CREDIT FACILITY

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

CREDIT FACILITY

CREDIT FACILITY

On September 4, 2019, we entered into the First Lien Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for senior secured credit facilities consisting of (i) a $225.0 million closing date term loan (the “Term Facility”) and loans thereunder (the “Term Loans”) and (ii) a $40.0 million revolving credit facility (the “Revolving Facility”) (collectively, the “Credit Facility”). The Term Facility has a seven-year term which expires on September 4, 2026 and the Revolving Facility has a five-year term which expires on September 4, 2024. We paid debt issuance costs of approximately $6.1 million on the closing date of the Credit Facility, $5.2 million is being amortized over the life of the Term Facility (84 months) and $0.9 million is being amortized over the term of the Revolving Facility (60 months) on a straight-line method. The Revolving Facility includes a letter of credit sub-facility (subject to a sublimit not to exceed $10.0 million) and a swing line loan sub-facility (subject to a sublimit not to exceed $10.0 million).

On April 8, 2020, we amended the Credit Agreement to establish an incremental loan facility in an aggregate principal amount equal to $25.0 million for an incremental term loan request (the “2020 Incremental Term Loan”) bearing interest at the Eurodollar Rate (as defined in the Credit Agreement) expiring September 4, 2026. We capitalized debt issuance costs of approximately $1.1 million on the closing date of the 2020 Incremental Term Loan, which was being amortized over the life of the 2020 Incremental Term Loan (77 months) on a straight-line basis.

On February 12, 2021, we further amended the Credit Agreement to establish an incremental term loan in an aggregate principal amount equal to $78.0 million (the “2021 Incremental Term Loan”) bearing interest at the Eurodollar Rate (as defined in the Credit Agreement) expiring September 4, 2026. We capitalized debt issuance costs of approximately $2.4 million on the closing date of the 2021 Incremental Term Loan, which was being amortized over the life of the 2021 Incremental Term Loan (67 months) on a straight-line basis.

The Credit Agreement includes an uncommitted incremental facility, which provides that we have the right at any time to request term loan increases, additional term loan facilities, revolving commitment increases and/or additional revolving credit facilities, in an aggregate principal amount, together with the aggregate principal amount of permitted incremental equivalent debt under the Credit Agreement, not to exceed (a) the sum of the greater of (i) $46.9 million and (ii) 100.0% of Consolidated EBITDA (as defined in the Credit Agreement) of CHS and its restricted subsidiaries for the most recently ended period of four consecutive fiscal quarters of CHS (calculated on a pro forma basis), plus (b) certain additional amounts, including an unlimited amount subject to pro forma compliance with a leverage ratio test.

Interest Rate and Fees

Borrowings under the Credit Agreement (other than borrowings of swing line loans) bear interest at a rate per annum equal to, at our election, either (i) the LIBOR for the relevant interest period (subject to a floor of 1.00% per annum) plus an applicable margin, as defined in the Credit Agreement, or (ii) a base rate plus an applicable margin, as defined in the Credit Agreement. We elected to use the LIBOR rate for the Term Loans and the Revolving Facility. The Credit Agreement provides for the replacement of LIBOR with a successor or alternative index rate in the event LIBOR is phased-out.

In addition to paying interest on the outstanding principal of the Credit Facility, we are required to pay a commitment fee in respect of any unused commitments under the Revolving Facility at a rate that is subject to adjustment based upon the First

Lien Net Leverage Ratio, as defined in the Credit Agreement (maximum debt to Earnings Before Interest, Income Tax, Depreciation and Amortization (“EBITDA”), as defined in the Credit Agreement) at such time and ranges from 0.375% to 0.500% per annum. We are also required to pay customary letter of credit fees and certain other agency fees.

