NOTE 8. LONG‑TERM DEBT

Long‑term debt consists of the following (in millions):


	June 30,		December 31,
	2017		2016
Term Loans	$	5.5	$	7.1
Revolver		5.0		5.0
Current portion of long-term debt		(10.5)		(2.3)
Long term-debt, less current portion	$	—	$	9.8

Ranger Services had a $2.0 million revolving line of credit with Iberia Bank expiring on April 30, 2018 (the “Revolver”). On December 23, 2016, Ranger Services amended the Revolver to increase its size to $5.0 million. As of June 30, 2017 and December 31, 2016, there was $5.0 million borrowed against the Revolver. The Revolver was secured by substantially all of Ranger Services’ assets (approximately $137.8 million of the Predecessor’s total assets as of June 30, 2017). Interest varied with the bank’s prime rate and the bank’s London Interbank Offered Rate (“LIBOR”). At June 30, 2017 and December 31, 2016, the interest rate was 4.73% and 4.12%, respectively.

In February 2015, as amended in June 30, 2016, Torrent Services secured a $2.0 million senior credit facility with Texas Capital Bank consisting of a $2.0 million Advancing Term Loan as defined by the note agreement. The note was secured by substantially all of Torrent Services’ assets (approximately $27.5 million of the Predecessor’s total assets as of June 30, 2017). Interest varies with the bank’s prime rate and the bank’s LIBOR and is payable quarterly through the maturity of the note. As of December 31, 2016, the interest rate was 5.75%. As of December 31, 2016, there was $0.7 million outstanding on the senior credit facility. As of June 30, 2017 the credit facility has no outstanding balance and has been subsequently closed.

In March 2015, Torrent Services, through certain members of its management team as borrowers, secured a $0.6 million promissory note with Benchmark Bank. Interest varied with the bank’s prime rate. Initially, all principal and interest was due on the date of maturity of September 4, 2015, however, the terms were renegotiated and a restructured note and agreement was entered into in April 2016 with an interest rate of 4.5%. In April 2016, Torrent made a principal payment of $0.4 million on this promissory note, leaving a remaining balance of $0.2 million, which is secured by a $0.2 million certificate of deposit. As of December 31, 2016, there was $0.2 million outstanding on the promissory note. The remaining principal balance was repaid in full on February 28, 2017.

In April 2015, Ranger Services secured a $7.0 million promissory note with Iberia Bank. Interest varied with the bank’s prime rate and the bank’s LIBOR and was payable in 60 equal monthly installments, which commenced on May 1, 2016. As of June 30, 2017 and December 31, 2016, the interest rate was 4.73%, and 4.12% respectively. Installment payments are due through May 1, 2019, and the note is secured by substantially all of Ranger Services’ assets (approximately $137.8 million of the Predecessor’s total assets as of June 30, 2017). As of June 30, 2017 and December 31, 2016, the outstanding balance was $5.5 million and $6.2 million, respectively.

All of the third party debt agreements include the usual and customary covenants for facilities of their type and size. The covenants cover matters such as minimum fixed charge coverage ratio, maximum leverage ratio, current ratio, maximum indebtedness to capitalization ratio, minimum debt service coverage ratio and minimum net income. As of June 30, 2017, the Company was not in compliance with certain financial covenants; however a waiver of non‑compliance was obtained from the financial institution. The Company did not anticipate being in compliance within the next twelve months and accordingly has classified the debt as current in the accompanying condensed combined consolidated balance sheet at June 30, 2017.

In connection with the Offering, a partial use of proceeds was for the repayment of all of these borrowings. There is no outstanding debt as of August 16, 2017 other than $7.0 million of seller’s notes issued as partial consideration for the ESCO Acquisition.

On August 16, 2017, in connection with the Offering, Ranger entered into a $50.0 million senior revolving credit facility by and among certain of the Borrower’s subsidiaries, as borrowers, each of the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent. The credit facility is subject to a borrowing base that is calculated by us based upon a percentage of the value of our eligible accounts receivable less certain reserves.

