Long-Term Debt

12 Months Ended

Dec. 31, 2019

Our syndicated Credit Agreement includes a $75 million, five-year undrawn revolving credit facility, as well as the following term loans:



(in thousands)	December 31, 2019		December 31, 2018
Term loan A-1	258,571		287,699
Term loan A-2	473,469		497,537
	732,040		785,236
Less: unamortized loan fees	11,926		14,994
Total debt, net of unamortized loan fees	$	720,114	$	770,242

Term Loan A-1 bears interest at one-month LIBOR plus a margin of 1.50%, while Term Loan A-2 bears interest at one-month LIBOR plus a margin of 1.75%. LIBOR resets monthly. Our cash payments for interest were $27.6 million and $33.0 million during 2019 and 2018, respectively.

The Credit Agreement is fully secured by a pledge and unconditional guarantee from the Company of its wholly owned subsidiaries as collateral, other than Shenandoah Telephone Company. This provides the lenders a security interest in substantially all of the assets of the Company.

The Credit Agreement contains affirmative and negative covenants customary to secured credit facilities, including restrictions on our ability to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of the Company’s businesses. Total dividends, distributions, and redemptions of capital stock generally cannot exceed the sum of $25 million plus 60% of the Company's consolidated net income from January 1, 2016 to the date of declaration of such dividends, distributions or redemptions.

The financial covenants of the Credit Facility include:


•	a limitation on the Company’s total leverage ratio, calculated as Consolidated EBITDA, as defined by the Credit Facility agreement, of less than or equal to 3.50 to 1.00 from December 31, 2018 through December 31, 2019, then 3.25 to 1.00 through December 31, 2021, and 3.00 to 1.00 thereafter;


•	a minimum debt service coverage ratio, calculated as Consolidated EBITDA minus certain cash tax payments divided by the sum of all scheduled principal payments on the Credit Facility plus cash payments for interest, greater than or equal to 2.00 to 1.00;


•	the Company must maintain a minimum liquidity balance, calculated as availability under the Revolver Facility plus unrestricted cash and cash equivalents, of greater than $25 million at all times.

As shown below, as of December 31, 2019, the Company was in compliance with the financial covenants in its credit agreements.



	Actual		Covenant Requirement
Total leverage ratio	2.4		3.5 or Lower
Debt service coverage ratio	5.8		2.0 or Higher
Minimum liquidity balance (in millions)	$	176.4	$25.0 or Higher

Term Loan A-1 requires quarterly principal repayments of $7.3 million from December 31, 2019 through September 30, 2022; then increasing to $10.9 million quarterly from December 31, 2022 through September 30, 2023, with the remaining balance due November 8, 2023. Term Loan A-2 requires quarterly principal repayments of $1.2 million through September 30, 2025, with the remaining balance due November 8, 2025. These scheduled payments are also summarized below:



	Amount
(in thousands)
2020	$	34,122
2021	34,122
2022	37,764
2023	172,515
2024	4,988
2025	448,529
Total	$	732,040

The estimated fair value of our variable-rate Credit Facility approximates its carrying value due to its floating interest rate structure.