Debt Obligations

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt Obligations

Note 12. Debt Obligations

Debt obligations consists of the following:

	As of			As of
	December 31,			December 31,
	2021			2020
Gross revolving credit facility state tax credits	$	—		$	1,533
Debt issuance costs		(8	)		(25	)
Revolving credit facility state tax credits, net	$	(8	)	$	1,508
Gross notes payable to sellers	$	-		$	41,064
Less debt discount		-			(9,205	)
Notes payable to sellers, net	$	-		$	31,859
Gross credit and guaranty facility	$	-		$	261,683
Debt issuance costs		-			(4,995	)
Credit and guaranty facility, net	$	-		$	256,688
Revolver facility	$	90,900		$	-
Debt issuance costs		(233	)		-
Revolver facility, net	$	90,667		$	-
Term Loan	$	125,000		$	-
Debt issuance costs		(3,163	)		-
Term loan, net	$	121,837		$	-
Total debt obligations	$	212,496		$	290,055

Refinancing

On December 22, 2021, the Company extinguished its current debt outstanding with HPS, as described below in the Credit and Guaranty Facility section and simultaneously entered into a new credit agreement with JP Morgan Chase Bank, N.A. ("JP Morgan") in order to gain more favorable interest terms. The Company used the proceeds from the new credit agreement with JP Morgan not only to repay the outstanding balance with HPS but also to repay the notes payable to sellers as described below in the Notes Payable to Sellers section.

Revolving Credit Facility State Tax Credits

Enhanced State Tax Credit Fund III, LLC, a subsidiary of ECG, has a $10 million revolving credit facility with a regional financial institution restricted solely for the purchase of allocable state tax credits from various state tax credit incentive programs. The facility bears interest at 0.25% above the Prime Rate and matures on June 15, 2022. As of December 31, 2021 and December 31, 2020, the credit facility had an outstanding balance of $0.0 million and $1.5 million, respectively, and is reported net of unamortized debt issuance costs on our Consolidated Balance Sheets. As of December 31, 2021 and December 31, 2020, the Company’s investment in allocable state tax credits was $0.0 million and $1.5 million.

Notes Payable to Sellers

On October 5, 2017, the Company issued Secured Promissory Notes Payable (“2017 Seller Notes”) in the amount of $81.3 million to the owners of RCP 2 in connection with the acquisition of that entity. The 2017 Seller Notes mature on January 15, 2025. The 2017 Seller Notes were recorded at their discounted fair value in the amount of $78.7 million. Non-cash interest expense was recorded on a periodic basis increasing the 2017 Seller Notes to their gross value. On December 23, 2021, the Company used the proceeds from the new credit agreement with JP Morgan to repay the outstanding balance of the 2017 Sellers Notes. As of December 31, 2021 and December 31, 2020, the gross value of the 2017 Seller Notes was $0.0 million and $6.4 million.

On January 3, 2018, the Company issued Secured Promissory Notes Payable (“2018 Seller Notes”) in the amount of $22.1 million to the owners of RCP 3 in connection with the acquisition of that entity. The 2018 Seller Notes mature on January 15, 2025. The 2018 Seller Notes were recorded at their discounted fair value in the amount of $21.2 million.

Noncash interest expense was recorded on a periodic basis increasing the 2018 Seller Notes to their gross value. On December 23, 2021, the Company used the proceeds from the new credit agreement with JP Morgan to repay the outstanding balance of the 2018 Sellers Notes. As of December 31, 2021 and December 31, 2020, the gross value of the 2018 Seller Notes was $0.0 million and $3.0 million.

On January 3, 2018, the Company issued tax amortization benefits in the amount of $48.4 million (“TAB Payments”) to the owners of RCP 3 in connection with the acquisition of that entity. The TAB Payments are non-interest bearing and will be paid in equal annual installments beginning April 15, 2023. The TAB Payments mature on April 15, 2037. The TAB Payments were recorded at their discounted fair value in the amount of $28.9 million. Non-cash interest expense is recorded on a periodic basis increasing the TAB Payments to their gross value. On April 1, 2020, the holders of the TAB Payments contributed $16.8 million of their TAB Payments to P10 Intermediate in exchange for receiving 3.3 million shares of Series C preferred stock. The discounted fair value of the TAB Payments received was $10.0 million on the date of the Five Points acquisition, April 1, 2020. See Note 18 for additional information. On December 23, 2021, the Company used the proceeds from the new credit agreement with JP Morgan to repay the outstanding balance of the TAB Payments. As of December 31, 2021 and December 31, 2020, the gross value of the 2018 TAB Payments was $0.0 million and $31.7 million.

During the years ended December 31, 2021, 2020 and 2019, we recorded combined interest expense on the 2018 Seller Notes and 2017 Seller Notes in the amount of $0.0 million, $0.0 million and $0.6 million, respectively.

