Debt

The Company's long-term debt consists of the following:



	December 31,
	2019		2018
	(amounts in thousands)
Senior Secured Asset-Based Loan, interest of 4.23% at December 31, 2019	$	70,974	$	—
Term Loan, net of unamortized discount of $697, interest of 4.80% at December 31, 2018	—		83,179
Total debt	70,974		83,179
Less current portion	—		(5,235		)
Long-term debt	$	70,974	$	77,944

October 2019 ABL Credit Agreement

Effective October 25, 2019, the Company terminated its commitments under its prior senior credit facility entered into in August 2017 (defined below) and entered into an ABL Credit Agreement (Loan Agreement), by and among the Company and certain of its domestic subsidiaries, as borrowers or guarantors, Wells Fargo, PNC Bank N.A., as well as other Lenders (as defined) from time to time parties thereto. The Loan Agreement provides for a five-year revolving senior secured asset-based credit facility (ABL) in the aggregate principal amount of up to $120.0 million (as described below), including a sublimit for swing loans up to $15.0 million and a $35.0 million sublimit for standby letters of credit.

Availability of the ABL commitments is subject to a borrowing base of up to 85% of secured eligible accounts receivable, subject to adjustment at certain quality levels, plus an amount of supplemental availability, initially equal to $16.9 million (Supplemental Availability), and reducing over time in accordance with the terms of the Loan Agreement, minus customary reserves, and subject to customary adjustments. Revolving loans and letters of credit issued under the Loan Agreement reduce availability under the ABL on a dollar-for-dollar basis. Availability under the ABL will be used for general corporate purposes. Additionally, the facility contains an uncommitted accordion provision to increase the amount of the facility by an additional $30.0 million. At December 31, 2019, availability under the ABL was $120.0 million and the Company had $71.0 million of borrowings drawn, as well as $19.9 million of letters of credit outstanding related to workers' compensation and professional liability policies (see Note 2 - Summary of Significant Accounting Policies), leaving $29.1 million available for borrowing.

The initial amounts drawn on the ABL included funds to repay the Company’s then outstanding borrowings of $75.4 million under its August 2017 Credit Facility and $1.3 million for the payment of fees, expenses, and accrued interest, as well as to backstop $21.2 million for outstanding letters of credit. The refinancing was treated as an extinguishment of debt, and, as a result, the Company wrote-off debt issuance costs of approximately $1.4 million in the fourth quarter of 2019, which is included with loss on early extinguishment of debt in the consolidated statements of operations.

As of December 31, 2019, the interest rate spreads and fees under the Loan Agreement were based on LIBOR (as defined by the Loan Agreement) plus 2.00% for the revolving portion of the borrowing base and LIBOR plus 4.00% on the Supplemental Availability. The Base Rate (as defined by the Loan Agreement) margins would have been 1.00% and 3.00%, respectively, for the revolving portion and Supplemental Availability, respectively. The LIBOR and Base Rate margins are subject to monthly pricing adjustments, pursuant to a pricing matrix based on the Company’s excess availability under the revolving credit facility. In addition, the facility is subject to an unused line fee, letter of credit fees, and an administrative fee. The unused line fee is 0.375% of the average daily unused portion of the revolving credit facility.

The Loan Agreement contains various restrictions and covenants applicable to the Company and its subsidiaries, including a covenant to maintain a minimum fixed charge coverage ratio. The Company was in compliance with this covenant as of December 31, 2019. Obligations under the ABL are secured by substantially all the assets of the borrowers and guarantors, subject to customary exceptions.

The Loan Agreement also contains customary events of default. If an event of default under the Loan Agreement occurs and remains uncured, then the administrative agent or the requisite lenders may declare any outstanding obligations to be immediately due and payable. In addition, if the Company or any of its subsidiaries becomes the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, than any outstanding obligations under the Loan Agreement will automatically become due and payable.

