(9)Long-Term Debt and Lines of Credit

Credit Facility

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 $665.0 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 unaudited condensed consolidated statements of operations and comprehensive loss. 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 unaudited condensed consolidated statements of operations and comprehensive loss. EVO, LLC utilized the net proceeds from the Secondary Offering to pay down the Senior Secured Credit Facilities first lien revolver and to pay the installment payment on the Senior Secured Credit Facilities first lien term loan which was paid on September 27, 2018.

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 September 30, 2018, the loans under the Senior Secured Credit Facilities had an interest rate of 7.00% for revolving credit facility loans, 5.49% for first lien term loans. The Senior Secured Credit Facilities requires 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 September 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 accrued interest at a rate of 5% per annum and was payable in quarterly installments of $5.0 million, plus accrued and unpaid interest. 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.

Long-term debt consists of the following:


	September 30,		December 31,
	2018		2017
	(In thousands)
First lien term loan	$	656,404	$	566,075
Second lien term loan		—		175,206
First lien revolver		39,212		44,632
Deferred purchase price		—		68,720
Letter of credit		—		1,000
Less debt issuance costs		(13,656)		(19,679)
Total long-term debt		681,960		835,954
Less current portion of long-term debt		(7,416)		(75,008)
Total long-term debt, net of current portion	$	674,544	$	760,946

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


	Amounts
	(In thousands)
Years ending December 31:
2018 (remainder of the year)	$	2,461
2019		6,593
2020		6,593
2021		6,593
2022		6,593
2023 and thereafter		666,783
	$	695,616

Settlement Lines of Credit

The Company maintains intraday and overnight facilities to fund its settlement obligations. These facilities are short-term in nature. During the nine months and year ended September 30, 2018 and December 31, 2017, respectively, the Company entered into the following settlement lines of credit.

On December 1, 2017, a subsidiary of the Company entered into a revolving line of credit 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 September 30, 2018, this interest rate was 6.75%. The loans drawn under the facility do not have a maturity date. As of September 30, 2018 and December 31, 2017, the loan amounts drawn under the facility were $14.4 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. 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 loans drawn under the facility bear interest at the prime rate plus 1.0%. At September 30, 2018, this interest rate was 6.25%. The loans drawn under the facility mature on December 19, 2018. As of September 30, 2018 and December 31, 2017, the loan amounts drawn under the facility were $11.2 million and $9.9 million, respectively.

On September 6, 2018, a subsidiary of the Company entered into an overdraft facility with PKO Bank Polski, as the lender, and Centrum Elektronicznych Uslug Platniczych eService Sp. z o. o. (“eService”) and EPI, as the guarantors. The facility provides the Company with access to settlement related funding. Under the facility, the Company can withdraw up to CZK 100.0 million. The loans drawn under the facility bear interest at the Prague Interbank Offered Rate (“PRIBOR”) plus 1.5%. At September 30, 2018, this interest rate was 2.87%. The loans drawn under the facility have a maturity date of September 9, 2019. As of September 30, 2018, the loan amount drawn under the facility was less than $0.1 million.