Long-Term Debt

6 Months Ended

Jun. 30, 2019

Successor

In connection with the Closing of the Ranpak Business Combination, Ranger Pledgor LLC ("Holdings"), Ranger Packaging LLC (the "US Borrower") and Ranpak B.V (the "Dutch Borrower" and together with the US Borrower, the "Borrowers"), entered into a First Lien Credit Agreement that provided for senior secured credit facilities to, in part, (i) fund the business combination, (ii) repay and terminate the existing indebtedness of Rack Holdings, and (iii) pay all fees, premiums, expenses and other transaction costs incurred in connection with the foregoing. The aggregate principal amount of the senior secured credit facilities consists of a $378.2 million dollar-denominated first lien term facility (the “First Lien Dollar Term Facility”), a €140.0 million ($159.2 million equivalent) euro-denominated first lien term facility (the “First Lien Euro Term Facility” and, together with the First Lien Dollar Term Facility, the “First Lien Term Facility”) and a $45.0 million revolving facility (the “Revolving Facility” and together with the First Lien Term Facility, the “Facilities”). The First Lien Term Facility matures seven years after the closing date and the Revolving Facility matures five years after the Closing Date. As of June 30, 2019, no amounts are outstanding under the Revolving Facility.

At June 30, 2019 long-term debt consisted of the following:



First Lien Dollar Term Facility	$	378.2
First Lien Euro Term Facility (140 million Euro)	159.2
Revolving Facility	—
Total Debt	$	537.4
Less deferred financing costs, net	(10.7		)
Less current portion	—
Long-term debt	526.7

Borrowings under the Facilities, at the Borrowers' option, bear interest at either (1) an adjusted eurocurrency rate or (2) a base rate, in each case plus an applicable margin. The applicable margin is 4.00% with respect to eurocurrency borrowings and 3.00% with respect to base rate borrowings (in each case, assuming a first lien net leverage ratio of greater than or equal to 5.00:1.00), subject to a leverage-based stepdown.

In connection with the debt financing, the Company, entered into a business combination contingent interest rate swap in a notional amount of $200.0 million to hedge part of the floating interest rate exposure under the Facilities. The fixed rate payable under the swap was 2.5634%. The interest rate swap became effective and was novated to the Company on the closing date in the amount of $4.7 million and will mature on June 3, 2022.

The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility.

The Facilities will provide the Borrowers with the option to increase commitments under the Facilities in an aggregate amount not to exceed the greater of $95.0 million and 100% of trailing-twelve months Consolidated EBITDA (as defined in the definitive documentation with respect to the Facilities), plus any voluntary prepayments of the debt financing (and, in the case of the Revolving Facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the Revolving Facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.

The obligations of (i) the US Borrower under the Facilities and certain of its obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned US organized restricted subsidiary of Holdings (together with Holdings, the “US Guarantors”) and (ii) the Dutch Borrower under the Facilities are unconditionally guaranteed by the US Borrower, the US Guarantors and each existing and subsequently acquired or organized direct or indirect wholly-owned Dutch organized restricted subsidiary of Holdings (the “Dutch Guarantors”, and together with the US Guarantors, the “Guarantors”), in each case, other than certain excluded subsidiaries. The Facilities are secured by (i) a first priority pledge of the equity interests of the Borrowers and of each direct, wholly-owned restricted subsidiary of any Borrower or any Guarantor and (ii) a first priority security interest in substantially all of the assets of the Borrowers and the Guarantors (in each case, subject to customary exceptions), provided that obligations of the US Borrower and US Guarantors under the Facilities were not secured by assets of the Dutch Borrower or any Dutch Guarantor.

The Facilities imposed restrictions that require the Company to comply with or maintain certain financial tests and ratios. Such agreements restrict our ability to, among other things: (i) declare dividends or redeem or repurchase capital stock, including with respect to Class A common stock (ii) prepay, redeem or purchase other debt (iii) incur liens (iv) make loans, guarantees, acquisitions and other investments (v) incur additional indebtedness (vi) engage in sale and leaseback transactions (vii) amend or otherwise alter debt and other material agreements (viii) engage in mergers, acquisitions and asset sales (ix) engage in transactions with affiliates and (x) enter into arrangements that would prohibit us from granting liens or restrict our ability to pay dividends, make loans or transfer assets among our subsidiaries. The Company was in compliance with all of its financial covenants as of June 30, 2019.

Predecessor

At December 31, 2018, long-term debt consisted of the following:



Predecessor

First Lien Term Loan B - United States Dollar based facility with interest based on one month adjusted Eurodollar plus margin. Interest rate was 5.77% at December 31, 2018	$	253.6
First Lien Term Loan B - Euro based facility with interest based on one month adjusted EURIBOR plus margin. Interest rate was 4.25% at December 31, 2018	172.4
Second Lien US$ Tranche with interest based on one month adjusted Eurodollar plus margin. Interest rate was 9.71% at December 31, 2018	80.5
Total debt	506.5
Less deferred financing costs	(7.2		)
Less current portion (First Lien)	(4.4		)
Long-term debt	$	494.9

Deferred financing costs represent costs incurred in connection with the issuance or amendment of the Company’s debt agreements. Deferred financing costs are amortized over the terms of the related debt, using the effective interest method, and recognized as a component of interest expense in the consolidated statements of operations and comprehensive loss. At the Closing of the Ranpak Business Combination, Rack Holdings' existing debt, which amounted to approximately $495.0 million, was repaid in full. At the date of the transaction, the remaining $6.3 million of deferred finance costs were written-off.

Amortization and accumulated amortization of deferred financing costs was as follows:



	Successor		Predecessor
	June 3, 2019 through June 30, 2019		April 1, 2019 through June 2, 2019		January 1, 2019 through June 2, 2019		Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
Amortization of deferred financing costs	$	0.2	$	6.8	$	7.5	$	0.6	$	1.4



	Successor		Predecessor
	June 30, 2019		December 31, 2018
Accumulated amortization of deferred financing costs	$	0.2	$	15.5