August 2017 Credit Facility

On August 1, 2017, the Company entered into an Amendment and Restatement of its Credit Agreement dated June 22, 2016 (August 2017 Credit Facility), to refinance and increase the aggregate committed size of the facility to $215.0 million, including a term loan of $100.0 million (Amended Term Loan) and a $115.0 million revolving credit facility (Amended Revolving Credit Facility) (together with the Amended Term Loan, the Amended Credit Facilities). The Amended Revolving Credit Facility included a subfacility for swingline loans up to an amount not to exceed $15.0 million, and a $35.0 million sublimit for the issuance of standby letters of credit. The proceeds of $106.5 million from this refinancing included $6.5 million under the new revolving credit facility and were used to repay borrowings under the Company’s 2016 Senior Credit Facilities (defined below), as well as to pay related interest, fees, and expenses of the transaction. In addition to increasing the size of the facilities, the maturity date was extended to August 1, 2022.

Borrowings under the Amended Term Loan were payable in quarterly installments, which commenced January 2, 2018, provided that, to the extent not previously paid, the aggregate unpaid principal balance would be due and payable on the maturity date. During the three months ended March 31, 2018, the Company entered into an interest rate swap to reduce its exposure to fluctuations in the interest rates associated with its debt, which was effective April 2, 2018. See Note 9 - Derivatives.

Optional Prepayments

The Company had the right at any time and from time to time to prepay any borrowing on its Amended Term Loan, in whole or in part, without premium or penalty. In addition to its scheduled payments, in both the third and fourth quarters of 2018, the Company made optional prepayments of $5.0 million each as permitted by the Amended and Restated Credit Agreement. In the first and second quarters of 2019, the Company made additional optional prepayments of $7.5 million and $5.0 million, respectively, on its Amended Term Loan.

Covenants and Amendments

The Amended and Restated Credit Agreement included two financial covenants: (i) a maximum Consolidated Total Leverage ratio (as defined therein); and (ii) a minimum Consolidated Fixed Charge Coverage ratio (as defined therein) as of the end of each fiscal quarter of 1.50:1.00.

On October 30, 2018, the Company entered into a first amendment to its August 2017 Credit Facility (First Amendment) that, among other administrative and clarifying changes, modified the following: (i) the definition utilized in its financial covenants of Consolidated EBITDA to allow for exclusion of charges related to the Company’s initiative to replace its applicant tracking system supporting its legacy travel nurse operations; (ii) increased the maximum Consolidated Total Leverage Ratio for the periods from September 30, 2018 through December 31, 2019; and (iii) increased the pro forma Consolidated Total Leverage Ratio threshold for allowing restricted payments.

On March 29, 2019, the Company entered into a second amendment to its August 2017 Credit Facility (Second Amendment) that, among other administrative changes, modified the following: (i) lowered the Aggregate Revolving Commitments from $115.0 million to $75.0 million through the exercise of a $40.0 million Optional Reduction; (ii) changed the financial leverage ratio from Consolidated Total Leverage to Consolidated Net Leverage and increased the maximum Consolidated Net Leverage Ratio through the period ending September 30, 2020; (iii) modified and added additional pricing levels to the Applicable Margin for borrowing; and (iv) added an additional financial covenant for the quarters ending March 31, 2019 through and including the quarter ending December 31, 2019, that required the Consolidated Asset Coverage Ratio to be no less than 1.10:1.00.

On September 30, 2019, the Company entered into a third amendment to its August 2017 Credit Facility (Third Amendment) that modified the following: (i) reduced the Aggregate Revolving Commitments from $75.0 million to $65.0 million on the effective date, and additional monthly reductions to $35.0 million on December 31, 2019; (ii) reduced the Letter of Credit sublimit from $35.0 million to $25.0 million; (iii) changed the maximum Consolidated Net Leverage Ratio from 4.25:1:00 to 4.60:1:00 for the period ending September 30, 2019; and (iv) changed the minimum Consolidated Fixed Charge Coverage Ratio from 1.50:1.00 to 1.10:1.00 for the period ending September 30, 2019.

