Debt

12 Months Ended

Dec. 31, 2019

Long-term debt at December 31, 2019 and 2018 consists of the following:



(in thousands)	December 31, 2019			December 31, 2018
Senior secured notes, due 2024	$	350,000		$	350,000
Revolving credit agreement	—			—
	350,000			350,000
Unamortized debt issuance costs related to senior secured notes	(3,968		)	(4,803		)
	346,032			345,197
Less: Current portion of long-term debt	—			—
	$	346,032		$	345,197

Senior secured notes

On September 15, 2016, the Company issued $350.0 million of senior secured notes due 2024 (the “Senior Notes”) under an unregistered private placement not subject to the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Senior Notes are governed by an indenture dated September 15, 2016 (the “Indenture”). The Senior Notes were issued by BMC East, LLC, a 100% owned subsidiary of the Company, and are guaranteed by the Company and the other subsidiaries that guarantee the Credit Agreement (as defined below). Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company, and all guarantees are full and unconditional and joint and several. The Senior Notes mature on October 1, 2024 and are secured by a first priority lien on certain assets of the Company and a second priority lien on the collateral that secures the Credit Agreement on a first-priority basis, which collectively accounts for substantially all assets of the Company. The interest rate is fixed at 5.5% and is payable semiannually on April 1 and October 1.

The Indenture contains customary nonfinancial covenants, including restrictions on new indebtedness, issuance of liens and guarantees, investments, distributions to equityholders, asset sales and affiliate transactions. The Company may redeem the Senior Notes in whole or in part at the redemption prices set forth in the Indenture plus accrued and unpaid interest. If the Company

experiences certain change of control events, holders of the Senior Notes may require the Company to repurchase all or part of their Senior Notes at a price equal to 101% plus accrued and unpaid interest. The Company was in compliance with all debt covenants under the Indenture as of December 31, 2019.

As of December 31, 2019, the estimated market value of the Senior Notes was $14.9 million higher than the carrying amount. The fair value is based on institutional trading activity and was classified as a Level 2 measurement in accordance with ASC 820.

Revolving credit agreement

On December 1, 2015, the Company entered into a senior secured credit agreement with Wells Fargo Capital Finance, as administrative agent, and certain other lenders (as amended by the first and second amendments, the “Existing Credit Agreement”), which includes a revolving line of credit (the “Revolver”). On May 31, 2019, the Company entered into the third amendment to the Existing Credit Agreement (the “Third Amendment”), which amended and restated the Existing Credit Agreement (the “Credit Agreement”) and increased the aggregate commitment from $375.0 million to $425.0 million. The Credit Agreement has a letters of credit sublimit of $100.0 million. The Revolver is subject to an asset-based borrowing formula on eligible accounts receivable, credit card receivables and inventory, in each case reduced by certain reserves.

Borrowings under the Revolver bear interest, at the Company’s option, at either the Base Rate (which means the higher of (i) the Federal Funds Rate plus 0.5%, (ii) the LIBOR rate plus 1.0% or (iii) the prime rate) plus a Base Rate Margin (which ranges from 0.25% to 0.50% based on Revolver availability) or LIBOR plus a LIBOR Rate Margin (which ranges from 1.25% to 1.50% based on Revolver availability). The Credit Agreement includes customary provisions for implementation of replacement rates for rate-based and LIBOR-based loans upon any phase-out of LIBOR. The fee on any outstanding letters of credit issued under the Revolver ranges from 0.75% to 1.25%, depending on whether the letters of credit are fully cash collateralized. The fee on the unused portion of the Revolver is 0.25%.

The Credit Agreement contains customary nonfinancial covenants, including restrictions on new indebtedness, issuance of liens, investments, distributions to equityholders, asset sales, affiliate transactions, merger transactions and entering into unrelated businesses. The Credit Agreement includes a financial covenant that requires us to maintain a minimum Fixed Charge Coverage Ratio of 1.00:1:00, as defined therein. However, the covenant is only applicable if excess availability under the Credit Agreement is less than or equal to the greater of (1) $37.7 million and (2) 10% of the line cap, and remains in effect until excess availability has been greater than the greater of (1) $37.7 million and (2) 10% of the line cap for 30 consecutive days. The Company was in compliance with all debt covenants under the Credit Agreement as of December 31, 2019.

The Revolver matures at the earlier of (i) May 31, 2024 and (ii) if the Senior Notes are refinanced or repaid, the date that is 91 days prior to the new maturity date of the replacement notes or other indebtedness that replaced or refinanced the Senior Notes. After considering the increase to the remaining term and the increase in the aggregate commitment resulting from the Third Amendment, the overall borrowing capacity of the Revolver increased. Accordingly, all existing unamortized debt issuance costs and new debt issuance costs related to the Third Amendment are being amortized through May 31, 2024.

The Company had no outstanding borrowings under the Revolver with net availability of $362.3 million as of December 31, 2019. The Company had $56.1 million in letters of credit outstanding under the Credit Agreement as of December 31, 2019. Obligations under the Credit Agreement are guaranteed by the Company’s material subsidiaries. Obligations under the Credit Agreement and the guarantees of those obligations, are secured by substantially all of the Company’s assets and those of the guarantors, subject to certain exceptions and permitted liens, including a first-priority security interest in certain accounts receivable, inventory and certain other assets of the Company and a second-priority security interest in substantially all other assets of the Company that secure the Senior Notes on a first-priority basis.

Scheduled maturities of long-term debt were as follows:



(in thousands)
2020	$	—
2021	—
2022	—
2023	—
2024	350,000
Thereafter	—
	$	350,000