7.LONG-TERM DEBT

In 2015, the Company began presenting deferred financing costs as a reduction to long-term debt on its consolidated balance sheets and, as a result, the presentation of long-term debt for the year ended December 31, 2014 has been adjusted. Long-term debt at December 31, 2015 and 2014 consisted of the following:



	December 31, 2015		December 31, 2014
Amounts in thousands		Principal		Principal
Credit agreement - Bank of Montreal	$	20,419	$	16,383
Credit agreement - Casinos Poland		1,647		3,446
Credit facility - Casinos Poland		0		1,506
Capital leases - Casinos Poland		13		108
Financing obligation - CDR land lease		14,087		16,806
Capital leases - CDR		615		0
Total Principal	$	36,781	$	38,249
Deferred financing costs		(261)		(355)
Total long-term debt	$	36,520	$	37,894
Less current portion		(4,123)		(5,272)
Long-term portion	$	32,397	$	32,622

The consolidated weighted average interest rate on all Company debt was 8.21% for the year ended December 31, 2015. In April 2015, the Company entered into two interest rate swap agreements to partially hedge the risk of future increases in the variable rate debt under the Company’s credit agreement with the Bank of Montreal (the “BMO Credit Agreement”). As of December 31, 2015, the notional amount for each of the interest rate swap agreements was CAD 10.4 million ($7.5 million based on the exchange rate in effect on December 31, 2015) at a Canadian Dollar Offered Rate (“CDOR”) of 3.92% and 3.89%, respectively. The interest rate swap agreements are not designated as hedges for accounting purposes. As a result, changes in fair value of the interest rate swaps are recognized in interest expense on the Company’s consolidated statement of earnings (loss). For the year ended December 31, 2015, the Company paid a floating interest rate on its remaining CAD 7.5 million ($5.4 million based on the exchange rate in effect on December 31, 2015) in borrowings under the BMO Credit Agreement and the interest rate was approximately 3.47%. For the year ended December 31, 2015, the Company paid a weighted average interest rate of 3.53% on its borrowings under the CPL loan agreements and 3.16% on its CDR lease agreements. The weighted average interest rate on all Company debt was higher than the interest rates of the BMO Credit Agreement, the weighted average interest of 3.53% on the CPL loan agreements and the 3.16% weighted average interest rate on the CDR lease agreements due to the CDR financing obligation, on which the Company pays a weighted average interest rate of 12.94%. See Note 12 for additional information on the interest rate swap agreements.

Credit Agreement – Bank of Montreal

In May 2012, the Company, through its Canadian subsidiaries, entered into the CAD 28.0 million credit agreement with the Bank of Montreal. On August 15, 2014, the Company, through its Canadian subsidiaries, entered into an amended and restated BMO Credit Agreement that increased the Company’s borrowing capacity to CAD 39.1 million. As of December 31, 2015, the Company had borrowed CAD 33.9 million, of which the outstanding balance was CAD 28.3 million ($20.4 million based on the exchange rate in effect on December 31, 2015) and the Company had approximately CAD 5.2 million ($3.8 million based on the exchange rate in effect on December 31, 2015) available under the BMO Credit Agreement. The outstanding borrowings cannot be re-borrowed once they are repaid. The Company has used borrowings under the BMO Credit Agreement primarily to repay the Company’s mortgage loan related to the Edmonton property, pay for the additional 33.3% investment in CPL and pay for development costs related to CDR. The Company can also use the proceeds to pursue the development or acquisition of new gaming opportunities and for general corporate purposes. Borrowings bear interest at fixed rates or at BMO’s floating rate plus a margin. Any funds not drawn down under the BMO Credit Agreement are subject to standby fees ranging from 0.50% to 0.75% payable quarterly in arrears. Standby fees of less than CAD 0.1 million (less than $0.1 million based on the exchange rate in effect on December 31, 2015) were recorded as interest expense in the consolidated statement of earnings (loss) for the year ended December 31, 2015. The BMO Credit Agreement has a term of five years through August 2019 and is guaranteed by the Company. The shares of the Company’s subsidiaries in Edmonton and Calgary and the Company’s 75% interest in CDR are pledged as collateral for the BMO Credit Agreement. The BMO Credit Agreement contains a number of financial covenants applicable to the Canadian subsidiaries, including restricting their incurrence of additional debt, a debt to EBITDA ratio, a fixed charge coverage ratio, maintenance of a CAD 28.0 million equity balance and a capital expenditure limit of CAD 2.0 million per year. The Company was in compliance with all covenants of the BMO Credit Agreement as of December 31, 2015.

Amortization expenses relating to deferred financing charges were $0.1 million for each of the years ended December 31, 2015, 2014 and 2013. These costs are included in interest expense in the consolidated statements of earnings (loss).

