Debt

6 Months Ended

Jun. 30, 2020

Note 7 — Debt

The aggregate carrying amounts, net of issuance costs, of the Company’s debt consists of the following (in millions):


	June 30, 2020		December 31, 2019
ESCO Notes Payable	$	—	$	5.8
Credit Facility	4.6		9.5
Encina Master Financing Agreement	22.2		27.1
Total Debt	26.8		42.4
Current portion of long-term debt	(10.0)		(15.8)
Long term-debt, net	$	16.8	$	26.6

ESCO Notes Payable

In connection with the IPO and the ESCO Leasing, LLC (“ESCO”) acquisition, both of which occurred on August 16, 2017, the Company issued $7.0 million of Seller’s Notes as partial consideration for the ESCO acquisition. These notes included a note for $1.2 million, which was paid in August 2018 and a note for $5.8 million, which was settled during the six months ended June 30, 2020. Both of these notes bore interest at 5.0%, payable quarterly until their respective maturity dates.

During the year ended December 31, 2018, the Company provided notice to ESCO that the Company sought to be indemnified for breach of contract. The Company exercised its right to stop payments of the remaining principal balance of $5.8 million on the Seller’s Notes and any unpaid interest, pending resolution of certain indemnification claims. Interest on the outstanding principal balance was accrued through the maturity date of the Note Payable. During the six months ended June 30, 2020, the Company paid $3.8 million to settle the note and any unpaid interest, in full, and recognized a gain on the retirement of debt of $2.1 million, which is included in the Condensed Consolidated Statement of Operations within General and administrative expenses. Please see Note 12 — Commitments and Contingencies for further details.

Credit Facility

On August 16, 2017, Ranger Energy Services, LLC, (“Ranger, LLC”) entered into a $50.0 million senior unsecured revolving credit facility (the “Credit Facility”) by and among certain of Ranger’s subsidiaries, as borrowers, each of the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”). The Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the value of the Company’s eligible accounts receivable less certain reserves. Such calculation is submitted, in the form of a borrowing base certificate, to the Administrative Agent within ten business days of the preceding month end. The Credit Facility includes cash dominion provisions that permits the Administrative Agent to sweep cash daily from the Company’s bank accounts into an account of the Administrative Agent to repay the Company’s obligations under the Credit Facility. Such dominion is triggered when excess availability is less than the greater of $6.25 million and 12.5% of the lesser of (x) the maximum revolver amount and (y) the borrowing base as of such date of determination. When the Company is subject to dominion, for 30 consecutive days it is required to either (a) maintain excess availability in excess of the greater of $6.25 million and 12.5% of the lesser of (x) the maximum revolver amount and (y) the borrowing base as of such date of determination and no event of default has occurred and is continuing or (b) have no revolver drawings and available cash of at least $20.0 million for dominion to revert back to the Company. During the three months ended March 31, 2020, the Company borrowed against the Credit Facility causing dominion to revert to the Administrative Agent, however after the 30 consecutive day period, as defined above, dominion reverted back to the Company in April 2020. The borrowings under the Credit Facility, and related issuance costs, were included in long-term debt, net in the Condensed Consolidated Balance Sheets as of June 30, 2020, as the Company was not subject to dominion. The Credit Facility is scheduled to mature on August 16, 2022.

The applicable margin for the LIBOR loans ranges from 1.5% to 2.0% and the applicable margin for Base Rate loans ranges from 0.5% to 1.0%, in each case, depending on Ranger LLC’s average excess availability under the Credit Facility. The applicable margin for the LIBOR loan was 1.75% and the applicable margin for Base Rate loans was 0.75% as of June 30, 2020. The weighted average interest rate for the borrowings under the Credit Facility was 3.1% for the six months ended June 30, 2020.

Under the Credit Facility, the total loan capacity was $15.8 million, which was based on a borrowing base certificate in effect as of June 30, 2020. The Company had outstanding borrowings of $5.0 million under the Credit Facility, leaving a residual $10.8 million available for borrowings as of June 30, 2020. The Company made a cash payment of $5.0 million on the Credit Facility in July 2020, such that there were no borrowings under the Credit Facility as of July 22, 2020. The Company was in compliance with the Credit Facility covenants as of June 30, 2020. The Company capitalized fees of $0.7 million associated with the Credit Facility, which are included in the Condensed Consolidated Balance Sheets as a discount to the Credit Facility. Such fees will be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of June 30, 2020 was $0.4 million.

Encina Master Financing and Security Agreement (“Financing Agreement”)

On June 22, 2018, the Company entered into a Financing Agreement with Encina Equipment Finance SPV, LLC (the “Lender”). The amount available to be provided by the Lender to the Company under the Financing Agreement was contemplated to be not less than $35.0 million, and not to exceed $40.0 million. The first financing was required to be in an amount up to $22.0 million, which was used by the Company to acquire certain capital equipment. Subsequent to the first financing, the Company borrowed an additional $17.8 million, net of expenses and in two tranches, under the Financing Agreement. The Company utilized the additional net proceeds to acquire certain capital equipment. The Financing Agreement is secured by a lien on certain high-spec rig assets. As of June 30, 2020, the aggregate principal balance outstanding under the Financing Agreement was $22.7 million. The total borrowings under the Financing Agreement were borrowed in three tranches, where the amounts outstanding are payable ratably over 48 months from the time of each borrowing. The three tranches mature in July 2022, November 2022 and January 2023.

Borrowings under the Financing Agreement bear interest at a rate per annum equal to the sum of 8.0% plus LIBOR, which was 1.5% as of June 30, 2020. Under the terms of the Financing Agreement, in no event will LIBOR fall below 1.5% and it requires the Company to maintain a leverage ratio of 2.5 to 1.0. The Company was in compliance with the covenants under the Financing Agreement as of June 30, 2020.

The Company capitalized fees of $0.9 million associated with the Financing Agreement, which are included in the Condensed Consolidated Balance Sheets as a discount to the long term debt. Such fees will be amortized through maturity and are included in Interest Expense, net in the Condensed Consolidated Statements of Operations. Unamortized debt issuance costs as of June 30, 2020 was $0.5 million.

Debt Obligations and Scheduled Maturities

As of June 30, 2020, aggregate future principal payments of total debt are as follows (in millions):


For the twelve months ending June 30,	Total
2021	$	10.0
2022	15.0
2023	2.7
Total	$	27.7