Debt

A summary of the Company’s debt obligations, net of unamortized discounts, is as follows (in thousands):

	March 31,			December 31,
	2016			2015
Non-related party debt:
Senior secured loans, net of issuance costs		118,059			118,936
Subordinated debt		24,273			24,240
Capital lease obligations		756			770
Total non-related party debt		143,088			143,946
Less current portion		(4,092	)		(3,611	)
Total non-related party debt, long-term	$	138,996		$	140,335

Related party debt:
Acquisition related debt		—			1,195
Less current portion		—			(1,195	)
Total related party debt, long-term	$	—		$	—

2015 Credit Facility

On March 9, 2015, the Company entered into a five year $125.0 million senior secured credit facility (the “2015 Credit Facility”) with Bank of America, N.A., as administrative agent for the lenders party thereto. The 2015 Credit Facility consists of a $50.0 million revolver and a $75.0 million term loan. The Company incurred approximately $1.4 million in debt issuance costs related to underwriting and other professional fees, and deferred these costs over the term of the 2015 Credit Facility. The Company used the proceeds to re-pay $24.9 million of certain existing indebtedness, fund acquisitions and de novo treatment facilities and for general corporate purposes. The 2015 Credit Facility also has an accordion feature that allows the total borrowing capacity to be increased up to $200 million, subject to certain conditions, including obtaining additional commitments from lenders. On June 16, 2015, the Company amended the 2015 Credit Facility to remove from the definition of “change of control” what is often referred to as a “dead hand proxy put” provision.

The 2015 Credit Facility requires quarterly term loan principal repayments for the outstanding term loan of $0.9 million from September 30, 2015 to December 31, 2016, $1.4 million for March 31, 2017 to December 31, 2017, $2.3 million from March 31, 2018 to December 31, 2018, and $2.8 million from March 31, 2019 to December 31, 2019, with the remaining principal balance of the term loan due on the maturity date of March 9, 2020. Repayment of the revolving loan is due on the maturity date of March 9, 2020. The 2015 Credit Facility generally requires quarterly interest payments.

Borrowings under the 2015 Credit Facility are guaranteed by the Company and each of its subsidiaries and are secured by a lien on substantially all of the Company’s and its subsidiaries’ assets. Borrowings under the 2015 Credit Facility bear interest at a rate tied to the Company’s Consolidated Total Leverage Ratio (defined as Consolidated Funded Indebtedness to Consolidated EBITDA, in each case as defined in the credit agreement). Eurodollar Rate Loans with respect to the 2015 Credit Facility bear interest at the Applicable Rate plus the Eurodollar Rate (each as defined in the credit agreement) (based upon the LIBOR Rate (as defined in the credit agreement) prior to commencement of the interest rate period). Base Rate Loans with respect to the 2015 Credit Facility bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0% (the interest rate at March 31, 2016 was 3.63%). In addition, the Company is required to pay a commitment fee on undrawn amounts under the revolving credit facility of 0.35% to 0.50% depending on the Company’s Consolidated Total Leverage Ratio (the commitment fee rate at March 31, 2016 was 0.45%). The Applicable Rates and the unused commitment fees of the 2015 Credit Facility are based upon the following tiers:

Pricing Tier	Consolidated Total Leverage Ratio	Eurodollar Rate Loans			Base Rate Loans			Commitment Fee
1	> 3.50:1.00		3.25	%		2.25	%		0.50	%
2	> 3.00:1.00 but < 3.50:1.00		3.00	%		2.00	%		0.45	%
3	> 2.50:1.00 but < 3.00:1.00		2.75	%		1.75	%		0.40	%
4	> 2.00:1.00 but < 2.50:1.00		2.50	%		1.50	%		0.35	%
5	< 2.00:1.00		2.25	%		1.25	%		0.35	%

The 2015 Credit Facility requires the Company to comply with customary affirmative, negative and financial covenants, including a Consolidated Fixed Charge Coverage Ratio, Consolidated Total Leverage Ratio and a Consolidated Senior Secured Leverage Ratio (each as defined in the credit agreement). The Company may be required to pay all of its indebtedness immediately if the Company defaults on any of the financial or other restrictive covenants contained in the 2015 Credit Facility. The financial covenants include maintenance of the following:

Fixed Charge Coverage Ratio may not be less than 1.50:1.00 as of the end of any fiscal quarter.

