Note 7. Debt

As of December 31, 2024, the Company had $22.8 million outstanding under its term loan facility and $45.0 million in borrowings under its revolving credit facility. The Company has no available borrowing capacity under its revolving credit facility.

As of December 31, 2023, the Company had $25.4 million outstanding under its term loan facility and $0.0 million in borrowings under its revolving credit facility. The Company had available $45.0 million under its revolving credit facility.

Secured credit agreements

On December 29, 2023, the Company entered into the Second Amendment to Credit Agreement (the “Second Amendment”), which amended the credit agreement, dated as of November 17, 2021 (the “Credit Agreement”, the Credit Agreement as amended, the “Existing Credit Agreement,” and the Existing Credit Agreement, as amended by the Second Amendment, the “Amended Credit Agreement”) by and among, inter alios, Cambium Networks, Ltd. as the borrower (the “Borrower”), the Company as a guarantor, Cambium (US), L.L.C., as a guarantor, certain other subsidiaries of the Company party thereto as guarantors (with the Borrower and each guarantor being, individually, a “Loan Party” and collectively, the “Loan Parties”), Bank of America, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), a Lender, Swingline Lender and an L/C Issuer and the other Lenders party thereto from time to time. Capitalized terms used but not otherwise defined herein shall have the meanings as assigned to such terms in the Second Amendment and Amended Credit Agreement as previously filed as Exhibit 10.47 and incorporated by reference in this Comprehensive Form 10-K.

The Second Amendment amended the Existing Credit Agreement by, among other things, establishing a covenant relief period, which began on December 31, 2023 and ended on November 30, 2024 (“Covenant Relief Period”) during which time the Company was (a) required to maintain certain Liquidity, (b) required to maintain certain levels of Consolidated EBITDA, (c) required to provide certain additional financial reporting to the Administrative Agent and (d) not required to meet (or, during such period, test) its Consolidated Leverage Ratio or Consolidated Fixed Charge Coverage Ratio. Additionally, the Second Amendment provided that, during the Covenant Relief Period, (x) the Applicable Rate of interest being incurred on any outstanding Loans is increased to 3.25% per annum for Term SOFR Loans and 2.25% per annum for Base Rate Loans, (y) the commitment fee for undrawn commitments is increased to 0.35% and (z) the ability of the Loan Parties to make certain Investments, Dispositions and Restricted Payments, in each case, as more fully set forth in the Amended Credit Agreement.

At December 31, 2024, the applicable margin was 2.25% and the effective interest rate on the term loan facility was 10.24%. The weighted-average interest rate on the revolving credit facility was 8.73% for the year ended December 31, 2024. In addition to the interest charged on the term loan facility and the revolving credit facility, as a result of the covenant violations, the bank converted the term loan and revolving credit facilities to Base Rate loans on the default date and has imposed an additional 2% interest penalty on all outstanding amounts until the events of default are cured.

The maturity date of the term loan facility and the revolving credit facility, with all amounts outstanding becoming due and payable in full, is November 17, 2026.

Obligations under the Second Amendment are guaranteed by the Loan Parties and secured by Collateral, in each case, as set forth in the Existing Credit Agreement, including a lien on all assets owned by the Borrower (subject to agreed security principles, but providing for a customary qualifying floating charge over all of the Company's assets, with certain customary exceptions). The Second Amendment also required the Borrower and its Subsidiaries to transition certain of their primary principal disbursement services, payroll services and primary operating customer deposit services to Bank of America, N.A.

Loan covenants and violations

The Amended Credit Agreement is subject to financial covenants, including covenants which require the Company to meet key financial ratios and customary affirmative and negative covenants. The Company was not in compliance with its quarterly consolidated EBITDA covenant as of September 30, 2024, its monthly liquidity covenant as of October 31, 2024 and November 30, 2024 and its quarterly consolidated fixed ratio covenant and consolidated leverage ratio covenant as of December 31, 2024. These events of default afford the lender the right to declare the entire outstanding $22.8 million principal and interest immediately due and payable as well as the $45 million outstanding under the revolving credit facility. Although the Company continues regular discussions with the lender to address its noncompliance of the covenants, it has been unable to obtain a waiver of the defaults from the lender, or otherwise refinance the indebtedness. There can be no assurances that the lender will provide a waiver and could declare the Company in default and accelerate all amounts due under the term loan facility and the revolving credit facility.

As the covenant violations give the lender the right to require immediate repayment of the amounts outstanding, the entire $22.8 million outstanding on the term loan facility and the $45.0 million outstanding under the revolving credit facility are classified as current and included in Current portion of long-term debt, net on the consolidated balance sheets as of December 31, 2024. Further, the $0.2 million of unamortized debt issuance cost associated with the term loan facility is classified as current and included in Current portion of long-term debt, net and $0.4 million of unamortized debt issuance costs associated with the revolving credit facility is classified as current and included in Other current assets on the consolidated balance sheets as of December 31 2024. If the lender requires immediate repayment of the outstanding term loan facility and revolving credit facility, the Company would be required to write-off the unamortized debt issuance costs upon extinguishment of the debt.

Interest expense, net

Net Interest expense, including bank charges and amortization of debt issuance costs, was $2.5 million and $5.8 million for the years ended December 31, 2023 and 2024, respectively. The increase in interest expense is primarily due to the addition of interest on the revolving credit facility against amounts borrowed in the first half of 2024 and an increase in the interest rate due to the events of default noted above. For the year ended December 31, 2024, the Company also expensed $0.6 million of fees related to an aborted amendment to our secured credit agreement.