Long-Term Debt

6 Months Ended

Jun. 30, 2024

Long-Term Debt.

Long-Term Debt

8. Long-Term Debt

As of June 30, 2024, and December 31, 2023, long-term debt consisted of the following:

	June 30,		December 31,
	2024		2023
2026 Senior Notes (1)	$	267,897	$	267,897
2026 ABL Revolver (2)		4,000		—
Unamortized deferred financing costs		(2,243)		(2,900)
Total long-term debt		269,654		264,997
Less current maturities		—		—
Long-term debt, net of current maturities	$	269,654	$	264,997

(1) The 2026 Senior Notes bear interest at a fixed rate of 8.625%.

(2) The 2026 ABL Revolver bears interest at a variable rate of 6.679% as of June 30, 2024.

2026 Senior Notes

On March 15, 2021, the Company completed an offering by its wholly-owned subsidiary, CPI CG Inc., of $310.0 million aggregate principal amount of 8.625% Senior Secured Notes due 2026 (the “2026 Senior Notes”) and

related guarantees. The 2026 Senior Notes bear interest at a rate of 8.625% per annum and mature on March 15, 2026. Interest is payable on the 2026 Senior Notes on March 15 and September 15 of each year.

The Company had obligations to make an offer to repay the 2026 Senior Notes, requiring prepayment in advance of the maturity date, upon the occurrence of certain events including a change of control, certain asset sales and based on an annual excess cash flow calculation. The annual excess cash flow calculation is determined pursuant to the terms of that certain Indenture, dated as of March 15, 2021, by and among CPI CG Inc., the Company, the subsidiary guarantors and U.S. Bank National Association, as trustee, with any required prepayments to be made after the issuance of the Company’s annual financial statements. No such payment is required to be made in 2024 and was not required to be made in 2023 based on the Company’s operating results for the years ended December 31, 2023 and 2022, respectively.

Refer to Note 15, “Subsequent Events” for information on the refinancing of the 2026 Senior Notes that occurred in July 2024.

2026 ABL Revolver

On March 15, 2021, the Company and CPI CG Inc., as borrower, entered into a Credit Agreement with Wells Fargo Bank, National Association, as lender, administrative agent and collateral agent, providing for an asset-based, senior secured revolving credit facility (the “2026 ABL Revolver”). The 2026 ABL Revolver matures on the earliest to occur of March 15, 2026 and the date that is 90 days prior to the maturity of the 2026 Senior Notes. On March 3, 2022, the Company and CPI CG Inc. entered into Amendment No. 1 to the Credit Agreement (the “Amendment”), which amended the 2026 ABL Revolver. The Amendment, among other things, increased the available borrowing capacity under the 2026 ABL Revolver to $75.0 million, increased the uncommitted accordion feature to $25.0 million from $15.0 million, and revised the interest rate provisions to replace the prior LIBOR benchmark with updated benchmark provisions using the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York. On October 11, 2022, the Company and CPI CG Inc. entered into Amendment No. 2 to the Credit Agreement, which amended the 2026 ABL Revolver to adjust certain monthly document delivery terms and to clarify the treatment of certain inventory.

Borrowings under the amended 2026 ABL Revolver bear interest at a rate per annum equal to the applicable term SOFR adjusted for a credit spread, plus an applicable interest rate margin. The Company may select a one, three or six-month term SOFR, which is adjusted for a credit spread of 0.10% to 0.30% depending on the term selected. Through March 31, 2023, the applicable interest rate margin ranged from 1.50% to 1.75% depending on the average excess availability of the facility for the most recently completed quarter. The unused portion of the 2026 ABL Revolver commitment accrued a monthly unused line fee, 0.50% per annum through March 31, 2023, multiplied by the aggregate amount of Revolver commitments less the average Revolver usage during the immediately preceding month. The interest rate margin and unused line fee percentage changed, effective April 1, 2023, to between 1.25% and 1.75% (interest rate margin) and 0.375% and 0.50% (unused line fee).

Refer to Note 15, “Subsequent Events” for information on the refinancing of the 2026 ABL Revolver that occurred in July 2024.

Deferred Financing Costs and Discount

Certain costs and discounts incurred with borrowings are reflected as a reduction to the long-term debt balance. These costs are amortized as an adjustment to interest expense over the life of the borrowing using the effective-interest rate method. The remaining unamortized debt issuance costs recorded on the 2026 Senior Notes were $2.2 million and are reported as a reduction to the long-term debt balance as of June 30, 2024. The remaining unamortized net discount and debt issuance costs on the 2026 ABL Revolver and related Amendment were $0.8 million and are recorded as other assets (current and long-term) on the consolidated balance sheet as of June 30, 2024.