Loan Facilities

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Loan Facilities

Note 9 — Loan Facilities

In April 2019, the Company refinanced borrowings made under its 2017 recapitalization plan with borrowings of $375.0 million from a new five-year secured term loan facility (“Term Loan Facility”). The carrying value of the Term Loan Facility is recorded net of unamortized debt issuance costs and discount. The debt principal balance, including debt issuance costs and discount, approximates fair value. Since the borrowing is not accounted for at fair value, the fair value is not included in the Company’s fair value hierarchy in “Note 7 — Fair Value of Financial Instruments,” however, had the borrowing been included, it would have been classified in Level 2.

	As of December 31,
	2022		2021
	(in thousands)
Term Loan Facility carrying value	$	269,633	$	267,840
Unamortized discount	696		1,252
Unamortized debt issuance costs	1,546		2,783
Total long-term debt	$	271,875	$	271,875

Borrowings under the Term Loan Facility bear interest at either the U.S. Prime Rate plus 2.25% or LIBOR plus 3.25% at our option and had a weighted average interest rate for the years ended December 31, 2022 and 2021 of 5.0% and 3.4%, respectively (with the borrowing rate ranging from 3.4% to 7.6% and from 3.3% to 3.4%, respectively).

The Term Loan Facility requires quarterly principal amortization payments of $4.7 million from September 30, 2019 through March 31, 2024 with the remaining outstanding balance due at maturity on April 12, 2024. Beginning April 2020, all voluntary prepayments, including refinancing of all or part of the borrowings, under the Term Loan Facility were permitted to be made without penalty.

As of December 31, 2022 the Company had repaid in advance all required quarterly amortization payments due over the term of the Term Loan Facility and the remaining outstanding principal balance of $271.9 million is due at maturity. During the years ended December 31, 2021 and 2020, the Company made principal payments on the Term Loan Facility of $55.0 million and $38.8 million, respectively. There were no principal payments made during the year ended December 31, 2022. In addition, the Company may be required to make annual repayments of principal on the Term Loan Facility within ninety days of year-end of up to 50% of its annual excess cash flow as defined in the credit agreement based on a calculation of net leverage. For the year ended December 31, 2022, a payment of $1.8 million is required. Based upon the Company’s financial results for the year ended December 31, 2021, an excess cash flow payment was not required. The Company is also required to repay certain amounts of the Term Loan Facility in connection with the non-ordinary course sale of assets, receipt of insurance proceeds, and the issuance of debt obligations, subject to certain exceptions.

The Term Loan Facility is guaranteed by the Company’s existing and subsequently acquired or organized wholly-owned U.S. restricted subsidiaries (excluding any registered broker-dealers) and secured with a first priority perfected security interest in certain domestic assets, 100% of the capital stock of each U.S. subsidiary and 65% of the capital stock of each non-U.S. subsidiary, subject to certain exclusions. The credit facility contains certain covenants that limit the Company’s ability above certain permitted amounts to incur additional indebtedness, make certain acquisitions, pay dividends and repurchase shares. The Term Loan Facility does not have financial covenants but is subject to certain other non-financial covenants. At December 31, 2022 and 2021, the Company was compliant with all loan covenants.

In conjunction with the refinancing in April 2019, the Company incurred fees of $5.7 million, of which $2.7 million was recorded as deferred financing costs. Those costs along with the remaining unamortized costs from the prior debt facility which, as of the date of the refinancing, were $9.0 million, are being amortized into interest expense over the remaining life of the obligation and recorded as a reduction in the carrying value of the Term Loan Facility in the consolidated statement of financial condition. For both years ended December 31, 2022 and 2021, the Company incurred incremental interest expense of $1.8 million, related to the amortization of these costs.