Long-term Debt and Credit Facilities

6 Months Ended

Jun. 30, 2011

Long-term Debt and Credit Facilities [Abstract]

Long-term Debt and Credit Facilities

Note 6 — Long-term Debt and Credit Facilities

Long-term debt was comprised as follows (dollar amounts in thousands):

	June 30,			December 31,
	2011			2010
Bank Credit Facility:
Term loan	$	367,308		$	372,511
Revolving loan commitment		-			-
Capital leases		726			1,128
		368,034			373,639
Less current maturities		(10,522	)		(4,807	)
	$	357,512		$	368,832

Bank Credit Facility — In April 2007, we entered into a $675.0 million bank Credit Facility, comprised of a $625.0 million term loan, which matures in April 2014, and a $50.0 million revolving loan commitment, which matures in April 2013. The term loan originally required quarterly repayments of $1,562,500, which began September 30, 2007. The term loan originally bore interest at our option of (1) the bank’s base rate plus a margin of 1.0% or (2) LIBOR plus a margin of 2.0%. The term loan is collateralized by substantially all of the assets of the Company.

Effective March 22, 2011, we entered into a First Amendment (the “Amendment”) to the bank Credit Facility. The Amendment modifies certain terms of the Credit Facility, including an increase in the permitted consolidated leverage ratio, the creation of a specific preferred stock dividend payment basket and the potential to extend the term beyond its current expiration in April 2014. The restricted payment basket within the Amendment allows for dividend payments not to exceed $5,750,000 per year. The Amendment also reduces the commitments under the revolving loan commitment, increases the interest rate and required quarterly repayment amount and adjusts other covenants. In March 2011, the Company incurred $2.4 million of debt issuance costs related to certain fees and expenses in connection with this Amendment.

Under the Amendment, the $50.0 million revolving loan commitment has been reduced to $25.0 million. The Amendment also requires us to make quarterly term loan repayments of $2.5 million, which began June 30, 2011, through December 31, 2012, and $3.75 million beginning March 31, 2013 through December 31, 2013. The amended term loan and revolving loan commitment bear interest at our option of (1) the bank’s base rate plus a margin of 4.0% or (2) LIBOR plus a margin of 5.0%. In addition, a LIBOR floor of 1.5% was established under the Amendment.

The Amendment includes terms and conditions which require compliance with leverage and interest coverage covenants. As of June 30, 2011, our consolidated leverage ratio was 3.49 compared to the maximum allowable ratio of 4.00 and our consolidated interest coverage ratio was 2.57 compared to the minimum allowable ratio of 2.25. Per the Amendment, the maximum allowable consolidated leverage ratio will remain at 4.00 until September 30, 2012, when it will change to 3.75 for the quarters ending December 31, 2012 through June 30, 2013. It will then drop to 3.50 for the quarter ending September 30, 2013 until maturity. The minimum allowable consolidated interest coverage ratio will continue to be 2.25 until maturity.

The Credit Facility also requires we notify the agent upon the occurrence of a “Material Adverse Effect” prior to any draw on the Company’s revolving loan commitment, as such terms are defined and used within our bank Credit Facility. However, under the Credit Facility, the provision of such a notice is not an event of default, but if such an event occurred, it could restrict the Company’s ability to obtain additional financing under the revolving loan commitment. The original Credit Facility also stipulated we enter into hedge agreements to provide at least 50% of the outstanding term loan into a fixed interest rate for a period not less than two years. Our fixed rate swap agreements expired in June 2011 (see Note 13). The Amendment does not require us to enter into any hedge agreements. The term loan interest rate as of June 30, 2011 was 6.5%. The all-in weighted average interest rate for the quarter ended June 30, 2011 was 12.0%, which includes both the term loan interest rate and the difference in the swaps’ fixed interest rate versus LIBOR. As of June 30, 2011, we were in compliance with all financial covenants required of our bank Credit Facility.

Our ability to remain in compliance with those covenants will depend on our ability to generate sufficient Consolidated EBITDA (a term defined in the Amendment) and to manage our capital investment and debt levels. We continue taking actions within our control to manage our debt level and remain in compliance with our debt covenants. The actions within our control include our management of capital investment, working capital and operating costs and exploring other alternative financing. Our ability to continue to comply with our current covenants is subject to the general economic climate and business conditions beyond our control. Although there are signs of stabilization in certain sectors of the economy, the uncertainties impacting travel and lodging, in addition to the constraints in the credit markets, consumer conservatism and other market dynamics, including technological changes, may continue to negatively impact our planned results and required covenants. If we are not able to remain in compliance with our current debt covenants and our lenders will not amend or waive covenants with which we are not in compliance, the debt would be due, we would not be able to satisfy our financial obligations and we would need to seek alternative financing. If we were not able to secure alternative financing, this would have a substantial adverse impact on the Company and our ability to continue our operations.

During the first quarter of 2011, we made a prepayment of $2.0 million on the term loan, along with the required payment of $1.0 million. We expensed $0.2 million of debt issuance costs related to the prepayment and the Amendment described above. During the second quarter of 2011, we made the required payment of $2.5 million.

In the first quarter of 2010, we made our required quarterly payment of $1.3 million, prepaid a total of $44.0 million on the term loan, which included $13.7 million of net proceeds from the common stock offering, and expensed $0.5 million of related debt issuance costs. The common stock offering is discussed in more detail in Note 15. In the second quarter of 2010, we made a prepayment of $22.2 million, in addition to the $1.2 million required payment on the term loan, and expensed $0.3 million of related debt issuance costs.

The Credit Facility provides for the issuance of letters of credit up to $7.5 million, subject to customary terms and conditions. Under the terms of the Amendment, this amount was reduced from $15.0 million. As of June 30, 2011, we had outstanding letters of credit totaling $325,000, which reduce amounts available under the revolving loan commitment. During the second quarter of 2011, we borrowed $20.0 million under the revolving loan commitment and repaid the entire amount during the quarter.

Capital Leases — As of June 30, 2011, we had total capital lease obligations of $0.7 million. There was no equipment acquired under capital lease arrangements during the six months ended June 30, 2011. Our capital lease obligations consist primarily of vehicles used in our field service operations.

As of June 30, 2011, long-term debt has the following scheduled maturities for the six months remaining in 2011 and the full years ending December 31, 2012 and after (dollar amounts in thousands):

	2011			2012			2013			2014			2015
Long-term debt	$	5,000		$	10,000		$	15,000		$	337,308		$	-
Capital leases		321			348			70			30			1
		5,321			10,348			15,070			337,338			1
Less amount representing interest on capital leases		(19	)		(19	)		(4	)		(2	)		-
	$	5,302		$	10,329		$	15,066		$	337,336		$	1

We do not utilize special purpose entities or off-balance sheet financial arrangements.