CREDIT FACILITY AND NOTES PAYABLE

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

CREDIT FACILITY AND NOTES PAYABLE

CREDIT FACILITIES AND NOTES PAYABLE

As of September 30, 2020 and December 31, 2019 our debt obligations consisted of the following (in thousands):

	September 30, 2020		December 31, 2019
First Lien Term Loans collateralized by RadNet's tangible and intangible assets	$	620,727	$	649,824
Discounts on First Lien Term Loans	(10,669)		(13,579)
SunTrust Term Loan Agreement collateralized by NJIN's tangible and intangible assets	52,500		55,875
Paycheck Protection Program loans at 1% due April 2022	4,037		—
Equipment note payable at 4.6%, due through 2020, collateralized by medical equipment	47		275
Total debt obligations	666,642		692,395
Less: current portion	(39,463)		(39,691)
Long term portion debt obligations	$	627,179	$	652,704

Included in our condensed consolidated balance sheets at September 30, 2020 are $620.7 million of First Lien Term Loans and $52.5 million of SunTrust Term Loan debt for a combined total of $673.2 million of total term loan debt (exclusive of unamortized discounts of $10.7 million) in thousands:

	Face Value		Discount		Total Carrying Value
First Lien Term Loans	$	620,727	$	(10,669)	$	610,058
SunTrust Term Loan	52,500		—		52,500
Total Term Loans	$	673,227	$	(10,669)	$	662,558

We had no balance under our $195.0 million Barclays Revolving Credit Facility at September 30, 2020 and have reserved $6.3 million for certain letters of credit. The remaining $188.7 million of our Barclays Revolving Credit Facility was available to draw upon as of September 30, 2020. We had no balance under our $30.0 million SunTrust Revolving Credit Facility related to our consolidated subsidiary NJIN at September 30, 2020.

Senior Secured Credit Facilities

Barclays Credit Facilities:

At September 30, 2020, (a) our Barclays credit facilities were comprised of one tranche of term loans (“First Lien Term Loans”) and a revolving credit facility of $195.0 million (the “Barclays Revolving Credit Facility”) and (b) our SunTrust credit facilities, which relate to our consolidated subsidiary NJIN, were comprised of one term loan (the "SunTrust Term Loan") and a revolving credit facility of $30.0 million (the "SunTrust Revolving Credit Facility").

As of September 30, 2020, we were in compliance with all covenants under our credit facilities. Deferred financing costs at September 30, 2020, net of accumulated amortization, was $1.9 million and is specifically related to our Barclays Revolving Credit Facility.

Our First Lien Term Loans bear interest at either an Adjusted Eurodollar Rate or a Base Rate, plus an applicable margin according to the following schedule:

First Lien Leverage Ratio	Eurodollar Rate Spread	Base Rate Spread
> 5.50x	4.50%	3.50%
> 4.00x but ≤ 5.50x	3.75%	2.75%
>3.50x but ≤ 4.00x	3.50%	2.50%
≤ 3.50x	3.25%	2.25%

At September 30, 2020 the effective Adjusted Eurodollar Rate and the Base Rate for the First Lien Term Loans was 1.00% and 3.25%, respectively and the applicable margin for Adjusted Eurodollar Rate and Base Rate borrowings was 3.75% and 2.75%, respectively.

The First Lien Credit Agreement provides for quarterly payments of principal under the First Lien Term Loans in the amount of approximately $9.7 million. The First Lien Term Loans will mature on July 21, 2023 unless otherwise accelerated under the terms of the First Lien Credit Agreement.

SunTrust Credit Facilities:

Our SunTrust Term Loan bears interest at either an Adjusted Eurodollar Rate or a Base Rate, plus an applicable margin according to the following schedule:

Pricing Level	Leverage Ratio	Applicable Margin for Eurodollar Loans	Applicable Margin for Base Rate Loans	Applicable Margin for Letter of Credit Fees	Applicable Percentage for Commitment Fee
I	Greater than or equal to 3.00:1.00	2.75% per annum	1.75% per annum	2.75% per annum	0.45% per annum
II	Less than 3.00:1.00 but greater than or equal to 2.50:1.00	2.25% per annum	1.25% per annum	2.25% per annum	0.40% per annum
III	Less than 2.50:1.00 but greater than or equal to 2.00:1.00	2.00% per annum	1.00% per annum	2.00% per annum	0.35% per annum
IV	Less than 2.00:1.00 but greater than or equal to 1.50:1.00	1.75% per annum	0.75% per annum	1.75% per annum	0.30% per annum
V	Less than 1.50:1.00	1.50% per annum	0.50% per annum	1.50% per annum	0.30% per annum

The loans and other obligations outstanding under the SunTrust Restated Credit Agreement currently bear applicable margin and fees based on Pricing Level III described above. The loans outstanding under the SunTrust Restated Credit Agreement currently bear interest based on a three month Eurodollar election of 2.00%, plus the applicable margin.

