Debt Obligations

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt Obligations

Note 12. Debt Obligations

Debt obligations consists of the following:

	As of			As of
	March 31,			December 31,
	2022			2021
Gross revolving credit facility state tax credits	$	—		$	-
Debt issuance costs		(4	)		(8	)
Revolving credit facility state tax credits, net	$	(4	)	$	(8	)
Revolver facility	$	65,900		$	90,900
Debt issuance costs		(2,802	)		(3,163	)
Revolver facility, net	$	63,098		$	87,737
Term Loan	$	125,000		$	125,000
Debt issuance costs		(404	)		(233	)
Term loan, net	$	124,596		$	124,767
Total debt obligations	$	187,690		$	212,496

Refinancing

On December 22, 2021, the Company extinguished its 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 the funds from which can be used 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 March 31, 2022 and December 31, 2021, the credit facility had an outstanding balance of $0.0 million and $0.0 million, respectively, and is reported net of unamortized debt issuance costs on our Consolidated Balance Sheets. As of March 31, 2022 and December 31, 2021, the Company’s investment in allocable state tax credits was $0 and $0. For the three months ended March 31, 2022 and 2021 $0 and $0 interest expense was incurred, respectively.

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 were set to mature on January 15, 2025. 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.

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 were set to mature on January 15, 2025. 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.

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 were set to mature on April 15, 2037. 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.

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.

Noncash interest expense was recorded on a periodic basis for the Notes Payable to Sellers. During the three months ended March 31, 2022 and March 31, 2021, we recorded combined interest expense on the 2018 Seller Notes and 2017 Seller Notes in the amount of $0, $0.2 million, respectively. During the three months ended March 31, 2022, we recorded $0 in interest expense related to the TAB Payments. For the three months ended March 31, 2021, we recorded $0.2 million on the TAB Payments.

Credit and Guaranty Facility

The Company’s subsidiary, Holdco, entered into the Credit and Guaranty Facility (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, in its capacity as administrative agent and collateral agent, and Texas Capital Bank, as joint lead arrangers and joint bookrunners, and the other loan parties party thereto. 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"). In addition to the Term Loan and Revolver Facility, the Credit Agreement also includes a $125 million accordion feature.

Both facilities are "Term SOFR Loans" meaning loans bearing interest based upon the "Adjusted Term SOFR Rate". The Adjusted Term SOFR Rate is the Secured Overnight Financing Rate ("SOFR") at the date of election, plus 0.10%. The

Company can elect one or three months for the Revolver Facility and three or six months for the Term Loan. 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 March 31, 2022, P10 was in compliance with its financial covenants required under the facility. In February 2022, the Company repaid $25 million of the principal balance outstanding on the revolving credit facility. As of March 31, 2022, the balance drawn on the revolving credit facility is $65.9 million and on the term loan, the balance is $125.0 million. The balance as of December 31, 2021 was $90.9 million on the revolving credit facility and $125 million on the term loan. For the three months ended March 31, 2022 and March 31, 2021, $0.9 million and $0 of interest expense was incurred, respectively.

Debt Payable

Future principal maturities of debt as of March 31, 2022 are as follows:

2022	$	-
2023		6,250
2024		6,250
2025		178,400
	$	190,900

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 March 31, 2022 and December 31, 2021 were $0 and $0, respectively. Unamortized debt issuance costs for the Revolving Credit Facility State Tax Credits as of March 31, 2022 and December 31, 2021 were $4 thousand and $8 thousand, respectively. Unamortized debt issuance costs for the Revolver Facility and Term Loan as of March 31, 2022 and December 31, 2021 were $3.2 million and $3.4 million, respectively.

Amortization expense related to debt issuance costs totaled $0.2 million for the three months ended March 31, 2022 and $0.7 million for the three months ended March 31, 2021. This is reported in interest expense, net on the Consolidated Statements of Operations. During the three months ended March 31, 2022 and March 31, 2021, we recorded $8 thousand and $0.1 million in debt issuance costs, respectively, which is included in debt obligations on the Consolidated Balance Sheets.