Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. GREENHILL & CO INC (1282977) 10-Q published on Aug 05, 2019 at 4:07 pm
Reporting Period: Jun 29, 2019
In conjunction with the refinancing of the 2017 Term Loan Facility in April 2019, the Company incurred fees of $5.7 million, of which $2.7 million has been recorded as deferred financing costs and $3.0 million was expensed. In addition, as a result of the refinancing, $1.8 million of previously deferred fees, or fees in aggregate $4.8 million, were charged to expense and recorded as interest expense in the condensed consolidated statements of operations. The deferred financing costs incurred in connection with the refinancing along with the remaining unamortized costs from the October 2017 borrowings, as of April 2019, of $9.0 million are being amortized into interest expense over the remaining life of the obligation and recorded as a reduction in the carrying value of the Term Loan Facility in the condensed consolidated statement of financial condition.
The Company incurred incremental interest expense of $0.4 million and $0.6 million related to the amortization of deferred financing costs for the three months ended June 30, 2019 and June 30, 2018, respectively. The Company incurred incremental interest expense of $1.0 million and $1.2 million related to the amortization of such costs for the six months ended June 30, 2019 and June 30, 2018, respectively.
On May 16, 2019, the Company entered into a new Office Lease (the “Lease”) for its new principal executive offices in New York, N.Y. Rental payments are scheduled to commence on November 1, 2020 and shall continue for a term of 15 years and 3 months. The Lease is not included in operating lease right-of-use assets and operating lease obligations on the condensed consolidated statement of financial condition as the Company does not yet have the right to use the premises.
For the three months ended June 30, 2019, we incurred interest expense of $10.6 million as compared to $5.6 million for the same period in 2018. The increase in interest expense of $5.0 million during the second quarter of 2019 principally resulted from a non-recurring charge of $4.8 million related to the refinancing of our existing term loan facility. The remaining increase relates to an increase in the average outstanding loan amount after the refinancing in April 2019. Our borrowing rate for the three month period ended June 30, 2019 was 5.76%, which was consistent with our borrowing rate in the same period in 2018, as the benefit of our 50 basis point rate reduction from our April 2019 refinancing offset the market rate increases over the past year on our variable borrowing rate.
For the six months ended June 30, 2019, due to our pre-tax loss we recognized an income tax benefit of $9.0 million, reflecting an effective rate of 24%. This compared to a provision for income taxes of $10.7 million for the same period in 2018. The provision for income taxes for the first half of 2019 and 2018 included charges of $0.8 million and $4.4 million, respectively, related to the tax effect of the difference between the grant price value and the market price value of restricted stock awards at the time of the vesting. Excluding these charges, the effective rate for the period ended June 30, 2019 was higher than the effective rate for the same period in the prior year principally as a result of lower earnings in the U.K.
On April 12, 2019, we refinanced the 2017 TLB and used proceeds of $375.0 million from a new 5 year term loan B facility (TLB) to repay in full the outstanding principal balance of the 2017 TLB of $319.4 million and pay fees and expenses. We received net proceeds of $48.3 million from the refinancing. Under the terms of the 2017 TLB we were eligible to repay, refinance or reprice the outstanding principal amount of the loan facility on or after April 12, 2019 without any incremental premium or other charge.
As a result of the refinancing, we lowered our borrowing rate by 50 basis points to LIBOR plus 3.25%, extended the maturity date of the new TLB by eighteen months to April 12, 2024, and lowered our annual amortization payments to 5% per annum, or $4.69 million quarterly, beginning on September 30, 2019 and continuing through March 31, 2024 with the remaining balance