Debt

12 Months Ended

Dec. 31, 2018

The Company’s debt, net of unamortized discounts and deferred financing fees, at December 31, 2018 and December 31, 2017 consisted of the following:


(in thousands)	December 31, 2018		December 31, 2017
Total Term Loan outstanding	$	403,957	$	407,109
Tecnidex loan outstanding	2,771		3,685
Less: Amounts due within one year	6,419		7,926
Total long-term debt due after one year	$	400,309	$	402,868

The Company evaluated the amount recorded under the Term Loan (defined below) and determined that the fair value as of December 31, 2018, and 2017, was approximately $397.1 million, and $408.2 million, respectively. The fair value of the debt is based on quoted inactive market prices and is therefore classified as Level 2 within the valuation hierarchy.

The Term Loan is presented net of deferred issuance costs, which are amortized using the effective interest method over the term of the Term Loan. Gross deferred issuance costs at the inception of the Term Loan were $12.9 million and as of December 31, 2018 and December 31, 2017 there were $6.2 million and $8.3 million of unamortized deferred issuance costs, respectively.

Scheduled principal repayments subsequent to December 31, 2018 are presented in the table below.


(in thousands)	Amount
2019	$	6,419
2020	4,853
2021	401,625



Total	$	412,897

Credit Facility

On July 31, 2015, in connection with the consummation of the Business Combination, AgroFresh Inc. as the borrower and its parent, AF Solutions Holdings LLC (“AF Solutions Holdings”), a wholly-owned subsidiary of the Company, as the guarantor, entered into a Credit Agreement with Bank of Montreal, as administrative agent (the “Credit Facility”). As of December 31, 2018, the Credit Facility consisted of a $425 million term loan (the “Term Loan”), with an amortization equal to 1.00% per year, and a $25 million revolving loan facility (the “Revolving Loan”). The Revolving Loan included a $10 million letter-of-credit sub-facility, issuances against which reduce the available capacity for borrowing. As of December 31, 2018, the Company had issued $0.6 million of letters of credit, against which no funds have been drawn. The Term Loan has a scheduled maturity date of July 31, 2021, and the Revolving Loan had a scheduled maturity date of July 31, 2019. The interest rates on borrowings

under the facilities are either the alternate base rate plus 3.75% or LIBOR plus 4.75% per annum, with a 1.00% LIBOR floor (with step-downs in respect of borrowings under the Revolving Loan dependent upon the achievement of certain financial ratios). The obligations under the Credit Facility are secured by liens on substantially all of the assets of (a) AgroFresh Inc. and its direct wholly-owned domestic subsidiaries, and (b) AF Solutions Holdings, including the common stock of AgroFresh Inc.

The net proceeds of the Term Loan were used to fund a portion of the purchase price payable to Rohm and Haas Company ("R&H"), a subsidiary of Dow, in connection with the Business Combination. Amounts available under the Revolving Loan may also be used for working capital, general corporate purposes, and other uses, all as more fully set forth in the Credit Agreement. At December 31, 2018, there was $410.1 million outstanding under the Term Loan and no balance outstanding under the Revolving Loan.

As of the Closing Date, the Company incurred approximately $12.9 million in debt issuance costs related to the Term Loan and $1.3 million in costs related to the Revolving Loan. The debt issuance costs associated with the Term Loan were capitalized against the principal balance of the debt, and the Revolving Loan costs were capitalized in Other Assets. All issuance costs will be accredited through interest expense for the duration of each respective debt facility. The interest expense related to the amortization of the debt issuance costs during the year ended December 31, 2018 and December 31, 2017 was approximately $2.5 million and $2.4 million, respectively.

Certain restrictive covenants are contained in the Credit Facility, which the Company was in compliance with as of December 31, 2018, other than certain covenants that apply only to the Company’s ability to borrow under the Revolving

Loan (excluding letters of credit). The Credit Facility imposes an overall cap on the total amount of dividends the Company can pay, together with the total amount of shares and warrants the Company can repurchase, of $12 million per fiscal year, and imposes certain other conditions on the Company’s ability to pay dividends.

Beginning with the year ended December 31, 2017, the Company is required to prepay Term Loan Borrowings and Incremental Term Loan Borrowings in an aggregate amount equal to 50% of the Excess Cash Flow for the fiscal year; provided that such amount of the Excess Cash Flow in any fiscal year shall be reduced by (i) the aggregate amount of prepayments of Term Loans and Incremental Term Loans made, (ii) to the extent accompanied by permanent reductions of Revolving Commitments, the aggregate amount of prepayments of Revolving Loans (other than prepayments financed with the proceeds of Indebtedness), (iii) repaid borrowings of Revolving Loans made on the Effective Date to account for any additional original issue discount or upfront fees that are implemented pursuant to the Fee Letter and (iv) the aggregate amount of cash dividends paid by the Company or Holdings to Holdings or Boulevard for the payment of the Seller Earnout; provided further that, prepayments of Term Loan Borrowings and Incremental Term Loan Borrowings shall only be required if 50% of the Excess Cash Flow for such fiscal year exceeds $5,000,000. There are no amounts due under this provision for the year ended December 31, 2018.

On January 31, 2019, The Revolving Loan was amended to extend the revolver from July 31, 2019 to December 31, 2020. The amended $12.5 million revolving credit facility also amended certain financial covenants.