaud bore interest at
5.0%per annum and all principal plus accrued interest was due upon the earlier of; (
6months after the U.K. Revolver is repaid in full, (
42months after the acquisition date (
May 2020)or (
3) the date on which the Predecessor suffers an insolvency event. The Seller Note with respect to Reilly bore interest at
5.0%per annum and all principal plus accrued interest are due
threeyears after the acquisition date (
July 2020).The Seller Notes were unsecured.
In connection with the Business Combination, the Company repaid its existing credit facilities in full and replaced them with the Term Loan Agreement and the ABL Credit Agreement. The Company also incurred an aggregate of
$16.4million of costs related to the extinguishment of its existing debts, including the write-off of unamortized borrowing costs and an early extinguishment fee paid to its lenders. The amount has been reflected as debt extinguishment costs in the Predecessor’s consolidated statement of income for the period ended
December 5, 2018.
The table below is a summary of the composition of the Company’s long-term debt balances at
January 31, 2020
October 31, 2019
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef