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DEBT
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
DEBT DEBT
As of June 30, 2024 and December 31, 2023, our total long-term debt and finance lease obligations are summarized as follows (in thousands):
June 30, 2024December 31, 2023
(unaudited)
2022 ABL Credit Facility$114,006 $113,415 
ME/RE Loans1
23,157 24,061 
Uptiered Loan1
135,881 129,436 
Incremental Term Loan1
39,235 38,758 
Equipment Finance Loan
2,349 — 
Total 314,628 305,670 
Finance lease obligations5,479 5,756 
Total long-term debt and finance lease obligations320,107 311,426 
Current portion of long-term debt and finance lease obligations(7,087)(5,212)
Total long-term debt and finance lease obligations, less current portion$313,020 $306,214 

1    Comprised of principal amount outstanding, less unamortized discount and issuance costs. See below for additional information.
2022 ABL Credit Facility
On February 11, 2022, we entered into a credit agreement, with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent, (the “ABL Agent”) (such agreement, as amended by Amendment No.1 dated as of May 6, 2022, Amendment No.2 dated as of November 1, 2022, Amendment No.3 dated as of June 16, 2023, and Amendment No.4 dated as of March 6, 2024, the “2022 ABL Credit Agreement”).
Available funding commitments under the 2022 ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $130.0 million to be provided by certain affiliates of the ABL Agent (the “Revolving Credit Loans”), with a $35.0 million sublimit for swingline borrowings, a $26.0 million sublimit for issuances of letters of credit, and an incremental delayed draw term loan of up to $35.0 million (the “Delayed Draw Term Loan”) originally provided by Corre Partners Management, LLC (“Corre”) and certain of its affiliates (collectively, the “2022 ABL Credit Facility”).
The terms of the 2022 ABL Credit Facility are described in the table below (dollar amounts are presented in thousands):
Revolving Credit LoansDelayed Draw Term Loan
Maturity date8/11/20258/11/2025
Stated interest rate
SOFR + applicable margin (base + applicable margin 1)
SOFR + 10% (Base + 9%)
Actual interest rate:
6/30/202410.09%15.44%
6/30/20239.92%15.27%
Interest paymentsmonthlymonthly
Cash paid for interest
YTD 6/30/2024$3,816$2,748
YTD 6/30/2023$2,955$2,583
Unamortized balance of deferred financing cost
6/30/2024$184$—
12/31/2023$267$—
Available amount at 6/30/2024$12,169$—
1 Applicable margin ranges based on EBITDA as defined in the 2022 ABL Credit Agreement
The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement. As of June 30, 2024, we are in compliance with the covenants.
As of June 30, 2024, $9.5 million in letters of credit were issued under the 2022 ABL Credit Agreement. Such amounts remain undrawn and are off-balance sheet.
ME/RE Loans
On June 16, 2023, we entered into ABL Amendment No. 3 which, in addition to making certain other changes to the 2022 ABL Credit Facility, provided us with $27.4 million of new term loans (the “ME/RE Loans”). Amounts repaid or prepaid under the ME/RE Loans may not be reborrowed.
The terms of ME/RE Loans are described in the table below (dollar amounts are presented in thousands):
Maturity date
8/11/2025
Stated interest rate
SOFR + 5.75% + 0.11% credit spread adjustment
Principal payments
$237 monthly
Effective interest rate1
6/30/202417.38%
6/30/202316.54%
Actual interest rate1
6/30/202411.19%
6/30/202311.02%
Interest paymentsmonthly
Cash paid for interest
YTD 6/30/2024$1,436
YTD 6/30/2023$—
Balances at 6/30/2024
Principal balance$24,402
Unamortized balance of debt issuance cost$(1,245)
Net carrying balance$23,157
Balances at 12/31/2023
Principal balance$25,823
Unamortized balance of debt issuance cost$(1,762)
Net carrying balance$24,061
1 The effective interest rate as of June 30, 2024, consisted of an 11.19% variable interest rate paid in cash and an additional 6.19% due to non-cash amortization of the related debt issuance costs. The effective interest rate as of June 30, 2023, consisted of an 11.02% variable interest rate paid in cash and an additional 5.52% due to non-cash amortization of the related debt issuance costs.
