Note 5 - Long-term Debt

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Long-Term Debt [Text Block]

NOTE 5. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	March 31, 2025			December 31, 2024
First Lien Credit Facilities:
Term loans, net of unamortized discount and deferred loan costs of $9.7 million at March 31, 2025 and $10.2 million at December 31, 2024; interest at SOFR, subject to a 0.75% floor plus 3.75% (at March 31, 2025) and 0.75% floor plus 3.75% (at December 31, 2024): 8.1% at March 31, 2025 and 8.1% at December 31, 2024.	$	533,031		$	533,951
Finance leases		2,970			3,022
Total debt		536,001			536,973
Less: Current portion		(6,605	)		(6,588	)
Long-term debt	$	529,396		$	530,385

First Lien Credit Facilities

On  February 15, 2022, AP Gaming I, LLC (the “Borrower”), a Delaware limited liability company and wholly owned indirect subsidiary of the Company and AP Gaming Holdings, LLC, a Delaware limited liability company and wholly owned indirect subsidiary of the Company (“Holdings”) entered into the Amended Credit Agreement (the "Amended Credit Agreement") with certain of the Borrower’s subsidiaries, the lenders party thereto and Jefferies Finance LLC, as administrative agent (the "Administrative Agent"). The Amended Credit Agreement amends and restates the existing credit agreement, among the Borrower, Holdings, the lenders party thereto from time to time, the Administrative Agent and the other parties named therein.

The Borrower is a direct subsidiary of Holdings, which is a direct subsidiary of AP Gaming, Inc., which is a direct subsidiary of the Company. These entities between the Borrower and the Company are holding companies with no other operations, cash flows, material assets or liabilities other than the equity interests in the Borrower.

The Amended Credit Agreement provides (i) a senior secured first lien term loan in an aggregate principal amount of $575.0 million (the “New Term Loan Facility”), the proceeds of which, together with cash on hand of the Borrower and its subsidiaries, were used by the Borrower to repay all amounts outstanding under the existing term loan facilities to pay related fees and expenses, and (ii) a $40.0 million senior secured first lien revolving facility, with a $7.5 million letter of credit subfacility and a $5.0 million swingline subfacility (the “New Revolving Credit Facility”).

Borrowings under the Amended Credit Agreement bear interest at a per annum rate equal to, at the Borrower’s election, either (a) an adjusted term Secured Overnight Financing Rate ("SOFR") for the interest period in effect, subject to a floor of (i) in the case of term loan borrowings, 0.75% and (ii) in the case of revolver borrowings, 0.00% or (b) a base rate determined by the highest of (i) the prime rate in effect, (ii) the federal funds effective rate plus 0.50% and (iii) an adjusted term SOFR with an interest period of one month plus 1.00%, in each case plus an applicable margin of 3.75% for adjusted term SOFR loans and 2.75% for base rate loans.
 
The New Term Loan Facility will mature on  February 15, 2029 and will amortize in quarterly installments equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. The commitments under the New Revolving Credit Facility will terminate on  February 15, 2027.
 
The Borrower  may voluntarily repay outstanding loans under the Amended Credit Agreement at any time, without prepayment premium or penalty, except in connection with a repricing event in respect of the New Term Loan Facility, subject to customary breakage costs with respect to adjusted term SOFR loans.
 
The Amended Credit Agreement includes customary mandatory prepayment events, affirmative covenants, negative covenants and events of default. In addition, the New Revolving Credit Facility requires the Borrower to comply on a quarterly basis, with a maximum net first lien senior secured leverage ratio of 6.70 to 1.00 if the aggregate amount of funded loans and issued letters of credit (excluding up to $5.0 million of undrawn letters of credit under the New Revolving Credit Facility and letters of credit that are cash collateralized) under the New Revolving Credit Facility on such date exceeds 35% of the then-outstanding commitments under the New Revolving Credit Facility.

On  February 5, 2024, the Borrower and Holdings, entered into an amendment (the “Seventh Amendment”) to amend that certain First Lien Credit Agreement, dated as of  June 6, 2017 (as amended on  December 6, 2017, as amended and restated on  February 7, 2018, as amended and restated as of  October 5, 2018, as amended as of  August 30, 2019, as amended and restated on  May 1, 2020, as amended as of  August 4, 2021, as amended and restated as of  February 15, 2022), among the Borrower, Holdings, the lenders party thereto from time to time, Jefferies Finance LLC, as administrative agent, and the other parties named therein (as so amended, the “Amended First Lien Credit Agreement”).
 
Among other things, the Seventh Amendment (i) removes the credit spread adjustment with respect to term loan borrowings in Term SOFR (as defined in the Amended First Lien Credit Agreement) and (ii) reduces the Applicable Margin (as defined in the Amended First Lien Credit Agreement) on the Borrower’s existing term loan to 3.75% for Term SOFR borrowings and 2.75% for adjusted base rate (as defined in the Amended First Lien Credit Agreement) borrowings. Additionally, in conjunction with entry into the Seventh Amendment, the Company elected to repay $15 million of its total debt outstanding.
 
An additional $1.6 million in loan costs including the write-off of deferred loan costs and third-party costs were incurred related to the Seventh Amendment. Given the composition of the lender group, the transaction was accounted for as a debt modification for existing lenders. As a result of the Seventh Amendment, $1.6 million in costs were expensed and included in the loss on extinguishment and modification of debt.

As of March 31, 2025, there were no required financial covenants for our debt instruments.

Finance Leases

The Company has entered into leases for vehicles and equipment that are accounted for as finance leases.