NOTE 8. LONG-TERM DEBT

On February 16, 2016, we entered into a Credit Agreement (the “2016 Credit Agreement”), among us, the lending institutions identified in the 2016 Credit Agreement, and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent. The 2016 Credit Agreement establishes senior secured credit facilities in an aggregate amount of $310.0 million, consisting of a $270.0 million Term B term loan facility maturing in six years that will amortize on a basis of 1% annually during the six-year term, and a $40.0 million revolving credit facility maturing in five years that includes a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement are secured by substantially all of our assets as well as our direct and indirect subsidiaries’ assets. As of July 2, 2016, there were $0.4 million of letters of credit outstanding and $39.6 million available on the revolver.

Interest on all loans under the 2016 Credit Agreement is payable either quarterly or at the expiration of any LIBOR interest period applicable thereto. Borrowings under the term loans and the revolving credit facility accrue interest at a rate equal to, at our option, LIBOR (with a floor of 100 basis points in respect of the term loan), or a base rate (with a floor of 200 basis points in respect of the term loan) plus an applicable margin. The applicable margin is 575 basis points in the case of LIBOR and 475 basis points in the case of the base rate. We will pay quarterly fees on the unused portion of the revolving credit facility equal to 50 basis points per annum as well as a quarterly letter of credit fee at 575 basis points per annum plus a 12.5 basis point facing fee per annum on the face amount of any outstanding letters of credit.

The 2016 Credit Agreement contains a springing financial covenant, if we draw in excess of twenty percent (20%) of the revolving facility, which requires us to maintain a maximum total net leverage ratio (based on the ratio of total debt for borrowed money to trailing EBITDA, each as defined in the 2016 Credit Agreement), and will be tested quarterly based on the last four fiscal quarters and is set at levels as described in the 2016 Credit Agreement. As of July 2, 2016, no such test is required as we have not exceeded 20% of our revolving capacity.

The 2016 Credit Agreement also contains a number of affirmative and restrictive covenants, including limitations on the incurrence of additional debt, liens on property, acquisitions and investments, loans and guarantees, mergers, consolidations, liquidations and dissolutions, asset sales, dividends and other payments in respect of our capital stock, prepayments of certain debt and transactions with affiliates. The 2016 Credit Agreement also contains customary events of default. Upon the occurrence of an event of default, the amounts outstanding under the 2016 Credit Agreement may be accelerated and may become immediately due and payable.

In connection with entering into the 2016 Credit Agreement, on February 16, 2016, we terminated our prior credit agreement, dated as of September 22, 2014, among PGT Industries, Inc., as the borrower, the Company, as guarantor, the lenders from time to time party thereto and DeutscheBank, as administrative agent and collateral agent (the “2014 Credit Agreement”). Along with cash on hand, proceeds from the term loan facility under the 2016 Credit Agreement were used to repay amounts outstanding under the 2014 Credit Agreement, acquire WinDoor, and pay certain fees and expenses.

The face value of the 2016 Credit Agreement at the time of issuance was $270 million of which $1.35 million has been repaid as scheduled debt repayments through July 2, 2016. As of July 2, 2016, the face value of debt outstanding under the 2016 Credit Agreement was $268.7 million, and accrued interest was $2.1 million. The Company incurred third-party fees and costs totaling $1.5 million, and additional lender fees and discount of $14.6 million.

The activity relating to third-party fees and costs, lender fees and discount for the six months ended July 2, 2016 are as follows. With our adoption of ASU 2015-03, all debt-related fees, costs and original issue discount are classified as a reduction of the carrying value of long-term debt:


(in thousands)	Total
At beginning of year	$	6,733
Amortization expense through refinancing		(128	)

At time of refinancing		6,605
Add: Fees, costs and OID relating to the 2016 Credit Agreement		16,148
Less: Debt extinguishment costs		(3,431	)
Less: Third-party fees and cost classified within SG&A		(627	)
Less: Amortization expense after refinancing		(1,015	)

Total	$	17,680

Estimated amortization expense relating to third-party fees and costs, lender fees and discount for the years indicated as of July 2, 2016, is as follows:


(in thousands)	Total
Remainder of 2016	$	1,373
2017		2,864
2018		3,035
2019		3,221
2020		3,490
2021		3,281
2022		416

Total	$	17,680

The contractual future maturities of long-term debt outstanding as of July 2, 2016, are as follows (at face value):


	(in thousands)
Remainder of 2016	$	1,350
2017		2,700
2018		2,700
2019		2,700
2020		2,700
2021		2,700
2022		253,800

Total	$	268,650