DEBT

12 Months Ended

Dec. 31, 2019

Long-term debt, net consists of the following:


	Year Ended December 31,
	2019		2018
Revolving Credit Facility	$	20,000	$	—
Less: unamortized debt issuance costs	(1,474)		—
Long-term debt, net	$	18,526	$	—

On October 1, 2019, Pennant entered into a Credit Agreement, which provides for a revolving credit facility with a syndicate of banks with a borrowing capacity of $75.0 million (the “Revolving Credit Facility”). The interest rates applicable to loans under the Revolving Credit Facility are, at the Company’s election, either (i) Adjusted LIBOR (as defined in the Credit Agreement) plus a margin ranging from 2.5% to 3.5% per annum or (ii) Base Rate plus a margin ranging from 1.5% to 2.5% per annum, in each case based on the ratio of Consolidated Total Net Debt to Consolidated EBITDA (each, as defined in the Credit Agreement). In addition, Pennant will pay a commitment fee on the undrawn portion of the commitments under the Revolving Credit Facility that is estimated to be 0.6% per annum. The Company is not required to repay any loans under the Credit Agreement prior to maturity in 2024, other than to the extent the outstanding borrowings exceed the aggregate commitments under the Credit Agreement. As of December 31, 2019, the Company’s weighted average interest rate on its outstanding debt was 4.7%. As of December 31, 2019, we had availability on our Revolving Credit Facility of $51,987, which is net of outstanding letters of credit of $3,013.

The fair value of the Company’s Revolver approximates carrying value, due to the short-term nature and variable interest rates. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates.

The Credit Agreement is guaranteed, jointly and severally, by certain of the Company’s wholly owned subsidiaries, and is secured by a pledge of stock of the Company's material independent operating subsidiaries as well as a first lien on substantially all of each material operating subsidiary's personal property. The Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Under the Credit Agreement, the Company must comply with financial maintenance covenants to be tested quarterly, consisting of a maximum Consolidated Total Net Debt to Consolidated EBITDA ratio (which cannot be above 2.50:1.00) (the “Leverage Ratio”), and a minimum interest/rent coverage ratio (which cannot be below 1.50:1.00). However, if the aggregate consideration paid in connection with permitted acquisitions consummated during any six consecutive month period exceeds $20,000, then at the Company’s election, the maximum allowable Leverage Ratio increases to 3.00:1.00 for the current fiscal quarter and the immediately following three fiscal quarters. The majority of lenders can require that the Company and its independent operating subsidiaries mortgage certain of its real property assets to secure the Credit Agreement if an event of default occurs, the

Company’s Leverage Ratio is equal to or greater than a ratio that is 0.25:1.00 less than the then-applicable maximum Leverage Ratio for two consecutive fiscal quarters, or its Liquidity (as defined in the Credit Agreement) is equal to or less than 10% of the Aggregate Revolving Commitment Amount (as defined in the Credit Agreement) for ten consecutive business days; provided that such mortgages will no longer be required if certain conditions are met. As of December 31, 2019, the outstanding balance under the Credit Agreement was $20,000, which is classified as long-term indebtedness, and the Company was in compliance with all loan covenants.