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DEBT
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
DEBT DEBT
As of September 30, 2024 and December 31, 2023, our total long-term debt and finance lease obligations are summarized as follows (in thousands):
September 30, 2024December 31, 2023
(unaudited)
2022 ABL Credit Facility1
$112,643 $113,415 
ME/RE Loans1
22,699 24,061 
Uptiered Loan1
139,206 129,436 
Incremental Term Loan1
39,516 38,758 
Equipment Finance Loan
1,882 — 
Total 315,946 305,670 
Finance lease obligations5,292 5,756 
Total long-term debt and finance lease obligations321,238 311,426 
Current portion of long-term debt and finance lease obligations(7,056)(5,212)
Total long-term debt and finance lease obligations, less current portion$314,182 $306,214 
1    Comprised of principal amount outstanding, less unamortized debt 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, Amendment No.4 dated as of March 6, 2024 and ABL Amendment No.5 (described below), 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, with a $35.0 million sublimit for swingline borrowings, a $26.0 million sublimit for issuances of letters of credit (the “Revolving Credit Loans”), and an incremental delayed draw term loan of up to $35.0 million (the “Delayed Draw Term Loan”) provided by Corre Partners Management, LLC (“Corre”) and certain of its affiliates (collectively, the “2022 ABL Credit Facility”).
On September 30, 2024, the Company entered into Amendment No.5 (“ABL Amendment No.5”) to the 2022 ABL Credit Agreement. ABL Amendment No. 5 amended the 2022 ABL Credit Agreement to, among other things, to:
(i) extend the scheduled maturity date from August 11, 2025 to September 30, 2027;
(ii) amend the applicable margin for Delayed Draw Term Loans from a flat rate of 10.00% for SOFR Loans (as defined in the 2022 ABL Credit Agreement) and 9.00% for Base Rate Loans (as defined in the 2022 ABL Credit Agreement) to a rate based on EBITDA ranging from 8.50% to 10.00% for SOFR Loans and 7.50% to 9.00% for Base Rate Loans;
(iii) amend the applicable margin for Revolving Credit Loans from a rate based on EBITDA ranging from 4.15% to 4.65% for SOFR Loans and 3.15% to 3.65% for Base Rate Loans to a rate based on both EBITDA and Average Historical Excess Availability (as defined in the 2022 ABL Credit Agreement) ranging from 3.50% to 4.25% for SOFR Loans and 2.50% to 3.25% for Base Rate Loans;
(iv) amend the applicable margin for ME/RE Loans (defined below) from a flat rate of 5.75% for SOFR Loans to a flat rate of 5.00% for SOFR Loans;
(v) amend the definitions of “Borrowing Base” and “Consolidated Fixed Charge Coverage Ratio” as well as related definitions in order to expand availability under the Revolving Credit Facility (as defined in the 2022 ABL Credit Agreement); and
(vi) add a springing financial covenant requiring Excess Availability (as defined in the 2022 ABL Credit Agreement) to be above $7,500,000 only if the Consolidated Fixed Charge Coverage Ratio falls below 0.85x for twelve month periods ending on or prior to December 31, 2024 and 1.00x for twelve month periods ending after December 31, 2024.
ABL Amendment No.5 was accounted for in accordance with ASC 470-60, Troubled Debt Restructuring, and no gain or loss was recognized. Amendment fees of $0.9 million related to the Revolving Credit Loans were deferred on September 30, 2024. The amendment fees will be amortized to interest expense over the term of the 2022 ABL Credit Agreement.
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
Scheduled maturity date1
9/30/20279/30/2027
Stated interest rateSOFR + applicable margin (base + applicable margin)SOFR + applicable margin (base + applicable margin)
Actual interest rate:
9/30/20249.57%15.32%
9/30/202310.09%15.44%
Interest paymentsmonthlymonthly
Cash paid for interest
YTD 9/30/2024$5,964$4,130
YTD 9/30/2023$4,932$3,951
Balances at 9/30/2024

     Principal balance
$77,905$35,000
Unamortized balance of debt issuance cost
N/A
$(262)
Net carrying balance
$77,905$34,738
Balances at 12/31/2023

     Principal balance
$78,415$35,000
Unamortized balance of debt issuance cost
N/A
$—
     Net carrying balance
$78,415$35,000
Unamortized balance of deferred financing cost
9/30/2024$1,102
N/A
12/31/2023$267
N/A
Available amount at 9/30/20242
$18,022$—
1 Amended maturity date is the earlier of (i) the Scheduled Maturity Date and (ii) the Springing Maturity Date (91 days prior to Scheduled Maturity Date of the A&R Term Loan Credit Agreement (defined below), or October 1, 2026).
2        Available amount following the execution of ABL Amendment No.5.
The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement. As of September 30, 2024, we are in compliance with the covenants.