The Credit Facility permits extensions of credit up to the lesser of $50.0 million and a borrowing base that is determined by calculating the amount equal to the sum of (i) 85% of the Eligible Accounts, less the amount, if any, of the Dilution Reserve, minus (ii) the aggregate amount of Reserves, if any, established by the Administrative Agent from time to time pursuant to the Credit Facility. The borrowing base is calculated on a monthly basis pursuant to a borrowing base certificate delivered by the Borrower to the Administrative Agent. The Company has approximately $20 million of borrowing capacity under the Credit Facility.

Borrowings under the Credit Facility bear interest, at the Company’s election, at either the (a) one-, two-, three- or six-month London Interbank Offered Rate (“LIBOR”) or (b) the greatest of (i) the federal funds rate plus ½%, (ii) the one-month LIBOR plus 1% and (iii) the Administrative Agent’s prime rate (the “Base Rate”), in each case plus an applicable margin, and interest shall be payable monthly in arrears. The applicable margin for LIBOR loans ranges from 1.50% to 2.00% and the applicable margin for Base Rate loans ranges from 0.50% to 1.00%, in each case, depending on the Company’s average excess availability under the Credit Facility. The applicable margin for LIBOR loans are 1.50% and the applicable margin for Base Rate loans are 0.50% until August 31, 2018. During the continuance of a bankruptcy event of default, automatically and during the continuance of any other default, upon the Administrative Agent’s or the required lenders’ election, all outstanding amounts under the Credit Facility bears interest at 2.00% plus the otherwise applicable interest rate. The Credit Facility is scheduled to mature on the fifth anniversary of the consummation of the Offering.

In addition, the Credit Facility restricts the Company’s ability to make distributions on, or redeem or repurchase, our equity interests, except for certain distributions, including distributions of cash so long as, both at the time of the distribution and after giving effect to the distribution, no default exists under the Credit Facility and either (a) excess availability at all times during the preceding 90 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 22.5% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $10.0 million or (b) if our fixed charge coverage ratio is at least 1.0x on a pro forma basis, excess availability at all times during the preceding 90 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 17.5% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $7.0 million. If the foregoing threshold under clause (b) is met, the Company may not make such distributions (but may make certain other distributions, including under clause (a) above) prior to the earlier of the date that is (a) 12 months from closing or (b) the date that the Company’s fixed charge coverage ratio is at least 1.0x for two consecutive quarters. The Credit Facility generally permits the Company to make distributions required under the Tax Receivable Agreement, but a ‘‘Change of Control’’ under the Tax Receivable Agreement constitutes an event of default under the Credit Facility, and the Credit Facility does not permit the Company to make payments under the Tax Receivable Agreement upon acceleration of our obligations thereunder unless no event of default exists or would result therefrom and we have been in compliance with the fixed charge coverage ratio for the most recent 12-month period on a pro forma basis. The Credit Facility also requires the Company to maintain a fixed charge coverage ratio of at least 1.0x if the Company’s liquidity is less than $10.0 million until the Company’s liquidity is at least $10.0 million for thirty consecutive days. The Company is not be subject to a fixed charge coverage ratio if we have no drawings under the Credit Facility and have at least $20.0 million of qualified cash.

The Credit Facility contains events of default customary for facilities of this nature, including, but not limited, to:

• events of default resulting from our failure or the failure of any guarantors to comply with covenants and financial ratios;

• the occurrence of a change of control;

• the institution of insolvency or similar proceedings against the Company or any guarantor; and

• the occurrence of a default under any other material indebtedness the Company or any guarantor may have.

Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the Credit Facility, the lenders are able to declare any outstanding principal of the Credit Facility debt, together with accrued and unpaid interest, to be immediately due and payable and exercise other remedies.

In addition the Company had related party debt totaling $17.1 million as of June 30, 2017, see Note 13 – Related Party Transactions.