On July 12, 2021, CHS entered into Amendment No. 4 to the Credit Agreement (“Amendment No. 4”). Amendment No. 4 amends the Credit Agreement to provide for, among other things, (i) the reduction of the Applicable Rate (as defined in the Credit Agreement) for Eurodollar Rate Loans (as defined in the Credit Agreement) from 5.25% to 4.75% and, for Base Rate Loans (as defined in the Credit Agreement), from 4.25% to 3.75%, and (ii) the reduction of the floor for the Eurodollar Rate (as defined in the Credit Agreement) from 1.00% to 0.75% for the Closing Date Term Loans (as defined in the Credit Agreement). Amendment No. 4 was accounted for as a debt modification.

See Note 19. Subsequent Events, for additional information

Covenants

The Credit Agreement includes negative covenants that, subject to certain exceptions and limitations, restrict the ability of CHS and its restricted subsidiaries to, among other things: incur liens; incur debt; make investments or loans; engage in mergers, acquisitions and asset sales; declare dividends or other distributions, redeem or repurchase equity interests or make other restricted payments; alter the businesses CHS and its restricted subsidiaries conduct; enter into agreements restricting distributions by CHS’s restricted subsidiaries; modify certain terms of certain junior indebtedness; and engage in certain transactions with affiliates.

In addition, the Credit Facility contains a financial covenant that requires us to maintain as of the last day of each period of four consecutive quarters of the Company, a First Lien Net Leverage Ratio not to exceed 7.4 to 1.0 if, as of the last day of any fiscal quarter of the Company, there are outstanding revolving loans and letters of credit (excluding (i) undrawn letters of credit in an aggregate face amount up to $10.0 million and (ii) letters of credit (whether drawn or undrawn) to the extent reimbursed, cash collateralized or backstopped on terms reasonably acceptable to the applicable issuing bank on or prior to the date that is three business days following the end of the applicable period of four consecutive fiscal quarters of CHS in an aggregate principal amount exceeding 35% of the aggregate principal amount of the Revolving Facility at such time. The financial covenant is subject to equity cure rights and may be amended or waived with the consent of the lenders holding a majority of the commitments under the Revolving Facility.

We were in compliance with our debt covenants at December 31, 2021.

Prepayments and Mandatory Prepayment

Under the terms of the Credit Agreement, we are permitted to voluntarily prepay outstanding loans or commitments in whole or part without premium or penalty other than certain exceptions described in the Credit Agreement; however, the Credit Agreement requires us to prepay outstanding term loans, subject to certain exceptions and limitations with (i) 50% of our annual excess cash flow, subject to certain step-downs based upon the First Lien Net Leverage Ratio; (ii) 100% of the net cash proceeds of certain asset sales or casualty events; and (iii) 100% of the net cash proceeds of certain incurrences or issuances of indebtedness.

Scheduled Repayments

We are required to make scheduled quarterly payments on the Term Loans. Prior to the 2021 Incremental Term Loan, we were required to make quarterly payments (i) commencing with the quarter ended December 31, 2019, in an amount equal to 0.25% of the aggregate principal amount of the Term Loans outstanding on September 4, 2019 with the balance due upon maturity date and (ii) in respect of the 2020 Incremental Term Loans, beginning with the quarter ended June 30, 2020, in an amount equal to 0.25% of the aggregate principal amount of the 2020 Incremental Term Loan outstanding on April 8, 2020, with the balance due on maturity.

Subsequent to the 2021 Incremental Term Loan, we are required to make quarterly payments (i) commencing with the quarter ended March 31, 2021, in an aggregate principal amount equal to $0.8 million for the Term Facility and the 2021 Incremental Term Loan, with the balance due upon maturity date and (ii) in respect of the 2020 Incremental Term Loans, in an amount equal to 0.25% of the aggregate principal amount of the 2020 Incremental Term Loan outstanding on April 8, 2020, with the balance due on maturity. We are required to repay the aggregate principal amount outstanding under the Revolving Facility, and the aggregate principal amount of each swing line loan under the Revolving Facility, at maturity of the Revolving

Facility on September 4, 2024. In connection with the prepayment noted under the “Extinguishment of Debt” below, no additional scheduled installments of principal are required.