Casinos Poland

As of December 31, 2015, CPL had debt totaling PLN 6.6 million ($1.7 million based on the exchange rate in effect on December 31, 2015) under two credit agreements and four capital lease agreements. CPL also had a credit facility whose term was extended from February 13, 2016 to February 11, 2018. There were no borrowings under the credit facility as of December 31, 2015.

The first credit agreement is with mBank (formerly known as BRE Bank). Under this agreement, CPL entered into a three year term loan in November 2013 at an interest rate of Warsaw Interbank Offered Rate (“WIBOR”) plus 1.75%. Proceeds from the loan were used to repay the balance of the Bank Pocztowy loan related to the CPL properties, invest in slot equipment and relocate the Company’s Poznan, Poland casino. As of December 31, 2015, the amount outstanding was PLN 4.4 million ($1.1 million based on the exchange rate in effect on December 31, 2015). CPL has no further borrowing availability under the loan, and the loan matures in November 2016. The mBank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and a current liquidity ratio of 0.6 or higher. On March 26, 2015, CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5. CPL was in compliance with all covenants of this mBank agreement as of December 31, 2015

The second credit agreement is also with mBank. Under this credit agreement, CPL entered into the three year term loan at an interest rate of WIBOR plus 1.70%. Proceeds from the loan were used to repay balances outstanding under a prior credit agreement that matured in September 2014 and to finance current operations. As of December 31, 2015, the amount outstanding was PLN 2.1 million ($0.5 million based on the exchange rate in effect on December 31, 2015). CPL has no further borrowing availability under the loan and the loan matures in September 2017. The mBank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and a current liquidity ratio of 0.6 or higher. On March 26, 2015, CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5. CPL was in compliance with all covenants of this mBank agreement as of December 31, 2015

The credit facility is a short-term line of credit with BPH Bank used to finance current operations. In February 2016, the term of the short-term line of credit was extended from February 13, 2016 to February 11, 2018. The extended line of credit bears the same interest rate of WIBOR plus 1.85% with a borrowing capacity of PLN 13.0 million, of which PLN 2.0 million can only be used to secure bank guarantees. The BPH Bank line of credit is secured by a building owned by CPL in Warsaw, Poland. As of December 31, 2015, there was no outstanding amount on the credit facility, and CPL had approximately PLN 11.0 million ($2.8 million based on the exchange rate in effect on December 31, 2015) available under the agreement.

CPL’s remaining debt consists of four capital lease agreements for various vehicles. As of December 31, 2015, the amount outstanding was PLN 0.1 million (less than $0.1 million based on the exchange rate in effect on December 31, 2015).

In addition, under Polish gaming law, CPL is required to maintain PLN 3.6 million in the form of deposits or bank guarantees for payment of casino jackpots and gaming tax obligations. mBank issued guarantees to CPL for this purpose totaling PLN 3.6 million ($0.9 million based on the exchange rate in effect as of December 31, 2015). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland and terminate on October 31, 2019. In addition, CPL is required to maintain deposits or provide bank guarantees for payment of additional prizes and giveaways at the casinos. The amount of these deposits varies depending on the value of the prizes. CPL maintained $0.2 million in deposits for this purpose as of December 31, 2015.

Century Downs Racetrack and Casino

As of December 31, 2015, CDR had debt totaling CAD 20.4 million ($14.7 million based on the exchange rate in effect on December 31, 2015). The debt includes CDR’s land lease and four capital lease agreements.

CDR’s land lease is a financing obligation to the Company. Prior to the Company’s acquisition of its ownership interest in CDR, CDR sold a portion of land on which the REC project is located and then entered into an agreement to lease back a portion of the land sold. The Company accounts for the lease using the financing method by accounting for the land subject to lease as an asset and the lease payments as interest on the financing obligation. Under the land lease, CDR has four options to purchase the land. The first option is July 1, 2023. Due to the nature of the CDR land lease financing obligation, there are no principal payments due until the Company exercises its option to purchase the land. Lease payments are applied to interest only, and any change in the outstanding balance of the financing obligation relates to foreign currency translation. As of December 31, 2015, the outstanding balance on the financing obligation was CAD 19.5 million ($14.1 million based on the exchange rate in effect on December 31, 2015) and the implicit interest rate was 10.0%.

CDR’s remaining debt consists of four capital lease agreements for equipment used in the operation of CDR. As of December 31, 2015, the amount outstanding was CAD 0.9 million ($0.6 million based on the exchange rate in effect on December 31, 2015).

As of December 31, 2015, scheduled maturities related to long-term debt were as follows:


Amounts in thousands	Bank of Montreal		Century Downs		Casinos Poland		Total
2016	$	2,447	$	244	$	1,432	$	4,123
2017		2,447		257		228		2,932
2018		2,447		74		0		2,521
2019		13,078		24		0		13,102
2020		0		9		0		9
Thereafter		0		14,094		0		14,094
Total	$	20,419	$	14,702	$	1,660	$	36,781