During the year ended December 31, 2021, we recorded $9.2 million in interest expense related to the TAB Payments of which $8.4 million related to the debt extinguishment. For the years ended December 31, 2020 and December 31, 2019, P10 recorded $1.0 million and $1.3 million, respectively, in interest expense related to the TAB Payments.

The 2017 Seller Notes, the 2018 Seller Notes and the TAB Payments are collectively referred to as “Notes payable to sellers” on our Consolidated Financial Statements.

Credit and Guaranty Facility

The Company’s subsidiary, Holdco, entered into the Facility with HPS as administrative agent and collateral agent on October 7, 2017. The Facility initially provided for a $130.0 million senior secured credit facility in order to refinance the existing debt obligations of RCP Advisors and provide for the financing to repay the Seller Notes due resulting from the acquisition of RCP Advisors. The Facility provided for a $125 million five-year term, subject to certain EBITDA levels and conditions, and a $5 million one-year line of credit. The line of credit was repaid and subsequently expired during 2018. Holdco was permitted to draw up to $125 million in aggregate on the term loan in tranches through July 31, 2019.

On October 2, 2020 and December 14, 2020, in connection with the acquisitions of TrueBridge and Enhanced, the term loan under the Facility was amended adding an additional $91.4 million and $68.0 million to the Facility, respectively.

On September 30, 2021, in connection with the acquisition of Bonaccord, the term loan under the Facility was amended adding an additional $35.0 million to the Facility.

On October 28, 2021, a payment of $88.6 million was made, which included an optional repayment of $86.8 million, required prepayment penalty of $1.2 million, and an accrued interest payment of $0.6 million.

On December 22, 2021, the remaining principal balance of $200 million was repaid using the proceeds of the new credit facility with JP Morgan. In accordance with the Facility, the Company also paid the remaining accrued interest balance of $2.1 million and an early extinguishment fee of $3.7 million.

Revolving Credit Facility and Term Loan

On December 22, 2021, the Company entered into a new credit agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A., in its capacity as administrative agent and collateral agent, JP Morgan Chase Bank, N.A. and Texas

Capital Bank, as joint lead arrangers and joint bookrunners, and the other loan parties party thereto, with the intention of using the proceeds to repay the Company's remaining debt obligations related to the HPS Facility and the Notes Payable to Sellers. The Credit Agreement consists of two facilities. The first is a revolving credit facility with an available balance of $125 million (the "Revolver Facility"). The second is a term loan for $125 million (the "Term Loan").

Both facilities are "Term SOFR Loans" meaning loans bearing interest based upon the "Adjusted Term SOFR Rate". The Adjusted Term SOFR Rate is SOFR rate at the date of election, plus 0.10%. The Company can elect one or three months for the Revolver Facility. The Company elected a six month SOFR rate at the time of draw for the term loan and a one month SOFR rate for the Revolver Facility at the time of draw. Principal is contractually repaid at a rate of 1.25% on the term loan quarterly effective March 31, 2023. The Revolving Credit Facility has no contractual principal repayments until maturity, which is December 22, 2025 for both facilities.

The Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum leverage ratio. As of December 31, 2021, P10 was in compliance of its financial covenants required under the facility. As of December 31, 2021, the balance drawn on the revolving credit facility is $90.9 million and on the term loan, the balance is $125.0 million. There was no balance as of December 31, 2020.

Debt Payable

Future principal maturities of debt as of December 31, 2021 are as follows:

2022	$	-
2023		6,250
2024		6,250
2025		203,400
	$	215,900

Debt Issuance Costs

Debt issuance costs are offset against the Revolving Credit Facility State Tax Credits, the Credit and Guaranty Facility, and the Revolver Facility and Term Loan. Unamortized debt issuance costs for the Credit and Guaranty Facility as of December 31, 2021 and December 31, 2020 were $0 and $5.0 million, respectively. Unamortized debt issuance costs for the Revolving Credit Facility State Tax Credits as of December 31, 2021 and December 31, 2020 were $8 thousand and $25 thousand, respectively. Unamortized debt issuance costs for the Revolver Facility and Term Loan as of December 31, 2021 and December 31, 2020 were $3.4 million and $0, respectively.

Amortization expense related to debt issuance costs totaled $6.0 million for the year ended December 31, 2021, $1.1 million for the year ended December 31, 2020 and $0.7 million for the year-ended December 31, 2019. Of the $6.0 million of amortization expense recognized in 2021, $2.1 million relates to the extinguishment of the Credit and Guaranty Facility and is included in loss on extinguishment on the Consolidated Statements of Operations. The remaining $3.9 million of amortization expense incurred during the year is reported in interest expense, net on the Consolidated Statements of Operations. During the years ended December 31, 2021 and December 31, 2020, we recorded $4.4 million and $4.1 in debt issuance costs, respectively, which is included in debt obligations on the Consolidated Balance Sheets. Of the $4.4 million recorded in 2021, $3.4 million relates to the Revolver Facility and Term Loan established on December 22, 2021.