Debt

Debt consisted of the following at June 30, 2020 and December 31, 2019:



			June 30, 2020						December 31, 2019
	Interest Rate	Maturity Date	Unamortized Debt Issuance Costs (i)			Carrying Value of Debt (j)			Carrying Value of Debt (j)
Revolving Facility (a)	6.25%	Feb. 2021	$	—		$	—		$	—
First Lien Term Loan (b)	8.25%	Feb. 2021	(13		)	16,362			18,008
Second Lien Term Loan (c)	11.00%	Oct. 2021	—			8,750			9,013
PPP Loan (d)	1.00%	May 2022	—			4,000			—
Vehicle Term Loan (e)	5.27%	Dec. 2021	—			543			725
Equipment Term Loan (f)	6.50%	Nov. 2022	—			198			—
Finance leases (g)	6.75%	Various	—			8,041			8,784
Total debt			$	(13	)	37,894			36,530
Debt issuance costs presented with debt						(13		)	(95		)
Total debt, net						37,881			36,435
Less: current portion of long-term debt (h)						(8,553		)	(6,430		)
Long-term debt						$	29,328		$	30,005

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(a)	The interest rate presented represents the interest rate as of June 30, 2020 on the Revolving Facility.


(b)	Interest on the First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%.


(c)	Interest on the Second Lien Term Loan (as defined below) accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month.


(d)	Interest on the PPP Loan (as defined below) accrues at an annual rate of 1.00%.


(e)	Interest on the Vehicle Term Loan (as defined below) accrues at an annual rate of 5.27%.


(f)	Interest on the Equipment Term Loan (as defined below) accrues at an annual rate of 6.50%.


(g)	Our finance leases include finance lease arrangements related to fleet purchases and real property with a weighted-average annual interest rate of approximately 6.75%, which mature in varying installments between 2020 and 2029.


(h)	The principal payments due within one year for the First Lien Term Loan, Second Lien Term Loan, Vehicle Term Loan, Equipment Term Loan and finance leases are included in current portion of long-term debt as of June 30, 2020.


(i)	The debt issuance costs as of June 30, 2020 and December 31, 2019 resulted from the amendment to the First Lien Term Loan, done in connection with our acquisition of Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC.


(j)	Our Revolving Facility, First Lien Term Loan, Second Lien Term Loan, and finance leases bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

See below for a discussion of material changes and developments in our debt and its principal terms from those described in Note 12 to the consolidated financial statements in our 2019 Annual Report on Form 10-K.

Indebtedness

As of June 30, 2020, we had $37.9 million of indebtedness outstanding, consisting of $16.4 million under the First Lien Term Loan, $8.8 million under the second lien term loan facility (the “Second Lien Term Loan”) pursuant to the Second Lien Term Loan Credit Agreement, $4.0 million under the PPP Loan, $0.5 million under the Direct Loan Security Agreement ( the “Vehicle Term Loan”) with PACCAR Financial Corp as the secured party, $0.2 million under the Equipment Term Loan and $8.0 million of finance leases for vehicle financings and real property leases.

Our Revolving Facility, First Lien Term Loan and Second Lien Term Loan contain certain affirmative and negative covenants, including a FCCR covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. On July 13, 2020, the Company entered into amendments of its First Lien Credit Agreement and Second Lien Term Loan Credit Agreement, which included among other terms and conditions, deferral of the measurement of the FCCR covenant until the second quarter of 2021. See Note 18 for further discussion of the amendments. As of June 30, 2020, we were in compliance with all covenants.

Equipment Term Loan

On November 20, 2019, we entered into a Retail Installment Contract (the “Equipment Term Loan”) with a secured party to finance $0.2 million of equipment. The Equipment Term Loan matures on November 2022, and shall be repaid in monthly installments of approximately $7 thousand beginning December 2019 and then each month thereafter, with interest accruing at an annual rate of 6.50%.