The scheduled amortization of the SunTrust Term Loan began December 31, 2018 with quarterly payments of $0.8 million, representing annual amortization equal to 5.00% of the original principal amount of the SunTrust Term Loan. At scheduled intervals, the quarterly amortization increases by $0.4 million, with the remaining balance to be paid at maturity. The SunTrust Term Loan will mature on August 1, 2023 unless otherwise accelerated under the terms of the SunTrust credit facility.

Revolving Credit Facilities

Barclays Revolving Credit Facility

Revolving loans borrowed under the Barclays Revolving Credit Facility bear interest at either an Adjusted Eurodollar Rate or a Base Rate plus an applicable margin. Rates of the applicable margin for borrowing under the Revolving Credit Facility also change depending on our leverage ratio and are the same rates as noted in the schedule above for First Lien Term Loans. As of September 30, 2020, the effective interest rate payable on revolving loans was 6.00%.

Letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin of Adjusted Eurodollar Rate, currently 3.75% , and fronting fees accrue at 0.25% per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the First Lien Credit Agreement. In addition, a commitment fee of 0.50% per annum accrues on the unused revolver commitments under the Revolving Credit Facility.

The Barclays Revolving Credit Facility will terminate on the earliest to occur of July 1, 2023 or its earlier termination to specific events of default pursuant to the First Lien Credit Agreement.

Our Barclays Revolving Credit Facility was amended in August 2020 to add $57.5 million of revolving commitments and extend the maximum borrowing capacity to $195.0 million. Total issue costs added in relation to the eighth amendment amounted to approximately $0.7 million and was capitalized as deferred financing costs and will be amortized over the remaining term of the agreement.

SunTrust Revolving Credit Facility

Our SunTrust Revolving Credit Facility is available to NJIN for funding requirements, with an available borrowing limit of $30.0 million. Revolving loan borrowed under the SunTrust Revolving Credit Facility bear interest at either an Adjusted Eurodollar Rate or a Base Rate plus an applicable margin. Rates of the applicable margin for borrowing under the Revolving Credit Facility also change depending on our leverage ration and are the same rates noted in the schedule above for the SunTrust Term Loan. The SunTrust Revolving Credit Facility terminates on August 31, 2023 unless all amounts outstanding otherwise have been declared or have automatically become due and payable (whether by acceleration or otherwise). NJIN has not borrowed against the revolving credit line.

Recent Amendments to credit facilities:

Barclays Credit Facilities:

On August 28, 2020, RadNet, Inc. entered into Amendment No. 8, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement "the Eighth Amendment". The Eighth Amendment amends the First Lien Credit Agreement to add $57.5 million of revolving commitments to the Barclays Revolving Credit Facility extending the maximum borrowing capacity under the revolving credit facility to $195.0 million while leaving the maturity date of July 1, 2023 unchanged. Total issue costs added in relation to the Eighth Amendment amounted to approximately $0.7 million and was capitalized as deferred financing costs and will be amortized over the remaining term of the agreement.

On April 18, 2019 we entered into the following two amendments to the First Lien Credit Agreement: (i) Amendment No. 6, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the “Sixth Amendment”); and (ii) Amendment No. 7 to Credit and Guaranty Agreement (the “Seventh Amendment”). The Sixth Amendment amended the First Lien Credit Agreement to issue $100.0 million in incremental First Lien Term Loans and to add an additional $20.0 million of revolving commitments to the Barclay's Revolving Credit Facility. The Seventh Amendment amended the First Lien Credit Agreement to extend the maturity date of the Barclays Revolving Credit Facility by an additional two years to July 1, 2023, unless sooner terminated in accordance with the terms of the First Lien Credit Agreement. Total issue costs added in relation to the Sixth and Seventh amendments in 2019 amounted to approximately $4.4 million. Of this amount, $2.1 million was identified and capitalized as discount on debt, $0.7 million was capitalized as deferred financing costs, and $1.6 million was expensed. Amounts capitalized will be amortized over the remaining term of the agreement.

Paycheck Protection Program

The Paycheck Protection Program (PPP) includes funds available for loans to small business and Medicare providers to support operations during the COVID-19 pandemic. The funds are administered by the Small Business Administration (SBA), through approved lenders and do not require collateral or personal guarantees. We received our loans based on being a Medicare provider. The terms and conditions for participation require entities to certify that economic uncertainty related to the COVID-19 pandemic makes the loan necessary to support their current operations, and that they will use the funds to retain workers (e.g., by paying salaries, providing paid sick/medical leave and health insurance benefits) and pay certain debts (mortgage obligations) and expenses (e.g. rent, utilities, telephone). The loans have a 1.0% fixed interest rate and are due in 2 years. Initial repayments have been deferred for six months. The loans are eligible for forgiveness subject to salary limitations and employee retention levels. Certain of our consolidated subsidiaries received four loans totaling $4.0 million. We have accounted for the funds received as debt and recorded a liability for the full amount of proceeds received. Interest will be accrued over the term of the loans. If we meet the eligibility requirements for forgiveness the amounts forgiven will be recognized in the income statement as a gain on loan extinguishment in accordance with accounting guidance.