INDEBTEDNESS

9 Months Ended

Sep. 30, 2020

INDEBTEDNESS

Long-term debt consisted of the following as of September 30, 2020 (in thousands):


	Principal Amount		Discount		Debt Issuance Costs		Net Balance
ABL facility	$	—	$	—	$	—	$	—
First lien term loan	918,063		(7,546)		(20,506)		890,011
Second lien notes	294,781		(7,590)		(5,116)		282,075
	$	1,212,844	$	(15,136)	$	(25,622)	1,172,086
Less: current portion							(9,250)
Total long-term debt							$	1,162,836

Long-term debt consisted of the following as of December 31, 2019 (in thousands):


	Principal Amount		Discount		Debt Issuance Costs		Net Balance
ABL facility	$	—	$	—	$	—	$	—
First lien term loan	925,000		(8,399)		(22,825)		893,776
Second lien notes	412,256		(11,672)		(7,864)		392,720
	$	1,337,256	$	(20,071)	$	(30,689)	1,286,496
Less: current portion							(9,250)
Total long-term debt							$	1,277,246

The interest rate on the first lien term loan was 4.65% and 6.20% as of September 30, 2020 and December 31, 2019, respectively. The weighted average interest rate incurred on the first lien term loan was 4.67% and 5.29% for the three and nine months ended September 30, 2020. The weighted average interest rate incurred on the first lien term loan was 6.67% for the period August 6, 2019 through September 30, 2019. The weighted average interest rate incurred on the previous first lien term loan was 6.06% and 6.20% for the three and nine months ended September 30, 2019, respectively, prior to the retirement of the previous credit facilities on August 6, 2019. The interest rate on the second lien notes was 9.00% and 10.66% as of September 30, 2020 and December 31, 2019, respectively. The weighted average interest incurred on the second lien notes was 9.51% and 10.17% for the three and nine months ended September 30, 2020. The weighted average interest rate incurred on the second lien notes was 10.89% for the period August 6, 2019 through September 30, 2019. The weighted average interest incurred on the previous second lien term loan was 11.02% and 11.36% for the three and nine months ended September 30, 2019, respectively, prior to the retirement of the previous credit facilities on August 6, 2019.

The Company elected to pay-in-kind (“PIK”) the quarterly interest payment due in August 2020 for the second lien notes, which resulted in the Company capitalizing $7.5 million in interest expense to the principal balance of the second lien term loan on the interest payment date. In connection with the PIK election, the Company was charged an additional 1.00% in interest expense during the quarterly interest period.

During the three months ended September 30, 2020, the Company completed a public offering of stock for net proceeds of $118.9 million. Those proceeds, along with additional cash on hand, were used to prepay $125.0 million of the second lien notes, which is reflected as a cash outflow from financing activities in the Company’s unaudited condensed consolidated statements of cash flows. The Company recognized a loss on extinguishment of debt of $8.3 million, of which $2.5 million related to a prepayment penalty and $5.8 million related to deferred financing fees, which were written off upon extinguishment. The $2.5 million prepayment penalty was reflected as a cash outflow from financing activities in the unaudited condensed consolidated statements of cash flows. See Note 15, Stockholders’ Equity, for further discussion of the public offering.

Long-term debt matures as follows (in thousands):


Year Ending December 31,	Minimum Payments
2020	$	2,313
2021	9,250
2022	9,250
2023	9,250
2024	9,250
Thereafter	1,173,531
Total	1,212,844

During the three and nine months ended September 30, 2020 and 2019, the Company engaged in hedging activities to limit its exposure to changes in interest rates. See Note 11, Derivative Instruments, for further discussion.

The following table presents the estimated fair values of the Company’s debt obligations as of September 30, 2020 (in thousands):


Financial Instrument	Carrying Value as of September 30, 2020		Markets for Identical Item (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
First lien term loan	$	890,011	$	—	$	905,485	$	—
Second lien notes	282,075		—		—		321,172
Total debt instruments	$	1,172,086	$	—	$	905,485	$	321,172

The following table sets forth the changes in Level 3 measurements for the three and nine months ended September 30, 2020 (in thousands):


	Level 3 Measurements
Second lien notes fair value as of January 1, 2020	$	411,119
Change in fair value	(71,748)
Second lien notes fair value as of March 31, 2020	$	339,371
Change in fair value	78,539
Second lien notes fair value as of June 30, 2020	$	417,910
Interest rate PIK	7,525
Principal prepayment	(125,000)
Change in fair value	20,737
Second lien notes fair value as of September 30, 2020	$	321,172

See Note 12, Fair Value Measurements, for further discussion.