Paycheck Protection Program Loan

On May 8, 2020, pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted on March 27, 2020, an indirect wholly-owned subsidiary of the Company (the “PPP Borrower”) received proceeds of a loan (the “PPP Loan”) from First International Bank & Trust (the “PPP Lender”) in the principal amount of $4.0 million. The PPP Loan is evidenced by a promissory note (the “Promissory Note”), dated May 8, 2020. The Promissory Note is unsecured, matures on May 8, 2022, bears interest at a rate of 1.00% per annum, and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration (the “SBA”) under the CARES Act.

Under the terms of the PPP, up to the entire principal amount of the PPP Loan, and accrued interest, may be forgiven if the proceeds are used for certain qualifying expenses over the covered period as described in the CARES Act and applicable implementing guidance issued by the SBA, subject to potential reduction based on the level of full-time employees maintained by the organization during the covered period as compared to a baseline period.

In June 2020, the Paycheck Protection Program Flexibility Act of 2020 (“Flexibility Act”) was signed into law, which amended the CARES Act. The Flexibility Act changed key provisions of the PPP, including, but not limited to, (i) provisions relating to the maturity of PPP loans, (ii) the deferral period covering PPP loan payments and (iii) the process for measurement of loan forgiveness. More specifically, the Flexibility Act provides a minimum maturity of five years for all PPP loans made on or after the date of the enactment of the Flexibility Act (“June 5, 2020”) and permits lenders and borrowers to extend the maturity date of earlier PPP loans by mutual agreement. As of the date of this filing, the Company has not approached the PPP Lender to request an extension of the maturity date from two years to five years. The Flexibility Act also provides that if a borrower does not apply for forgiveness of a loan within 10 months after the last day of the measurement period (“covered period”), the PPP loan is no longer deferred and the borrower must begin paying principal and interest. In addition, the Flexibility Act extended the length of the covered period from eight weeks to 24 weeks from receipt of proceeds, while allowing borrowers that received PPP loans before June 5, 2020 to determine, at their sole discretion, a covered period of either eight weeks or 24 weeks.

The PPP Borrower used the PPP Loan proceeds for designated qualifying expenses over the covered period and plans to apply for forgiveness of the PPP Loan in accordance with the terms of the PPP, but no assurance can be given that the PPP Borrower will obtain forgiveness of the PPP Loan in whole or in part. As such, the Company has classified the PPP loan as debt and it is included in long-term debt on the condensed consolidated balance sheet.

With respect to any portion of the PPP Loan that is not forgiven, the PPP Loan will be subject to customary provisions for a loan of this type, including customary events of default relating to, among other things, payment defaults, breaches of the provisions of the Promissory Note and cross-defaults on any other loan with the PPP Lender or other creditors. Upon a default under the Promissory Note, including the non-payment of principal or interest when due, the obligations of the PPP Borrower thereunder may be accelerated. In the event the PPP Loan is not forgiven, the principal amount of $4.0 million shall be repaid at maturity.

The Company has obtained the consent of the lenders under each of the Credit Agreement and the Second Lien Term Loan Credit Agreement for the PPP Borrower to enter into and obtain the funds provided by the PPP Loan.

Maturity Date Extension

On July 13, 2020, the Company entered into an amendment of its First Lien Credit Agreement, which extended the maturity date of the First Lien Credit Agreement from February 7, 2021 to May 15, 2022. Prior to executing the Third Amendment to Credit Agreement (the “Third Amendment to First Lien Credit Agreement”), the First Lien Credit Agreement, which includes the Revolving Facility and the First Lien Term Loan, was set to mature on February 7, 2021, at which time the Company would have been required to repay the outstanding principal amount of the Revolving Facility and approximately $15.0 million of the First Lien Term Loan, together with interest accrued and unpaid thereon. On July 13, 2020, the Company also entered into an amendment of its Second Lien Term Loan Credit Agreement, which extended the maturity date from October 7, 2021 to November 15, 2022. Due to the Third Amendment to First Lien Credit Agreement, the First Lien Term Loan principal payments that were due at maturity are no longer due within twelve months. Therefore, as of June 30, 2020, the First Lien Term Loan principal payments due at maturity are included in long-term debt on the condensed consolidated balance sheet. See Note 18 for further discussion of the amendments.