LONG-TERM DEBT AND OTHER BORROWINGS

Long-term debt consists of the following:



		December 31,
		2017		2016
	Scheduled Maturity	(In Thousands)
Credit Agreement (presented net of the unamortized deferred financing costs of $4.0 million as of December 31, 2017 and $4.5 million as of December 31, 2016)	August 4, 2019	$	223,985	$	217,467
7.25% Senior Notes (presented net of the unamortized discount of $2.8 million as of December 31, 2017 and $3.3 million as of December 31, 2016 and unamortized deferred financing costs of $5.0 million as of December 31, 2017 and $6.0 million as of December 31, 2016)	August 15, 2022	288,191		286,623
Total debt		512,176		504,090
Less current portion		—		—
Total long-term debt		$	512,176	$	504,090

As described below, we are in compliance with all covenants of our debt agreements as of December 31, 2017.

The following discussion is not a complete description our long-term debt agreements or amendments and is qualified in its entirety by reference to the full text of the complete agreement and amendment, which are filed as an exhibit to our filings with the SEC.

Bank Credit Facilities

Under our credit agreement, as amended (the "Credit Agreement"), with a syndicate of banks including Bank of America, N.A. as administrative agent, we have an asset-based revolving credit facility with a borrowing capacity of up to $315 million, subject to certain requirements, which matures August 4, 2019. The Credit Agreement is available to provide our working capital needs, letters of credit, and for general partnership purposes, including capital expenditures and potential future expansions or acquisitions. The Credit Agreement provides that we can make distributions to holders of our common units, but only if there is no default or event of default under the facility and we maintain excess availability of $30.0 million under the Credit Agreement. Borrowings under the Credit Agreement bear interest at a rate per annum equal to, at our option, either (a) LIBOR (adjusted to reflect any required bank reserves) for an interest period equal to one, two, three, or six months (as selected by us), plus a leverage-based margin or (b) a base rate plus a leverage-based margin; such base rate shall be determined by reference to the highest of (1) the prime rate of interest per annum announced from time to time by Bank of America, N.A., (2) the Federal Funds rate plus 0.50% per annum, and (3) LIBOR (adjusted to reflect any required bank reserves) for a one month interest period on such day plus 1.00% per annum. In addition to paying interest on outstanding principal under the Credit Agreement, we are required to pay a commitment fee in respect of the unutilized commitments. We are also required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans, fronting fees, and other fees, agreed to with the administrative agent and lenders. As of December 31, 2017, we had a balance outstanding of $228.0 million, had approximately $7.2 million letters of credit, and had availability under the Credit Agreement of approximately $79.8 million.

Under our Credit Agreement, we and our subsidiary CSI Compressco Sub Inc. are named as the borrowers, and all obligations under the Credit Agreement are guaranteed by all of our existing and future, direct and indirect, domestic restricted subsidiaries (other than domestic subsidiaries that are wholly owned by foreign subsidiaries). The Credit Agreement includes customary covenants that, among other things, limit our ability to incur additional debt, incur, or permit certain liens to exist, or make certain loans, investments, acquisitions, or other restricted payments. Our Credit Agreement includes a maximum credit commitment and included within the maximum amount is availability for letters of credit (with a sublimit of $20.0 million) and swingline loans (with a sublimit of $60.0 million). The amount of outstanding borrowings under the Credit Agreement is subject to certain limitations, including a borrowing-base calculation as described below and borrowing limitations as a result of financial covenants.

On May 25, 2016, we entered into an amendment (the "Third Amendment") to our Credit Agreement that, among other things, modified certain financial covenants in the Credit Agreement. As discussed below, these financial covenants were further amended in November 2016. In addition, the Third Amendment provided for other changes related to the Credit Agreement including, among other amendments (i) reducing the maximum aggregate lender commitments from $400.0 million to $340.0 million, (ii) increasing the applicable margin by 0.25% with a range between 2.00% and 3.00% per annum for LIBOR-based loans and 1.00% to 2.00% per annum for base-rate loans, based on the applicable consolidated total leverage ratio, and (iii) imposing a requirement that we use designated consolidated cash and cash equivalent balances in excess of $35.0 million to prepay the loans as well as other provisions and restrictions. As a result of the reduction of the maximum lender commitment pursuant to the Third Amendment, unamortized deferred finance costs of $0.7 million were charged to interest expense during the year ended December 31, 2016. Pursuant to the Third Amendment, bank fees of $0.7 million were incurred during the year ended December 31, 2016 and were deferred, netting against the carrying value of the amount outstanding under our Credit Agreement.

On November 3, 2016, we entered into an additional amendment (the "Fourth Amendment") to our Credit Agreement that, among other changes, further modified certain financial covenants in the Credit Agreement. The Fourth Amendment converted the Credit Agreement from a secured revolving credit facility into an asset-based revolving credit facility ("ABL Facility"). Borrowings under the Credit Agreement, as amended, may not exceed a borrowing base equal to the sum of (i) 80% of the aggregate net amount of our eligible accounts receivable, plus (ii) 20% of the aggregate value of any eligible parts inventory, in the event we elect to include eligible parts inventory pursuant to a notice to the administrative agent, plus (iii) 80% of the net in-place eligible compressor equipment, decreased each month by the amount of associated depreciation expense, plus (iv) 80% of the cost of new eligible compressor equipment, and minus (v) the amount of any reserves established by the administrative agent in its discretion. In addition, the Fourth Amendment imposed other requirements, including requirements related to borrowing base reporting on a monthly basis and provisions to permit periodic appraisal and inspection of collateral assets. Pursuant to the Fourth Amendment, certain additional restrictive provisions ("cash dominion provisions") are imposed if an event of default has occurred and is continuing or excess availability under the ABL Facility falls below $30.0 million. In addition, the Fourth Amendment reduced the maximum aggregate lender commitments from $340.0 million to $315.0 million. As a result of the further reduction of the aggregate lender commitments pursuant to the Fourth Amendment, unamortized deferred finance costs of $0.3 million were charged to interest expense during the year ended December 31, 2016. Pursuant to the Fourth Amendment, associated fees of $0.8 million were incurred during the year ended December 31, 2016 and were deferred, netting against the carrying value of the amount outstanding under the Credit Agreement.

