Debt

12 Months Ended

Dec. 31, 2019

NOTE K—DEBT

At December 31, 2019 and 2018, debt (in thousands) consisted of the following:



	December 31, 2019			December 31, 2018
Senior secured credit facility:
Revolver expiring May 1, 2023 (7.75% at December 31, 2019 and 8.50% at December 31, 2018)	$	—		$	—
Term Loan facility—final maturity May 1, 2025 (5.81% at December 31, 2019 and 6.56% December 31, 2018)	1,247,600			1,270,400
Less: Unamortized original issue discount	(5,412		)	(6,511		)
Less: Unamortized debt issuance cost	(25,390		)	(31,310		)
Note payable secured by royalty interest	10,438			26,511
Insurance financing notes payable	5,055			—
Equipment notes payable	87			321
Finance leases	70			344
Total debt	1,232,448			1,259,755
Less: current portion	(18,463		)	(13,327		)
Total long-term portion of debt	$	1,213,985		$	1,246,428

Senior Secured Credit Facility

On May 1, 2018, we entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement"), which increased our existing senior debt by entering into a new $1.380 billion senior secured Credit Facility, consisting of a $1.280 billion term loan (the "Term Loan") and a $100 million revolving credit facility (the "Revolver") (collectively the "Credit Facility") that may also be used for swingline loans or letters of credit, and we may elect to increase the term loan in accordance with the terms of the Credit Agreement. Borrowings under the Credit Agreement will bear interest at variable rates as determined at our election, at LIBOR or a base rate, in each case, plus an applicable margin. In addition, under the Credit Agreement, we are required to pay a per annum facility fee and fees for letters of credit. The Credit Agreement is secured by substantially all of our assets and of our domestic subsidiaries' assets and a pledge of the equity interests in such entities. The Term Loan matures on May 1, 2025, and the Revolver expires on May 1, 2023. We capitalized $38.7 million in debt issuance costs and original issue discount as a result of the new Credit Agreement.

The Credit Agreement contains covenants that, among other things, limit our ability, and certain of our subsidiaries' abilities, to create, incur or assume indebtedness and liens, to make acquisitions or investments, to sell assets and to pay dividends. The Credit Agreement also requires us to maintain a consolidated leverage ratio of no more than 3.75:1.00 as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 30% of the Revolver commitment. These covenants are subject to a number of important exceptions and qualifications. The Credit Agreement includes events of default and other affirmative and negative covenants that are usual for facilities and transactions of this type. As of December 31, 2019, and 2018, we are in compliance with all covenants in accordance with our senior secured Credit Facility.

Term Loan

At December 31, 2019, contractual maturities of our senior secured Credit Facility (in thousands) are as follows:



2020	$	12,800
2021	12,800
2022	12,800
2023	12,800
2024	12,800
Thereafter	1,183,600
Total	$	1,247,600

During the third quarter of 2019, we repurchased outstanding debt under the Term Loan in the amount of $10 million at a rate of 95.5%. Debt issuance costs and original issue discount were recalculated with the reduced future debt payments, and additional costs of approximately $0.4 million were expensed. As a result, we recorded a gain on extinguishment of debt in the amount of $0.1 million. The gain on extinguishment was recorded in Other income, net, including interest income in the Consolidated Statements of Operations.

Revolving Line-of-Credit

We have a $100.0 million Revolver with zero drawn and $6.5 million allocated for letters of credit as of December 31, 2019, leaving $93.5 million available under the Revolver. Based on our consolidated leverage ratio of 4.30:1.00 as of December 31, 2019, we may draw up to $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver.

Note Payable Secured by Royalty Interest

In conjunction with the acquisition of New Birmingham, Inc. in August 2016, we assumed a note payable secured by a royalty interest. The monthly royalty payment is calculated based on future tonnages and sales related to the sand shipped from our Tyler, Texas facility. The note payable is due by June 30, 2032. The note does not provide a stated interest rate. The minimum payments (in thousands) for the next five years required by the note are as follows:



2020	$	454
2021	378
2022	434
2023	499
2024	570
Thereafter	8,103

Under this agreement once a certain number of tons have been shipped from the Tyler facility, the minimum payments will decrease to $0.5 million per year, subject to proration in the period this threshold is met.

The royalty note payable fair value was estimated to be $22.5 million on the acquisition date. The estimate was made using a discounted cash flow model, which calculated the present value of projected future cash payments required under the agreement using a discounted rate of 14%. As of December 31, 2019, the note payable had a fair value of $10.4 million. The decrease in fair value of the note payable amount is due to changes in our estimate of future tonnages and sales related to the sand shipped from our Tyler, Texas facility. We no longer expect any future tonnages and sales related to this facility, which has been idled. The note payable has been reduced to the discounted value of the future minimum payments as required by contract. These changes in estimate resulted in gains that were recorded in Other income, net, including interest income in the Consolidated Statements of Operations. Gains in the amount of $16.9 million were recorded during 2019. The effective interest rate based on the updated projected future cash payments was 14% at December 31, 2019. Other changes in fair value of the note payable amount may result if estimates of future tonnages and sales increase or decrease.

Insurance Financing Notes Payable

During the third quarter of 2019, we renewed our insurance policies and financed the payments through notes payable with a stated interest rate of 4.5%. These payments will be made in installments throughout a ten-month period and, as such, have been classified as current debt. As of December 31, 2019, the notes payable had a balance of $5.1 million.