Debt Issuance Costs

Fees paid in connection with the First Amendment in the fourth quarter of 2018 were $0.3 million, of which a portion was included in other noncurrent assets as deferred issuance costs related to the revolving credit facility and a portion was treated as a deduction to long-term debt related to its Amended Term Loan. In addition, fees paid in 2019 in connection with the Second Amendment and the Third Amendment totaling $0.7 million had been included as debt issuance costs associated with the revolving credit facility and as a reduction to the carrying amount of the term loan and were expected to be amortized to interest expense over the remaining term of the arrangement.

As a result of the early prepayments on the Amended Term Loan, debt issuance costs of $0.1 million were written off in each of the years ended December 31, 2019 and December 31, 2018. In addition, pursuant to the reduced capacity of the revolver resulting from the Second Amendment and Third Amendment, debt issuance costs of $0.4 million were written off. The write-offs of debt issuance costs are included as loss on early extinguishment of debt in the consolidated statements of operations.

2016 Senior Credit Facilities

On June 22, 2016, the Company entered into a senior credit agreement (2016 Credit Agreement), which provided for an initial term loan of $40.0 million (Term Loan) and a revolving credit facility of up to $100.0 million (Revolving Credit Facility) (together with the Term Loan, the 2016 Senior Credit Facilities) both of which would have matured on June 22, 2021. Proceeds of the Senior Credit Facilities were used primarily to refinance the Company’s prior senior secured asset-based credit facility and $30.0 million Second Lien Term Loan and to pay related transaction fees and expenses, including a redemption premium of $0.6 million.

On July 5, 2017, the Company entered into a Second Amendment to its 2016 Credit Agreement primarily to allow for the acquisition of Advantage including a reset of the Applicable Margin to Level III, based on the incremental borrowings and consistent with the prior pricing grid (or 2.25% for Eurodollar Loans and LIBOR Index Rate Loans, 1.25% for Base Rate Loans and a 0.30% commitment fee). Also, on July 5, 2017, the Company entered into an Incremental Term Loan Agreement for $40.0 million with SunTrust as Lender and Administrative Agent (Incremental Term Loan Agreement) to pay for part of the consideration of the acquisition of Advantage. The Incremental Term Loan maturity date was June 22, 2021 and was prepayable at any time without penalty. Borrowings under the Incremental Term Loan Agreement were payable in quarterly installments, commencing September 30, 2017.

Convertible Notes

The Company and certain of its domestic subsidiaries entered into a Convertible Note Purchase Agreement (the Note Purchase Agreement), with certain note holders (collectively, the Noteholders) on June 30, 2014. Pursuant to the Note Purchase Agreement, the Company sold to the Noteholders an aggregate of $25.0 million of convertible notes (the Convertible Notes). On March 17, 2017, the Company paid in full the Convertible Notes. In connection with the repayment, the Company issued to the Noteholders an aggregate of 3,175,584 shares of Common Stock, par value $0.0001, and cash in the aggregate amount of $5.6 million (of which $5.0 million is included in repayment of debt and $0.6 million is presented as extinguishment fees, both within financing activities in the consolidated statements of cash flows). Upon derecognition of the net carrying amounts of the Convertible Notes (the remaining $20.0 million after the $5.0 million cash payment) and derivative liability ($26.0 million), the Company recognized a non-cash charge of $5.0 million as loss on early extinguishment and a non-cash addition to additional paid-in capital of $46.0 million for the fair value of the shares, which is not presented in the consolidated statements of cash flows. The loss on early extinguishment of debt includes the write off of unamortized loan fees and remaining interest due through the Forced Conversion date (defined below) of June 30, 2017.

The Convertible Notes were convertible at the option of the holders thereof at any time into shares of the Common Stock at a conversion price of $7.10 per share, or 3,521,126 shares of Common Stock. After three years from the issuance date, the Company had the right to force a conversion of the Convertible Notes if the volume-weighted average price (VWAP) per share of its Common Stock exceeded 125% of the then conversion price for 20 days of a 30 day trading period (Forced Conversion date).

The Convertible Notes bore interest at a rate of 8.00% per annum, payable in quarterly cash installments. The Convertible Notes would have matured on June 30, 2020, unless earlier repurchased, redeemed or converted. Subject to certain exceptions, the Company was not permitted to redeem the Convertible Notes until June 30, 2017.