Long-term Debt, Line of Credit and Derivatives

The Company entered into a new syndicated credit agreement (the "Credit Agreement") on August 5, 2015 with Regions Bank, as administrative agent and collateral agent, and the following co-syndication agents: Bank of America, N.A., BOKF, NA dba Bank of Texas, Branch Banking & Trust Company, Frost Bank, Bank Midwest, a division of NBH Bank, N.A., IBERIABANK, KeyBank NA, Trustmark National Bank, and First Tennessee Bank NA. The primary purpose of the new Credit Agreement was to finance the acquisition of TAS to provide a revolving line of credit, and to provide financing to extinguish all prior indebtedness with Wells Fargo Bank, National Associates, as administrative agent, and Wells Fargo Securities, LLC.

The Credit Agreement, which may be amended, from time to time provides for borrowings under a revolving line of credit and swingline loans with a commitment amount of $50 million, and a term loan with a commitment amount of $135 million (together, the “Credit Facility”). The Credit Facility is guaranteed by the subsidiaries of the Company, secured by the assets of the Company, including stock held in its subsidiaries, and may be used to finance the acquisition of TAS, to finance general corporate and working capital purposes, to finance capital expenditures, to refinance existing indebtedness, to finance permitted acquisitions and associated fees, and to pay for all related expenses to the Credit Facility. Interest is due and is computed based on the designation of the loan, with the option of a Base Rate Loan (the base rate plus the Applicable Margin), or an Adjusted LIBOR Rate Loan (the adjusted LIBOR rate plus the Applicable Margin). Interest is due on the last day of each quarter end for Base Rate Loans and at the end of the LIBOR rate period for Adjusted LIBOR Rate Loans. The rate for all loans, at the time of loan origination was 4.75%. Principal balances drawn under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty. Amounts repaid under the revolving line of credit may be re-borrowed. The Credit Facility matures on August 5, 2020.

The Company submitted a Conversion Notice to Regions Bank to convert the full $135 million loan balance of the term loan to a 3-month Adjusted LIBOR Rate Loan effective on August 19, 2015 with a rate of 2.81% through November 19, 2015. As of September 30, 2015, the outstanding balance on the term loan was $133.3 million.

The Company also submitted a Conversion Notice to Regions Bank to convert the full $14.0 million loan balance of the revolving loan to a 3-month Adjusted LIBOR Rate Loan effective on August 19, 2015 with a rate of 2.81% through November 19, 2015. As of September 30, 2015, the outstanding principal balance on the revolver was $14.0 million. Outstanding letters of credit, which were issued on August 10, 2015, totaled $1.1 million as of September 30, 2015, which reduced our maximum borrowing availability to $34.9 million. The Company made a payment of $5.0 million on October 16, 2015 to partially pay down the outstanding revolver balance.

The quarterly weighted average interest rate as of September 30, 2015 for the new Credit Facility was 3.33%.

Provisions of the revolving line of credit and accordion

The Company has a maximum borrowing availability under the revolving line of credit and swingline loans (as defined in the Credit Agreement) of $50 million. The letter of credit sublimit is equal to the lesser of $20 million and the aggregate unused amount of the revolving commitments then in effect. The swingline sublimit is equal to the lesser of $5 million and the aggregate unused amount of the revolving commitments then in effect.

Revolving loans may be designated as Base Rate Loan or Adjusted LIBOR Rate Loans, at the Company’s request, and must be made in an aggregate minimum amount of $1.0 million and integral multiples of $250,000 in excess of that amount. Swingline loans must be made in an aggregate minimum amount of $250,000 and integral multiples of $50,000 in excess of that amount. The Company may convert, change, or modify such designations from time to time.

The Company is subject to a Commitment Fee for the unused portion of the maximum available to borrow under the revolving line of credit Facility. The Commitment Fee, which is due quarterly in arrears, is equal to the Applicable Margin of the actual daily amount by which the Aggregate Revolving Commitments exceeds the Total Revolving Outstanding.

Provisions of the term loan

The term loan may be designated as a Base Rate Loan or Adjusted LIBOR Rate Loans, at the Company’s request. The Company may convert, change, or modify such designations from time to time. The principal amount of $135 million for the term loan commitment shall be repaid in quarterly installment payments (as stated in the Credit Agreement). The table below outlines the total remaining payment amounts annually for the next five years and thereafter:



2015	$	1,687
2016	8,437
2017	11,812
2018	13,500
2019	15,188
Thereafter	82,676
	$	133,300

The Company made the scheduled principal payment on September 30, 2015, which reduced the outstanding principal balance to $133.3 million. The current portion of debt is $7.6 million and the non-current portion is $125.7 million. Total debt issuance costs, which included underwriter fees, legal fees and syndication fees were approximately $4.4 million. These costs have been capitalized as non-current deferred charges and amortized using the effective interest rate method over the duration of the loan. Total debt issuance expenses of approximately $158,000 were recognized as of September 30, 2015.

Financial covenants

Restrictive financial covenants under the Credit Facility include:


•	A consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 1.25 to 1.00.


•	A consolidated Leverage Ratio to not exceed the following during each noted date:

-Closing Date through and including December 31, 2015, to not exceed 3.25 to 1.00;

-March 31, 2016 through and including June 30, 2016, to not exceed 3.00 to 1.00;

-September 30, 2016 through and including December 31, 2016, to not exceed 2.75 to 1.00;

-March 31, 2017 and thereafter, to not exceed 2.50 to 1.00.

In addition, the Credit Facility contains events of default that are usual and customary for similar transactions, including non-payment of principal, interest or fees; inaccuracy of representations and warranties; violation of covenants; bankruptcy and insolvency events; and events constituting a change of control.

At September 30, 2015, the Company was in compliance with its financial covenants and expects to be in compliance through the maturity date.

The Company expects to meet its future internal liquidity and working capital needs, and maintain or replace its equipment fleet through capital expenditure purchases and major repairs, from funds generated by its operating activities for at least the next 12 months. The Company believes that its cash position is adequate for general business requirements and to service its debt.

Derivative Financial Instruments

On September 16, 2015, the Company entered into a series of receive-variable, pay-fixed interest rate swaps to hedge the variability in the interest payments on 50% of the aggregate principal amount of the Regions Term Loan outstanding, beginning with a notional amount of $67.5 million. There are a total of five sequential interest rate swaps to achieve the hedged position and each year on August 31, with the exception of the final swap, the existing interest rate swap is scheduled to expire and will be immediately replaced with a new interest rate swap until the expiration of the final swap on July 31, 2020. At inception, these interest rate swaps were designated as a cash flow hedge for hedge accounting, and as such, the effective portion of unrealized changes in market value are recorded in accumulated other comprehensive income (loss) and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings. The change in fair market value of the swaps as of September 30, 2015 is $0.6 million, which is reflected in the balance sheet as a liability.