Guarantees and Collateral

All obligations under the Credit Agreement are unconditionally guaranteed by Parent and certain subsidiaries. All obligations under the Credit Agreement are secured, subject to permitted liens and other exceptions and limitations, by first priority security interests in substantially all the assets of the Company and each guarantor (including all the equity interests of CHS).

Extinguishment of Debt

On June 18, 2021, $131.5 million from the IPO proceeds (see Note 1. Business and Basis of Presentation) were used to repay the principal balance, accrued but unpaid interest, and prepayment premium under the Credit Agreement. The 2020 Incremental Term Loan and the 2021 Incremental Term Loan were repaid in full and the remainder of the proceeds were used to repay a portion of the Term Facility. The prepayment for the Term Facility was applied to the remaining scheduled installments of principal and as a result of the prepayment, no additional scheduled installments of principal are required. The Company recorded a loss on extinguishment of debt of $5.0 million. The loss consisted of $3.4 million for unamortized deferred financing costs and $1.6 million for prepayment premiums.

Other Information

As of December 31, 2021, and December 31, 2020, unamortized deferred financing costs for the Term Loans totaled $3.0 million and $5.2 million, respectively. Amortization of deferred financing costs for the years ended December 31, 2021, and 2020, totaled $0.9 million for each period. From Inception to December 31, 2019 (Successor) and from January 1 to September 4, 2019 (Predecessor) amortization of deferred financing costs totaled $0.2 million and $0.3 million, respectively.

As of December 31, 2021 and December 31, 2020, unamortized deferred financing costs associated with the Revolving Facility totaled $0.5 million and $0.7 million, respectively, and were included in Other assets in the consolidated balance sheets. Amortization of deferred financing costs was approximately $0.2 million for each of the years ended December 31, 2021, and 2020. From Inception to December 31, 2019 (Successor) and from January 1 to September 4, 2019 (Predecessor) amortization of deferred financing costs totaled $0.1 million for each period.

Amortization of deferred financing costs is included within Interest expense in the consolidated statement of operations and comprehensive income (loss).

For the years ended December 31, 2021, and 2020, the average interest rate for the Term Facility was 6.1% and 6.5%, respectively. As of December 31, 2021, and December 31, 2020, the aggregate principal balance was $192.6 million and $222.2 million, respectively.

For the year ended December 31, 2021, the average interest rate for the 2020 Incremental Term Loan was 10.0%. As of December 31, 2020, the aggregated principal balance was $24.8 million.

For the year ended December 31, 2021, the average interest rate for the 2021 Incremental Term Loan was 7.0%.

For the years ended December 31, 2021, and 2020, the average interest rate for the Revolving Facility was 2.75% for each period. As of December 31, 2021, and December 31, 2020, the available balance was $39.4 million and $39.5 million, respectively. On January 23, 2020, we established an irrevocable transferable letter of credit (“LOC”) in the favor of a lessor totaling $0.5 million. The LOC expired on January 31, 2021, however, per the terms of the agreement, the LOC automatically extends for a one year period upon the expiration date and each anniversary thereafter, unless at least 60 days prior to such expiration date or anniversary written notice is provided that we elect not to extend the LOC. The LOC was automatically extended for a one year period on January 31, 2021.

Debt consists of the following as of December 31, 2021, and December 31, 2020:

(in thousands)	December 31, 2021		December 31, 2020
Term loans	$	192,631	$	246,999
Less: deferred financing costs	(2,988)		(5,209)
Term loans, net of deferred financing costs	189,643		241,790
Less: current portion	—		(2,500)
	$	189,643	$	239,290

Debt Maturities Schedule

The required principal payments for Term Loans for each of the five years and thereafter following the

balance sheet date are as follows:

(in thousands)
2022	$	—
2023	—
2024	—
2025	—
2026	192,631
Total	$	192,631