On May 5, 2017, we entered into an amendment (the "Fifth Amendment") to our Credit Agreement that

modified certain financial covenants in the Credit Agreement, providing that (i) the consolidated total leverage ratio

may not exceed (a) 5.95 to 1 as of March 31, 2017; (b) 6.75 to 1 as of June 30, 2017 and September 30, 2017; (c)

6.50 to 1 as of December 31, 2017 and March 31, 2018; (d) 6.25 to 1 as of June 30, 2018 and September 30, 2018;

(e) 6.00 to 1 as of December 31, 2018; and (e) 5.75 to 1 as of March 31, 2019 and thereafter; and (ii) the

consolidated secured leverage ratio may not exceed 3.25 to 1 as of the end of any fiscal quarter. The consolidated

interest coverage ratio was not amended by the Fifth Amendment. In addition, the Fifth Amendment (i) increased

the applicable margin by 0.25% in the event the consolidated total leverage ratio exceeds 6.00 to 1, resulting in a

range for the applicable margin between 2.00% and 3.50% per annum for LIBOR-based loans and 1.00 to 2.50%

per annum for base-rate loans, according to the consolidated total leverage ratio, and (ii) modified the appraisal

delivery requirement from an annual requirement to a semi-annual requirement. In connection with the Fifth

Amendment, the board of directors of our General Partner adopted resolutions limiting the cash distributions

payable on our common units to no more than $0.1875 per common unit for the quarterly period ended June 30,

2017. The Fifth Amendment also included additional revisions that provide flexibility for the issuance of preferred

securities.

The weighted average interest rate on borrowings outstanding under the Credit Agreement as of December 31, 2017 was 5.0% per annum. At December 31, 2017, our consolidated total leverage ratio was 6.48 to 1 (compared to 6.50 to 1 maximum as required under the Credit Agreement), our consolidated secured leverage ratio was 2.89 to 1 (compared to 3.25 to 1 maximum as required under the Credit Agreement) and our consolidated interest coverage ratio was 2.55 to 1 (compared to a 2.25 to 1 minimum as required under the Credit Agreement). The consolidated total leverage ratio and the consolidated secured leverage ratio, as both are calculated under the Credit Agreement, exclude the long-term liability for the Preferred Units in the determination of total indebtedness.

We are in compliance with all covenants of the Credit Agreement as of December 31, 2017. We have reviewed our financial forecasts as of March 1, 2018 for the subsequent twelve month period, which considers the current level of distributions to be paid on our common units. We believe that we will have adequate liquidity, earnings, and operating cash flows to fund our operations and debt obligations and maintain compliance with the covenants under our debt agreements through March 1, 2019.

7.25% Senior Notes

The obligations under the 7.25% Senior Notes due 2022 (the "7.25% Senior Notes") are jointly and severally, and fully and unconditionally, guaranteed on a senior unsecured basis by each of our domestic restricted subsidiaries (other than CSI Compressco Finance) that guarantee our other indebtedness (the "Guarantors" and together with the Issuers, the "Obligors"). The 7.25% Senior Notes and the subsidiary guarantees thereof (together, the "Securities") were issued pursuant to an indenture described below. As of December 31, 2017, 295.9 million in aggregate principal amount of the 7.25% Senior Notes are outstanding.

The Obligors issued the Securities pursuant to the Indenture dated as of August 4, 2014 (the "Indenture") by and among the Obligors and U.S. Bank National Association, as trustee (the "Trustee"). The 7.25% Senior Notes accrue interest at a rate of 7.25% per annum. Interest on the 7.25% Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year. The 7.25% Senior Notes are scheduled to mature on August 15, 2022.

The Indenture contains customary covenants restricting our ability and the ability of our restricted subsidiaries to: (i) pay dividends and make certain distributions, investments and other restricted payments; (ii) incur additional indebtedness or issue certain preferred shares; (iii) create certain liens; (iv) sell assets; (v) merge, consolidate, sell or otherwise dispose of all or substantially all of our assets; (vi) enter into transactions with affiliates; and (vii) designate our subsidiaries as unrestricted subsidiaries under the Indenture. The Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the 7.25% Senior Notes then outstanding may declare all amounts owing under the 7.25% Senior Notes to be due and payable.

During September 2016 and October 2016, we repurchased on the open market and retired $54.1 million aggregate principal amount of 7.25% Senior Notes for a purchase price of $50.9 million, at an average repurchase price of 94% of the principal amount of the 7.25% Senior Notes, plus accrued interest, utilizing a portion of the net proceeds of the sale of the Preferred Units. Following the repurchase of these 7.25% Senior Notes, $295.9 million aggregate principal amount of 7.25% Senior Notes remain outstanding. In connection with the repurchase of these 7.25% Senior Notes, $1.4 million of early extinguishment net gain was credited to other expense during the year ended December 31, 2016, representing the difference between the repurchase price and the $54.1 million aggregate principal amount of the 7.25% Senior Notes repurchased, and $1.8 million of remaining unamortized deferred finance costs and discounts associated with the repurchased 7.25% Senior Notes.