The ME/RE Loans are governed by the 2022 ABL Credit Agreement and are subject to the same restrictive covenants as described under the 2022 ABL Credit Facility.
Amended and Restated Term Loan Credit Agreement - Uptiered Loan and Incremental Term Loan
On June 16, 2023, we entered into an amendment and restatement of that certain subordinated term loan credit agreement dated as of November 9, 2021 (such agreement, as amended and restated, and as further amended by Amendment No.1 dated March 6, 2024, the “A&R Term Loan Credit Agreement”) among the Company, as borrower, the guarantors party thereto, the lenders from time-to-time party thereto and Cantor Fitzgerald Securities, as agent (the “A&R Term Loan Agent”). The A&R Term Loan Credit Agreement included a term loan credit agreement entered into on November 9, 2021, as amended through March 29, 2023 (the “Uptiered Loan”), and an additional funding commitment, subject to certain conditions, consisting of a $57.5 million senior secured first lien term loan (the “Incremental Term Loan”) provided by Corre and certain of its affiliates and comprised of a $37.5 million term loan tranche and a $20.0 million delayed draw tranche.
The A&R Term Loan Credit Agreement contains certain customary conditions to borrowings, events of default and affirmative, negative, and financial covenants (as described in the A&R Term Loan Credit Agreement and further amended by Amendment No. 4 dated March 6, 2024). As of June 30, 2024, we are in compliance with the A&R Term Loan Credit Agreement covenants.
The terms of Uptiered Loan and Incremental Term Loan are described in the table below (dollar amounts are presented in thousands):
Uptiered Loan
 Incremental Term Loan
Maturity date
12/31/2027 (12/31/2026 if outstanding balance is greater than $50 million)
12/31/2026
Stated interest rate
6/30/2024
9.5% PIK and 4.0% cash2
12% paid in cash
6/30/2023
 12% PIK
N/A
Principal paymentsat maturity
$356 quarterly
Effective interest rate
6/30/2024
14.56%3
22.96%4
6/30/2023
12.86%3
N/A
Interest paymentscash quarterly/PIK monthly quarterly
Cash paid for interest
YTD 6/30/2024$1,429$2,854
YTD 6/30/2023$—N/A
PIK interest added to principal
YTD 6/30/2024$6,376$—
YTD 6/30/2023$7,686N/A
Balances at 6/30/2024
Principal balance 1
$136,463$47,339
Unamortized balance of debt issuance cost$(582)$(8,104)
Net carrying balance$135,881$39,235
Balances at 12/31/2023
Principal balance 1
$130,087$48,052
Unamortized balance of debt issuance cost$(651)$(9,294)
Net carrying balance$129,436$38,758
Available amount at 6/30/2024
$—$10,000
___________
1 The principal balance of the Uptiered Loan is made up of $22.5 million drawn on November 9, 2021, $27.5 million drawn on December 8, 2021, and $57.0 million added as part of the exchange agreement on October 4, 2022. In addition, the principal balance also includes paid-in-kind (“PIK”) interest recorded to date of $28.6 million and $22.2 million as of June 30, 2024 and December 31, 2023, respectively, and PIK fees of $0.9 million incurred as of December 31, 2022.
2 Cash and PIK split is based on the Net Leverage Ratio as defined in the A&R Term Loan Credit Agreement. Cash interest rate increased by 1.5% on January 31, 2024.
3 The effective interest rate on the Uptiered Loan as of June 30, 2024 consisted of a 13.50% stated interest rate paid in PIK and cash and an additional 1.06% due to the non-cash amortization of the related debt issuance costs. The effective interest rate on the Uptiered Loan as of June 30, 2023 consisted of a 12.00% stated interest rate paid in PIK and an additional 0.86% due to the non-cash amortization of the related debt issuance costs.
