BANK DEBT

9 Months Ended

Sep. 30, 2024

BANK DEBT

BANK DEBT

(5) BANK DEBT

On September 27, 2024, the Company executed the First Amendment (“First Amendment”) to the Fourth Amended and Restated Credit Agreement, dated as of August 2, 2023 (as amended, the “Credit Agreement”), with PNC Bank, National Association (in its capacity as administrative agent, "PNC"), which was accounted for as a debt modification. The primary purpose of the First Amendment was to provide the Company with short-term covenant relief to pursue additional liquidity. The First Amendment provides for additional flexibility for the Company to enter into prepaid forward power sale contracts, provided that the Company repays outstanding term loans under the Credit Agreement (“Term Loan”) with proceeds received from certain eligible power purchase agreements, up to a maximum of $20.0 million. These required prepaid forward power sale Term Loan repayments, if any, will take the place of the $6.5 million quarterly Term Loan payments. Furthermore, the First Amendment defines certain administrative changes which include, among other things, added requirements related to reporting, third party financial advisors, and appraisals on coal and power assets.

Bank debt was reduced by $21.5 million during the nine months ended September 30, 2024. Bank debt is comprised of our Term Loan ($45.5 million as of September 30, 2024) and a $75.0 million revolver ($24.5 million borrowed as of September 30, 2024) under the Credit Agreement. The term debt required quarterly payments of $6.5 million starting in April 2024 through maturity. Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

Liquidity

As of September 30, 2024, we had additional borrowing capacity of $31.1 million under the revolver and total liquidity of $34.9 million. Our additional borrowing capacity is net of $19.4 million in outstanding letters of credit that we were required to maintain for surety bonds and $24.5 million drawn on the revolver at September 30, 2024. Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

Fees

Unamortized bank fees and other costs incurred in connection with our initial facility totaled $4.3 million. Additional costs incurred with the First Amendment totaled $0.6 million. These unamortized bank fees were deferred and are being amortized over the term of the loan. Unamortized bank fees as of September 30, 2024, and December 31, 2023, were $3.0 million and $3.6 million, respectively.

Bank debt, less debt issuance costs, is presented below (in thousands):

	September 30,		December 31,
	2024		2023
Current bank debt	$	26,000	$	26,000
Less unamortized debt issuance cost		(1,905)		(1,562)
Net current portion	$	24,095	$	24,438
Long-term bank debt	$	44,000	$	65,500
Less unamortized debt issuance cost		(1,082)		(2,047)
Net long-term portion	$	42,918	$	63,453
Total bank debt	$	70,000	$	91,500
Less total unamortized debt issuance cost		(2,987)		(3,609)
Net bank debt	$	67,013	$	87,891

Future Maturities (in thousands):
2024	$	6,500
2025		26,000
2026		37,500
Total	$	70,000

Covenants

The First Amendment, among other things, provided the Company with short-term covenant relief to pursue additional liquidity. The First Amendment waived the Company’s Leverage Ratio requirement for the third and fourth quarters of 2024, increased the threshold to 5.50 to 1.00 for the first quarter of 2025, and decreased the threshold back to 2.25 to 1.00 for each fiscal quarter thereafter. Additionally, the Debt Service Coverage Ratio requirement (1.25 to 1.00) was waived from third quarter of 2024 through the first quarter of 2025. The First Amendment also added additional financial covenants which include: (i) a maximum First Lien Leverage Ratio for the first quarter of 2025, calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 3.50 to 1.00; (ii) a minimum liquidity requirement of $10.0 million, beginning on the First Amendment execution date and ending when the second quarter of 2025 compliance certificate is received; and (iii) a minimum quarterly EBITDA requirement, as defined in the First Amendment, of $5.0 million for the third quarter of 2024 through the first quarter of 2025. As of September 30, 2024, our liquidity of $34.9 million and quarterly EBITDA of $9.6 million were in compliance with the requirements of the Credit Agreement.

As of September 30, 2024, we were in compliance with all other covenants defined in the Credit Agreement.

Interest Rate

The interest rate on the facility ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our Leverage Ratio. As of September 30, 2024, we were paying SOFR plus 5.00% on the outstanding bank debt which equates to an all-in rate of 9.76%.