Debt

9 Months Ended

Sep. 30, 2020

Our debt consists of the following ($ in thousands):


			Outstanding Balance as of
	Interest Rate	Maturity Date	September 30, 2020		December 31, 2019
Revolving Credit Facilities
Revolving Credit Facility (1)	LIBOR + 3.00%	April 27, 2022	$	84,667	$	60,000

Senior Secured Credit Facilities
Term Loan (2)	LIBOR + 2.75%	April 27, 2024	$	978,873	$	986,448
Term A1 Loan	11.4777%	April 27, 2024	35,000		—
Term A2 Loan	11.4777%	April 27, 2024	31,000		—
Term A3 Loan (3)	LIBOR + 3.00%	April 27, 2024	28,000		—
Total Term Loans (at stated value)			1,072,873		986,448
Unamortized discount			(1,786)		(2,168)
Unamortized debt issuance costs			(6,471)		(3,622)
Total Term Loans, net			$	1,064,616	$	980,658

Property Loan
Property Loan (at stated value)	9.25%	July 1, 2025	$	110,000	$	—
Unamortized discount			(4,172)		—
Unamortized debt issuance costs			(4,645)		—
Total Property Loan, net			$	101,183	$	—

Financing lease obligations			$	2,313	$	—

Total debt, net			$	1,252,779	$	1,040,658

________

(1)Undrawn balances bear interest between 0.5% to 0.25% depending on certain leverage ratios. We had available balances of $0 million and $40.0 million as of September 30, 2020 and December 31, 2019, respectively. The weighted-average interest rate on the outstanding balance of our Revolving Credit Facility was 3.15% and 4.72% as of September 30, 2020 and December 31, 2019, respectively.

(2)One-month London Interbank Offered Rate (“LIBOR”) rate is subject to a 1.0% floor. The interest rate was 3.75% and 4.55% as of September 30, 2020 and December 31, 2019, respectively. Our two interest rate swaps fix LIBOR at 2.85% on $800.0 million of our Term Loan (see Note 12).

(3)LIBOR rate is subject to a 1.0% floor. The interest rate was 4.00% as of September 30, 2020.

Fourth Amendment to Amended and Restated Credit Agreement

On June 12, 2020, we entered into the Fourth Amendment to the Amended & Restated Credit Agreement (the “Fourth Amendment”, and collectively with the unamended terms of the Senior Secured Credit Facility, the “Existing Credit Agreement”). The terms of the Senior Secured Credit Facility remain in effect except for the following terms modified by the Fourth Amendment:

i.replace the total net leverage ratio requirement of the financial covenant with a minimum liquidity test until September 30, 2021 (the “Relief Period”);

ii.modify the financial covenant for certain test dates after the Relief Period; and

iii.add certain restrictions on, among other things, the incurrence of additional debt and making of investments, dispositions and restricted payments during the Relief Period.

Additional Credit Facility

On June 12, 2020, we entered into an additional senior secured credit facility with an average interest rate of 9.25% that matures on April 27, 2024 and ranks pari passu with the Existing Credit Agreement (the “Additional Credit Facility”). The Additional Credit Facility consists of the following term loans:

i.$35.0 million term loan at fixed rate of 11.4777% (the “Term A1 Loan”);

ii.$31.0 million term loan at fixed rate of 11.4777% (the “Term A2 Loan”); and

iii.$28.0 million term loan at our option of either a base rate plus a margin of 2.00% or LIBOR plus 3.00% (the “Term A3 Loan”). Term A3 Loan is a Eurocurrency loan subject to a 1.0% LIBOR floor consistent with the Existing Credit Agreement.

We intend to use the proceeds from the Additional Credit Facility for general corporate purposes. The obligations under the Additional Credit Facility are collateralized in a manner that is substantially identical to the Existing Credit Agreement.

Prior to the maturity date, the Additional Credit Facility does not require principal payments, but does include mandatory prepayment requirements for the Term A3 Loan that are consistent with the Existing Credit Agreement. Mandatory prepayments are required for certain asset sales, casualty events and condemnation events that are not reinvested in our business where our total net leverage ratio is above 4.00x. We may not voluntarily prepay any portion of the Additional Credit Facility prior to June 2023 without paying a make-whole premium equal to 100% of the interest that would have otherwise accrued from the date of such payment through June 2022 plus 50% of the interest that otherwise would have accrued from June 2022 to June 2023. Subsequent to June 2023, we may prepay any portion of the Additional Credit Facility without penalty.

In connection with the Additional Credit Facility, we terminated the remaining $15.0 million of unused capacity of our Revolving Credit Facility under the Existing Credit Agreement. The Additional Credit Facility contains covenants, including a springing financial maintenance covenant, identical to those contained in the Existing Credit Agreement.

Property Loan Agreement

On June 12, 2020, we entered into a property loan agreement in the amount of $110.0 million that has a fixed interest rate of 9.25% and matures on July 1, 2025 (the “Property Loan”). Prior to maturity, the Property Loan does not require principal payments. The Property Loan is collateralized by the mortgages of our Hyatt Ziva and Hyatt Zilara Cap Cana properties located in the Dominican Republic and the Hilton Rose Hall Resort & Spa located in Jamaica (collectively the “Properties”). We intend to use the proceeds of the Property Loan to finance the operation and management of the Properties and for general corporate purposes.

During the term of the Property Loan, we are required to deposit certain cash reserves including reserves for operating expenses, debt service and certain property improvement plan required work. We will continue to fund the reserves until the Properties achieve a debt service coverage ratio of 1.50x for two consecutive calendar quarters. These reserves are presented as restricted cash on our Condensed Consolidated Balance Sheet, which had a balance of $27.6 million as of September 30, 2020.

Financing lease obligation

On July 1, 2020, we entered into a twelve year financing lease arrangement with a third-party for the construction, management and maintenance of a thermal energy plant located at the Hyatt Ziva and Hyatt Zilara Cap Cana. We recognized a $2.3 million right-of-use asset and lease liability within property and equipment, net and debt, respectively, on the Condensed Consolidated Balance Sheet.

Financial maintenance covenants

We were in compliance with all applicable covenants as of September 30, 2020. See a summary of our applicable covenants and restrictions below:


Debt						Covenant Terms
Existing Credit Agreement						We are required to maintain a minimum liquidity balance of $60.0 million through the Relief Period. If we have more than 35% drawn on the Revolving Credit Facility for periods subsequent to June 30, 2021, we will be subject to the following total net leverage ratio requirements: ▪6.50x for the period ended September 30, 2021; ▪6.00x for the period ended December 31, 2021; and ▪4.75x for periods thereafter.
Term A1 Loan						Same terms as the Existing Credit Agreement.
Term A2 Loan						No applicable debt covenants.
Term A3 Loan						No applicable debt covenants.
Property Loan						No applicable debt covenants other than the requirement to maintain a cash reserve until the Properties achieve a debt service coverage ratio of 1.50x for two consecutive quarters.