4 The effective interest rate on the Incremental Term Loan as of June 30, 2024 consisted of a 12.00% stated interest rate paid in cash and an additional 10.96% due to the non-cash amortization of the related debt issuance costs.
Warrants
As of June 30, 2024 and December 31, 2023, APSC Holdco II, L.P. held 500,000 warrants and certain affiliates of Corre collectively held 500,000 warrants, in each case providing for the purchase of one share of the Company’s common stock per warrant at an exercise price of $15.00. The warrants will expire on December 8, 2028.
The exercise price and the number of shares of our common stock issuable on exercise of the warrants are subject to certain antidilution adjustments, including for stock dividends, stock splits, reclassifications, noncash distributions, cash dividends, certain equity issuances and business combination transactions. The warrants can be exercised by rendering cash or by means of a cashless option as set forth in the agreement.
Equipment Finance Loan
On March 6, 2024, we entered into agreements to sell various equipment to an equipment finance lender for $2.9 million and lease the equipment for monthly payments of $181 thousand over 18 months. The lease agreement provides for a bargain purchase option at the end of the lease term which we intend to exercise. The Company determined that the transaction did not meet the criteria for sale-leaseback in accordance with ASC 842, Leases and accounted for this arrangement as an equipment financing. The assets subject to the transaction remain on our balance sheet and continue to depreciate in accordance with our depreciation policy.
Fair Value of Debt
The fair value of our debt obligations is representative of the carrying value based upon the respective interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt obligations.
1970 Group Substitute Insurance Reimbursement Facility
On September 29, 2022, we entered into the Substitute Insurance Reimbursement Facility Agreement with 1970 Group Inc. (“1970 Group”) (as amended by that certain first amendment thereto dated August 29, 2023, the “Substitute Insurance Reimbursement Facility Agreement”). Under the Substitute Insurance Reimbursement Facility Agreement, the 1970 Group extended credit to us in the form of a substitute reimbursement facility (the “Substitute Reimbursement Facility”) to provide up to approximately $22.9 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance policies. As of June 30, 2024, we have $22.9 million of letters of credit outstanding under the Substitute Reimbursement Facility.
According to the provisions of ASC 470, Debt, the arrangement is a “Substitute Insurance Reimbursement Facility” limited to the amounts drawn under the letters of credit. Therefore, until we use or draw on such Substitute Insurance Reimbursement Facility, the letters of credit are treated as an off-balance sheet credit arrangement. The fees paid by us periodically under this arrangement are deferred and amortized to interest expense over the term of the arrangement. As of June 30, 2024, all fees were fully amortized.
Liquidity
As of June 30, 2024, we had $17.9 million of unrestricted cash and cash equivalents and $4.6 million of restricted cash, including $3.2 million of restricted cash held as collateral for letters of credit and commercial card programs. International cash balances as of June 30, 2024 were $6.1 million, and approximately $0.5 million of such cash is located in countries where currency or regulatory restrictions exist. As of June 30, 2024, we had approximately $22.2 million of available borrowing capacity under our various credit agreements, consisting of $12.2 million available under the Revolving Credit Loans and $10.0 million available under the Incremental Term Loan under the A&R Term Loan Credit Agreement. As of June 30, 2024, we had $34.7 million in letters of credit and $2.5 million in surety bonds outstanding and $0.7 million in miscellaneous cash deposits securing other required obligations.
As of December 31, 2023, our cash and cash equivalents consisted of $30.4 million of unrestricted cash and cash equivalents and $5.0 million of restricted cash, including $3.4 million of restricted cash held as collateral for letters of credit and commercial card programs. International cash balances as of December 31, 2023 were $12.0 million, including $0.6 million of cash located in countries where currency or regulatory restrictions existed.