Note 9 - Senior Notes and Unsecured Revolving Credit Facility

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

9. Senior Notes and Unsecured Revolving Credit Facility

Indebtedness consisted of the following:

	March 31,		December 31,
	2020		2019
	(Dollars in thousands)
7.25% Senior Notes due 2022, net	$	300,479	$	304,832
Unsecured revolving credit facility		—		—
Total Indebtedness	$	300,479	$	304,832

On March  17, 2017, the Company completed the sale of $250 million in aggregate principal amount of 7.25% Senior Notes due 2022 (the "Existing Notes"), in a private placement. The Existing Notes were issued at an offering price of 98.961% of their face amount, which represented a yield to maturity of 7.50%. On May 4, 2017, the Company completed a tack-on private placement offering through the sale of an additional $75 million in aggregate principal amount of the 7.25% Senior Notes due 2022 ("Additional Notes"). The Additional Notes were issued at an offering price of 102.75% of their face amount plus accrued interest since March 17, 2017, which represented a yield to maturity of 6.438%. Net proceeds from the Existing Notes were used to repay all borrowings outstanding under the Company’s senior unsecured revolving credit facility with the remainder used for general corporate purposes. Net proceeds from the Additional Notes were used for working capital, land acquisition and general corporate purposes. Interest on the Existing Notes and the Additional Notes (together, the "Notes") is paid semiannually in arrears on April  1 and October  1. The Notes were exchanged in an exchange offer for Notes that are identical to the original Notes, except that they are registered under the Securities Act, and are freely tradeable in accordance with applicable law.

The carrying amount of our Senior Notes listed above at  March 31, 2020 is net of the unamortized discount of $1.0 million, unamortized premium of $0.8 million, and unamortized debt issuance costs of $2.6 million, each of which are amortized and capitalized to interest costs on a straight-line basis over the respective terms of the notes which approximates the effective interest method. The carrying amount for the Senior Notes listed above at December 31, 2019, is net of the unamortized discount of $1.1 million, unamortized premium of $0.9 million, and unamortized debt issuance costs of $3.0 million. Debt issuance costs for the unsecured revolving credit facility, which totaled $0.4 million as of March 31, 2020, are included in other assets and amortized and capitalized to interest costs on a straight-line basis over the term of the agreement.

The Notes are general senior unsecured obligations that rank equally in right of payment to all existing and future senior indebtedness, including borrowings under the Company's senior unsecured revolving credit facility. The Notes contain certain restrictive covenants, including a limitation on additional indebtedness and a limitation on restricted payments. Restricted payments include, among other things, dividends, investments in unconsolidated entities, and stock repurchases. Under the limitation on additional indebtedness, we are permitted to incur specified categories of indebtedness but are prohibited, aside from those exceptions, from incurring further indebtedness if we do not satisfy either a leverage condition or an interest coverage condition. Exceptions to the limitation include, among other things, borrowings of up to $260 million under existing or future bank credit facilities, non-recourse indebtedness, and indebtedness incurred for the purpose of refinancing or repaying certain existing indebtedness. Under the limitation on restricted payments, we are also prohibited from making restricted payments, aside from certain exceptions, if we do not satisfy either condition. In addition, the amount of restricted payments that we can make is subject to an overall basket limitation, which builds based on, among other things, 50% of consolidated net income from January 1, 2017 forward and 100% of the net cash proceeds from qualified equity offerings. Exceptions to the foregoing limitations on our ability to make restricted payments include, among other things, investments in joint ventures and other investments up to 15% of our consolidated tangible net assets and a general basket of $15 million. The Notes are guaranteed, on an unsecured basis, jointly and severally, by all of the Company's 100% owned subsidiaries. See Note 17 for information about the guarantees and supplemental financial statement information about our guarantor subsidiaries group and non-guarantor subsidiaries group.

During the three months ended March 31, 2020, the Company repurchased and retired approximately $4.8 million in face value of the Notes at 101.63% of the face value for a cash payment of approximately $4.8 million. The Company recognized a loss on early extinguishment of debt of $0.1 million and wrote off approximately $46,000 of unamortized discount, premium and debt issuance costs associated with the Notes retired.  During the three months ended March 31, 2019, the Company repurchased and retired approximately $5.0 million in face value of the Notes at 90.25% of the face value for a cash payment of approximately $4.5 million. The Company recognized a gain on early extinguishment of debt of $0.4 million and wrote off approximately $70,000 of unamortized discount, premium and debt issuance costs associated with the Notes retired.   

The Company has an unsecured revolving credit facility ("Credit Facility") with a bank group.  On August 7, 2019, the Company entered into a Modification Agreement (the “Modification”) to its Amended and Restated Credit Agreement.  The Modification, among other things, (i) extended the maturity date of the revolving credit facility to March 1, 2021, (ii) decreased (A) the total commitments under the facility to $130 million from $200 million and (B) the accordion feature to $200 million from $300 million, subject to certain financial conditions, including the availability of bank commitments, (iii) provided for certain adjustments to the borrowing base calculation commencing January 1, 2020; and (iv) revised the covenant limiting restricted payments to provide for basket limitations and net leverage ratio thresholds on the Company’s stock repurchases, dividend payments, and repurchases of its Notes, subject to specified exceptions. As of March 31, 2020, we had no borrowings outstanding under the credit facility. Interest is payable monthly and is charged at a rate of 1-month LIBOR plus a margin ranging from 2.25% to 3.00% depending on the Company’s leverage ratio as calculated at the end of each fiscal quarter. As of March 31, 2020, the interest rate under the Credit Facility was 3.99%. Pursuant to the Credit Facility, the Company is required to maintain certain financial covenants as defined in the Credit Facility, including (i) a minimum tangible net worth; (ii) maximum leverage ratios; (iii) a minimum liquidity covenant; and (iv) a minimum fixed charge coverage ratio based on EBITDA (as detailed in the Credit Facility) to interest incurred or if this test is not met, the Company maintains unrestricted cash equal to not less than the trailing 12 month consolidated interest incurred. As of March 31, 2020, the Company was in compliance with all financial covenants.

The Credit Facility, as amended by the Modification, also provides a $17.5 million sublimit for letters of credit, subject to conditions set forth in the agreement. As of  March 31, 2020 and December 31, 2019, the Company did not have any outstanding letters of credit issued under the Credit Facility.