As of September 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”).
On September 30, 2024, the Company entered into ABL Amendment No.5. ABL Amendment No.5 amended the 2022 ABL Credit Agreement to, among other things, provide for the following changes to the ME/RE Loans:
(i) extended the scheduled maturity date from August 11, 2025 to September 30, 2027; and
(ii) amended the applicable margin for ME/RE Loans from a flat rate of 5.75% for SOFR Loans (as defined in the 2022 ABL Credit Agreement) to a flat rate of 5.00% for SOFR Loans.
The terms of ME/RE Loans are described in the table below (dollar amounts are presented in thousands):
Scheduled maturity date1
9/30/2027
Stated interest rate
SOFR + 5.0% + 0.11% credit spread adjustment
Principal payments
$237 monthly
Effective interest rate2
9/30/202413.11%
9/30/202316.75%
Actual cash interest rate
9/30/202410.32%
9/30/202311.19%
Interest paymentsmonthly
Cash paid for interest
YTD 9/30/2024$2,128
YTD 9/30/2023$640
Balances at 9/30/2024
Principal balance$23,692
Unamortized balance of debt issuance cost$(993)
Net carrying balance$22,699
Balances at 12/31/2023
Principal balance$25,823
Unamortized balance of debt issuance cost$(1,762)
Net carrying balance$24,061
1 Amended maturity date is the earlier of (i) the Scheduled Maturity Date and (ii) the Springing Maturity Date (91 days prior to Scheduled Maturity Date of the A&R Term Loan Credit Agreement, or October 1, 2026).
2        The effective interest rate as of September 30, 2024 consisted of 10.32% variable interest rate paid in cash and an additional 2.79% due to non-cash amortization of the related debt issuance costs. The effective interest rate as of September 30, 2023, consisted of 11.19% variable interest rate paid in cash and an additional 5.56% 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.1 dated March 6, 2024). As of September 30, 2024, we are in compliance with the A&R Term Loan Credit Agreement covenants.
On September 30, 2024 we entered into Amendment No.2 (“ Term Loan Amendment No.2”) to the A&R Term Loan Credit Agreement. Term Loan Amendment No.2 amended the A&R Term Loan Credit Agreement to, among other things, make conforming changes to the A&R Term Loan Credit Agreement, consistent with the changes being made to the 2022 ABL Credit Agreement by ABL Amendment No.5.
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
9/30/2024
9.5% PIK and 4.0% cash2
12% paid in cash
9/30/2023
 12% PIK
12% paid in cash
Principal paymentsat maturity
$356 quarterly
Effective interest rate
9/30/2024
14.56%3
22.96%4
9/30/2023
12.86%3
23.69%4
Interest paymentscash quarterly/PIK monthly quarterly
Cash paid for interest
YTD 9/30/2024$2,775$4,267
YTD 9/30/2023$—$—
PIK interest added to principal
YTD 9/30/2024$9,661
N/A
YTD 9/30/2023$10,829N/A
Balances at 9/30/2024
Principal balance 1
$139,748$46,983
Unamortized balance of debt issuance cost$(542)$(7,467)
Net carrying balance$139,206$39,516
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$38,758
Available amount at 9/30/2024$—$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 of $31.8 million and $22.2 million as of September 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 determined based on the Net Leverage Ratio as defined in the A&R Term Loan Credit Agreement.
3 The effective interest rate on the Uptiered Loan as of September 30, 2024 consisted of 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 September 30, 2023 consisted of 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 September 30, 2024 consisted of 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. The effective interest rate on the Incremental Term Loan as of September 30, 2023 consisted of 12.00% stated interest rate paid in cash and an additional 11.69% due to the non-cash amortization of the related debt issuance costs.
Warrants
As of September 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 eighteen 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 16, 2024, we entered into an amended and restated substitute insurance reimbursement facility agreement with 1970 Group Inc. (“1970 Group”) (such agreement, 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 $19.0 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance policies. As of September 30, 2024, we have $19.0 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 there is a 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 September 30, 2024, we had approximately $2.2 million of unamortized deferred fees.
Liquidity
As of September 30, 2024, we had $14.9 million of unrestricted cash and cash equivalents and $4.2 million of restricted cash, including $2.9 million of restricted cash held as collateral for letters of credit and commercial card programs. International cash balances as of September 30, 2024 were $6.2 million, and approximately $0.6 million of such cash is located in countries where currency or regulatory restrictions exist. As of September 30, 2024, we had approximately $28.0 million of available borrowing capacity under our various credit agreements, consisting of $18.0 million available, following the execution of ABL Amendment No.5, under the Revolving Credit Loans and $10.0 million available under the Incremental Term Loan. As of September 30, 2024, we had $30.8 million in letters of credit and $2.5 million in surety bonds outstanding and $1.3 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.