Consolidated Total Leverage Ratio: may not be greater than the following levels as of the end of each fiscal quarter:

Measurement Period Ending		Maximum Consolidated Total Leverage Ratio
March 31, 2016		4.50:1.00
June 30, 2016		4.25:1.00
September 30, 2016		4.25:1.00
December 31, 2016		4.25:1.00
March 31, 2017 and each fiscal quarter thereafter		4.00:1.00

Consolidated Senior Secured Leverage Ratio may not be greater than the following levels as of the end of each fiscal quarter:

Measurement Period Ending		Maximum Consolidated Senior Secured Leverage Ratio
March 31, 2016		4.00:1.00
June 30, 2016		3.75:1.00
September 30, 2016		3.75:1.00
December 31, 2016		3.75:1.00
March 31, 2017 and each fiscal quarter thereafter		3.50:1.00

On July 1, 2015, the Company borrowed $15.0 million under the $50.0 million revolver of the 2015 Credit Facility. The Company used the proceeds to fund de novo development projects and acquisitions.

On August 7, 2015, the Company borrowed $32.0 million under the $50.0 million revolver of the 2015 Credit Facility. The Company used the proceeds to fund de novo development projects and acquisitions.

At March 31, 2016, the Company was in compliance with all applicable covenants.

As of March 31, 2016, our availability under the $50.0 million revolver portion of the 2015 Credit Facility was $0.7 million, net of $47.0 million in borrowings as noted above, and $2.3 million in standby letters of credit issued for various corporate purposes.

2015 Subordinated Debt

On October 2, 2015, the Company entered into two financing facilities with affiliates of Deerfield Management Company, L.P. (“Deerfield). The financing facilities consist of $25.0 million of subordinated convertible debt and up to $25.0 million of unsecured subordinated debt, together with an incremental facility of up to an additional $50.0 million of subordinated convertible debt (subject to certain conditions) (the “Deerfield Facility”). The Company issued $25.0 million of subordinated convertible debt at closing and used the proceeds to fund acquisitions, its de novo projects and for other corporate purposes. The $25.0 million of subordinated convertible debt bears interest at an annual rate of 2.50% and matures on September 30, 2021. The $25.0 million of subordinated convertible debt funded at closing is convertible into shares of the Company’s common stock at $30.00 per share. The $25.0 million of unsecured subordinated debt bears interest at an annual rate of 12.0%, matures on October 2, 2020, and can be repaid under certain conditions without penalty prior to October 2, 2017.

The Company incurred approximately $0.8 million in debt issuance costs related to underwriting and other professional fees, and deferred these costs over the term of the debt. At March 31, 2016, $25.0 million of subordinated convertible debt remained outstanding, with an interest rate of 2.50%.

Acquisition Related Debt

At December 31, 2015, the Company had outstanding notes payables of $1.2 million resulting from the seller financing of the acquisition of certain assets of AJG Solutions and its subsidiaries and the equity of B&B holdings INTL LLC (collectively, the “TSN Acquisition”). On February 29, 2016, the Company paid in full the outstanding balance, including principal of $1.2 million and accrued interest of $0.2 million.

Interest Rate Swap Agreements

In July 2014, the Company entered into two interest rate swap agreements to mitigate its exposure to fluctuations in interest rates. The interest rate swap agreements had initial notional amounts of $8.9 million and $13.2 million which fix interest rates over the life of the respective interest rate swap agreement at 4.21% and 4.73%, respectively. The notional amounts of the swap agreements represent amounts used to calculate the exchange of cash flows and are not the Company’s assets or liabilities. The interest payments under these agreements are settled on a net basis. The Company has not designated the interest rate swaps as cash flow hedges and therefore the changes in the fair value of the interest rate swaps are included within interest expense in the condensed consolidated statements of operations.

The fair value of the interest rate swaps at March 31, 2016 and December 31, 2015 represented a liability of $639,000 and $464,000, respectively, and is reflected in other long-term liabilities on the condensed consolidated balance sheets. Refer to Note 12 for further discussion of fair value of the interest rate swap agreements. The Company’s credit risk related to these agreements is considered low because the swap agreements are with a creditworthy financial institution.

The following table sets forth our interest rate swap agreements at March 31, 2016 (dollars in thousands):

	Notional		Maturity	Fair
	Amount		Date	Value
Pay-fixed interest rate swap	$	7,818	May 2018	$	(159	)
Pay-fixed interest rate swap		11,395	August 2019		(480	)
Total	$	19,213		$	(639	)