(9)Long-Term Debt and Credit Facilities

On December 22, 2016, EVO Payments International, LLC (“EPI”), a subsidiary of EVO, Inc., entered into a credit agreement (“Senior Secured Credit Facilities”). The Senior Secured Credit Facilities consisted of a first lien senior secured credit facility totaling $670.0 million (comprised of a $100.0 million revolver and a $570.0 million term loan) and second lien senior secured credit facility comprised of a $175.0 million term loan. On October 24, 2017 the Company entered into an incremental amendment agreement to upsize the existing first lien revolver from $100.0 million to $135.0 million. On April 3, 2018, the Company entered into a second incremental amendment agreement to the first lien credit facility, which increased the existing term loan credit facility by $95.0 million to $665 million. As a result of this second incremental amendment, $0.9 million in existing deferred financing was expensed as debt extinguishment loss related to the significant modification of a certain lender’s commitment within the syndicate and is classified as other expense in the consolidated statements of operations. On May 25, 2018, the Company paid in full the second lien term loan in the amount of $178.2 million including $1.5 million of accrued interest and $1.8 million of prepayment penalty. On June 14, 2018 the Company entered into a restatement agreement (the “Restatement Agreement”) whereby the syndicate lenders agreed to replace their existing term loans with replacement term loans. In addition, the Restatement Agreement increased the first lien revolver by $65.0 million to $200.0 million and extended the maturity date of the first lien revolver to June 14, 2023. As a result of the Restatement Agreement, $1.2 million in existing deferred financing costs were expensed as debt extinguishment loss related to the significant modification of a certain lender’s commitment within the syndicate and is classified as other expense in the consolidated statements of operations. This amount was recorded in the other expense on the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

The Senior Secured Credit Facilities provide the Company with the capacity to support both domestic and international growth, as well as fund general operating needs. The loans under the Senior Secured Credit Facilities bear interest, at the Company’s election, at the prime rate or London Interbank Offered Rate (LIBOR), plus leverage based margin. Under the Restatement Agreement, the lenders agreed to reduce the applicable leverage based margins. As of June 30, 2018, the loans under the Senior Secured Credit Facilities had an interest rate of 6.75% for revolving credit facility loans, 5.36% for first lien term loans. The Senior Secured Credit Facilities provides for quarterly principal payments of the first lien secured credit facility of $1.6 million commencing on June 30, 2018 through September 30, 2023. The revolving credit facility and first lien term loan mature on June 14, 2023 and December 22, 2023, respectively.

All amounts outstanding under the Senior Secured Credit Facilities are secured by a pledge of certain assets of EPI, as well as secured guarantees provided by certain of EPI’s controlled subsidiaries. The Senior Secured Credit Facilities also contain a number of significant negative covenants. These covenants, among other things, restrict, subject to certain exceptions, EPI’s and its controlled subsidiaries, ability to: incur indebtedness; create liens; engage in mergers or consolidations; make investments, loans and advances; pay dividends or other distributions and repurchase capital stock; sell assets; engage in certain transactions with affiliates; enter into sale and leaseback transactions; make certain accounting changes; and make prepayments on junior indebtedness. The first lien senior secured credit facility also contains a springing financial covenant that requires EPI to remain under a maximum consolidated leverage ratio determined on a quarterly basis.

In addition, the Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due thereunder and exercise of the remedies on the collateral. As of June 30, 2018 and 2017, the Company was in compliance with all its financial covenants.

In conjunction with the acquisition of Sterling, a subsidiary of the Company agreed to a deferred purchase price of $70.0 million which accrues interest at a rate of 5% per annum and is payable in quarterly installments of $5.0 million, plus accrued and unpaid interest, beginning September 30, 2017. In May 2018, the Company paid in full the outstanding balance of $57.4 million of the Sterling deferred purchase price, utilizing proceeds from the IPO and funds drawn from the revolving credit facility of $4.8 million.

On December 1, 2017, a subsidiary of the Company entered into a revolving line credit of facility with Deutsche Bank A.G., as the lender, and EVO, LLC, as the guarantor. The facility provides the Company with access to settlement related funding. Under the facility, the Company can withdraw up to the lesser of $35.0 million or 90% of the aggregate dollar amount of eligible settlement receivables due. The loans drawn under the facility bear interest at the prime rate plus 1.5%. At June 30, 2018, this interest rate was 6.50%. The loans drawn under the facility do not have a maturity date. As of June 30, 2018 and December 31, 2017, the loan amounts drawn under the facility were $19.4 million and $12.6 million, respectively.

On December 19, 2017, a subsidiary of the Company entered into a revolving line of credit facility with Wells Fargo Bank N.A., as the lender, and EVO, LLC, as the guarantor. The facility provides the Company with access to settlement related funding. Under the facility, the Company can withdraw up to $10.0 million. The loans drawn under the facility bear interest at the prime rate plus 1.0%. At June 30, 2018, this interest rate was 6.00%. The loans drawn under the facility mature on December 19, 2018. As of June 30, 2018 and December 31, 2017, the loan amounts drawn under the facility were $9.4 million and $9.9 million, respectively. On May 29, 2018, the Company entered into an incremental amendment agreement to the revolving line credit facility, pursuant to which the maximum amount that can be withdrawn was increased to $15.0 million.

The Company maintains intraday and overnight facilities to fund its settlement obligations. These facilities are short-term in nature.

Long-term debt consists of the following:


	June 30,		December 31,
	2018		2017
	(In thousands)
First lien term loan	$	657,946	$	566,075
Second lien term loan		—		175,206
First lien revolver		30,565		44,632
Deferred purchase price		—		68,720
Letter of credit		—		1,000
Settlement facilities		38,154		28,563
Less debt issuance costs		(13,938)		(19,679)
Total long-term debt		712,727		864,517
Less current portion of long-term debt		(45,056)		(103,571)
Total long-term debt, net of current portion	$	667,671	$	760,946

Principal payment requirements on the above obligations in each of the years remaining subsequent to June 30, 2018 are as follows:


	Amounts
	(In thousands)
Years ending December 31:
2018 (remainder of the year)	$	41,759
2019		6,593
2020		6,593
2021		6,593
2022		6,593
2023 and thereafter		658,534
	$	726,665