Long-term Debt

Long-term debt was comprised of the following at February 28, 2013 and November 30, 2013:



	As of February 28, 2013			As of November 30, 2013
2012 Credit Agreement debt :
Revolver	$	5,000		$	3,000
Term Loan	62,000			56,000
Total 2012 Credit Agreement debt	67,000			59,000
98.7FM nonrecourse debt	79,068			76,003
Current maturities	(12,126		)	(12,436		)
Unamortized original issue discount	(2,448		)	(1,570		)
Total long-term debt	$	131,494		$	120,997

2012 Credit Agreement Debt and Related Amendment

On December 28, 2012, Emmis Operating Company (“EOC”), a wholly owned subsidiary of Emmis, entered into a credit facility (the “2012 Credit Agreement”) to provide for total borrowings of up to $100 million, including (i) an $80 million term loan and (ii) a $20 million revolver, of which $5 million may be used for letters of credit.

A portion of the proceeds under the 2012 Credit Agreement were used to repay (i) EOC’s indebtedness under and terminate the 2006 Credit Agreement, for which Bank of America, N.A. acted as administrative agent and (ii) the Notes issued under the Note Purchase Agreement dated as of November 11, 2011 between Emmis Communications Corporation, as Issuer, and Zell Credit Opportunities Master Fund, L.P., as Purchaser, as amended, (“Senior Unsecured Notes”).

In addition to repaying in full the 2006 Credit Agreement and the Senior Unsecured Notes, the proceeds of the borrowings under the 2012 Credit Agreement were used for working capital needs and other general corporate purposes of Emmis, and certain other transactions permitted under the 2012 Credit Agreement.

All outstanding amounts under the 2012 Credit Agreement bear interest, at the option of EOC, at a rate equal to the Eurodollar Rate or an alternative base rate (as defined in the 2012 Credit Agreement) plus a margin. The margin over the Eurodollar Rate or the alternative base rate varies (ranging from 2.50% to 5.00%), depending on Emmis’ ratio of consolidated total debt to consolidated EBITDA, as defined in the agreement. Interest is due on a calendar month basis under the alternative base rate and at least every three months under the Eurodollar Rate. Beginning 60 days after closing, the 2012 Credit Agreement required Emmis to maintain fixed interest rates, for at least one year, on a minimum of 50% of its total outstanding debt, as defined. See Note 7 for more discussion of our interest rate swap agreement.

The term loan and revolver both mature on December 28, 2017. Beginning on April 1, 2013, the borrowings under the term loan are payable in quarterly installments equal to 2.50% of the original balance of the term loan, with the remaining balance payable December 28, 2017. Proceeds from raising additional equity, issuing additional subordinated debt or from asset sales, as well as excess cash flow, subject to certain exceptions, are required to be used to repay amounts outstanding under the 2012 Credit Agreement.

Approximately $0.5 million of transaction fees related to the 2012 Credit Agreement were capitalized and are being amortized over the life of the 2012 Credit Agreement. These deferred debt costs are included in other assets, net in the condensed consolidated balance sheets. The 2012 Credit Agreement is carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $2.5 million as of the issuance of the debt on December 28, 2012 and $1.6 million as of November 30, 2013, is being amortized as additional interest expense over the life of the 2012 Credit Agreement.

Borrowing under the 2012 Credit Agreement depends upon our continued compliance with certain operating covenants and financial ratios, including leverage and fixed charge coverage as specifically defined. The operating covenants and other restrictions with which we must comply include, among others, restrictions on additional indebtedness, incurrence of liens, engaging in businesses other than our primary business, paying certain dividends, redeeming or repurchasing capital stock of Emmis, acquisitions and asset sales. No default or event of default has occurred or is continuing. The 2012 Credit Agreement provides that an event of default will occur if there is a “change in control” of Emmis, as defined. The payment of principal, premium and interest under the 2012 Credit Agreement is fully and unconditionally guaranteed, jointly and severally, by ECC and most of its existing wholly-owned domestic subsidiaries. Substantially all of Emmis’ assets, including the stock of most of Emmis’ wholly-owned, domestic subsidiaries are pledged to secure the 2012 Credit Agreement.

On August 9, 2013, Emmis entered into the First Amendment to Credit Agreement, Security Agreement and Subsidiary Guarantee (“First Amendment”) which allowed for the formation of NextRadio LLC, a wholly-owned subsidiary of Emmis, as an excluded subsidiary under the Credit Agreement and facilitated the transactions contemplated by the agreement with Sprint dated August 9, 2013 (see Note 5). No financial covenants were impacted by the First Amendment and total costs were less than $0.1 million.

During the nine-months ended November 30, 2013, Emmis recognized a loss on debt extinguishment of $0.7 million. Approximately $0.1 million of the loss related to the write-off of deferred debt fees and approximately $0.6 million related to the write-off of unamortized debt discount associated with the Company's payments of term loans.

We were in compliance with all financial and non-financial covenants as of November 30, 2013. Our Senior Leverage Ratio, Total Leverage Ratio and Minimum Fixed Charge Coverage Ratio (each as defined in the 2012 Credit Agreement) requirements and actual amounts as of November 30, 2013 were as follows:



	As of November 30, 2013
	Covenant Requirement	Actual Results
Maximum Senior Leverage Ratio	3.50 : 1.00	2.89 : 1.00
Maximum Total Leverage Ratio	4.00 : 1.00	2.89 : 1.00
Minimum Fixed Charge Coverage Ratio	1.25 : 1.00	1.48 : 1.00

98.7FM Nonrecourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of nonrecourse notes. Teachers Insurance and Annuity Association of America, through a participation agreement with Wells Fargo Bank Northwest, National Association, is entitled to receive payments made on the notes. The notes are obligations only of the newly-created subsidiaries, are non-recourse to the rest of the Company’s subsidiaries and are secured by the assets of the newly-created subsidiaries, including the payments made to the newly-created subsidiary related to the 98.7FM LMA, which are guaranteed by Disney Enterprises, Inc. The notes bear interest at 4.1%.

Based on amounts outstanding at November 30, 2013, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:



	2012 Credit Agreement
Year Ended	Revolver		Term Loan		98.7FM Debt		Total
February 28 (29),	Amortization		Amortization		Amortization		Amortization
2014	$	—	$	2,000	$	1,061	$	3,061
2015	—		8,000		4,541		12,541
2016	—		8,000		4,990		12,990
2017	—		8,000		5,453		13,453
2018	3,000		30,000		6,039		39,039
Thereafter	—		—		53,919		53,919
Total	$	3,000	$	56,000	$	76,003	$	135,003