Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.21.2
Debt
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Debt Debt
Long-term debt consisted of the following (in thousands):
September 30, December 31,
  2021 2020
Bank credit facility - term loan $ 63,925  $ 77,988 
Bank credit facility - revolver loans 232,659  175,473 
Principal amount of long-term debt 296,584  253,461 
Less debt issuance costs (2,375) (2,368)
Total long-term debt 294,209  251,093 
Less current portion (14,162) (20,379)
Long-term debt, less current portion $ 280,047  $ 230,714 

We have a loan agreement with a group of banks from which we borrow amounts under the loan agreement to provide working capital support, fund letters of credit, and finance acquisitions. The loan agreement includes term and revolving loan facilities. The revolving loan facility provides for revolving loans and letters of credit.
On July 23, 2021, we entered into a third amendment to our loan agreement which, among other things, extended the maturity dates with respect to the revolving credit facility and term loan facility to July 2024, lowered the applicable LIBOR rate floor, and modified the maximum Total Funded Debt to EBITDA Ratio. Except as described above, the amended loan agreement has substantially the same terms as the existing loan agreement, including covenants and events of default.
The fair value of outstanding debt as of September 30, 2021 under our bank loan facilities approximates its carrying value using Level 2 inputs based on market data on companies with a corporate rating similar to ours that have recently priced credit facilities.

Our required term and revolver loan payments after September 30, 2021 are as follows (in thousands):
2021 3,750 
2022 15,000 
2023 15,000 
2024* 262,834 
Total $ 296,584 
*Includes the revolver loan required payment of $232.7 million.

The maximum amount of credit available under the loan agreement for revolving loans and letters of credit as of September 30, 2021 was $350 million. We pay an unused commitment fee and fees on letters of credit that are issued. We had letters of credit outstanding totaling $803 thousand as of September 30, 2021 and no letters of credit outstanding as of December 31, 2020.

Under the loan agreement we may elect to increase the maximum availability of the term loan facility, the revolving loan facility, or both facilities, up to an aggregate additional amount of $100 million.

We pay interest on the term loan borrowings and revolving loan borrowings at LIBOR plus a base margin or at a base rate (typically the prime rate) plus a base margin. As of September 30, 2021, the LIBOR base margin was 2.25% and the base rate base margin was 1.75%. The base margins increase or decrease in increments as our Total Funded Debt/EBITDA Ratio increases or decreases.

We use interest rate hedges on a portion of our debt. The amount of our debt with interest rate swap agreements was $75 million and $145 million as of September 30, 2021 and December 31, 2020, respectively.

After taking into account the impact of interest rate swap agreements, as of September 30, 2021, interest rates on portions of our outstanding debt ranged from 3.50% to 6.18%, and the effective interest rate on our aggregate outstanding debt was 3.90%.

Interest expense incurred on bank loan borrowings and interest rate hedges was $2.7 million and $3.3 million for the three months ended September 30, 2021 and 2020, respectively, and $7.9 million and $9.5 million for the nine months ended September 30, 2021 and 2020, respectively.
The loan agreement contains collateral requirements to secure our loan agreement obligations, restrictive covenants, a limit on annual dividends, and other affirmative and negative covenants, conditions, and limitations. Restrictive covenants include a maximum Total Funded Debt to EBITDA Ratio and a minimum Fixed Charge Coverage Ratio. We were in compliance with required ratios and other terms and conditions as of September 30, 2021. We continue to monitor the impacts of COVID-19 on our results of operations and liquidity relative to compliance with financial covenants; at this time, we expect that we will remain in compliance with such covenants over the next twelve months.