Long-term Debt and Line of Credit

The Company entered into a credit agreement (the "Credit Agreement") with Regions Bank on August 5, 2015, 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 $50.0 million, and a term loan with a commitment amount of $135.0 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.

Total debt issuance costs, which included underwriter fees, legal fees and syndication fees were approximately $4.5 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 $0.5 million were recognized as of December 31, 2015.

The quarterly weighted average interest rate as of December 31, 2015 for the Regions Credit Facility was 3.16%.

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 $50.0 million. The letter of credit sublimit is equal to the lesser of $20.0 million and the aggregate unused amount of the revolving commitments then in effect. The swingline sublimit is equal to the lesser of $5.0 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. The revolving line of credit termination date is the earlier of the Credit Facility termination date, August 5, 2020, or the date the outstanding balance is permanently reduced to zero. The Company has the intent and ability to repay the amounts outstanding on the revolving credit facility within one year, therefore, the outstanding balance as of December 31, 2015 has been classified as current.

As of December 31, 2015, the outstanding balance on the revolving line of credit was $4.0 million and was designated as an Adjusted LIBOR Rate Loan at a rate of 3.44%. There was also an outstanding letter of credit in the amount of $1.1 million as of December 31, 2015, which reduced the maximum borrowing availability on the revolving line of credit to $44.9 million as of December 31, 2015. The Company made payments of $10.0 million on the outstanding revolving balance during the fourth quarter of 2015. Subsequent to December 31, 2015, the Company drew $22.0 million from the revolving line of credit to use for working capital needs.

Provisions of the term loan

At December 31, 2015, the outstanding term loan component of the Credit Facility totaled $106.6 million and was secured by specific assets of the Company. The principal amount of $135.0 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 for the term loan through maturity of the Credit Facility:



2016	$	8,437
2017	11,813
2018	13,500
2019	15,188
2020	57,687
	$	106,625

The Company made the scheduled quarterly principal payments and additional payments of $25.0 million, which reduced the outstanding principal balance to $106.6 million at December 31, 2015. The current portion of debt is $8.4 million and the non-current portion is $98.2 million. As of December 31, 2015, $103.3 million of the term loan was designated as an Adjusted LIBOR Rate Loan with an interest rate of 3.44% and the remaining $3.3 million was designated as a Base Rate Loan with an interest rate of 5.50%.

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; breaches of representations and warranties that are not timely cured; violation of covenants; bankruptcy and insolvency events; and events constituting a change of control.

The Company was in compliance with all financial covenants at December 31, 2015. The Company continues to closely monitor future expected covenant compliance given the step down of the leverage ratio covenant in 2016 and beyond. The Company has initiated discussions with the lead bank in an effort to explore available options, which may include an amendment to the Credit Agreement. Any amendment to the Credit Agreement may increase the cost of the Company’s borrowings and impose additional limitations over certain types of activities. The Company believes it would have a favorable outcome in the event a relief of covenants would be needed in the future.

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.

Debt Extinguishment

At December 31, 2014, the Company had a credit agreement with Wells Fargo Bank, National Association, as administrative agent, and Wells Fargo Securities, LLC. At December 31, 2014, $26.0 million was outstanding on the revolving line of credit and $11.0 million was outstanding on the term loan component. The weighted average interest rate for all outstanding debt as of December 31, 2014 was 2.19%. With funding from the aforementioned syndicated credit facility with Regions Bank, the Company repaid all amounts outstanding on the revolver and term loans with Wells Fargo of approximately $32.4 million. The credit facility with Wells Fargo was terminated on August 5, 2015.

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, net of tax, as of December 31, 2015 is $0.1 million, which is reflected in the Consolidated Balance Sheets as a liability.