6. DEBT

Long-term debt is comprised of the following:

Senior Secured Notes Due 2029

In December 2023, ProFrac Holdings II, LLC completed an offering of $520 million of senior secured floating rate notes due in December 2029 in a private offering to qualified institutional buyers (“2029 Senior Notes”). The Company primarily used these proceeds to repay outstanding principal amounts of the 2022 Term Loan, the REV Note, and the First Financial loan.

The 2029 Senior Notes bear interest at an adjusted Secured Overnight Financing Rate (“Adjusted SOFR”) plus a margin of 7.25% per annum with a 2.00% Adjusted SOFR floor. The Adjusted SOFR rate is equal to the applicable Secured Overnight Financing Rate plus 0.26161% per annum. Interest is payable quarterly, in arrears, on March 31, June 30, September 30 and December 31. The effective interest rate was 14.0% as of December 31, 2023. No interest was due on December 31, 2023. The first interest payment date is March 31, 2024.

The 2029 Senior Notes were issued at a discount of $5.2 million for aggregate consideration of $514.8 million and resulted in net proceeds to the Company of $498.8 million after debt issuance costs of $16.0 million.

The 2029 Senior Notes require minimum quarterly payments including principal payments of $10.0 million on June 30, 2024, September 30, 2024, and December 31, 2024, and $15.0 million at the end of each calendar quarter thereafter. On each of March 29, 2024, June 28, 2024, September 30, 2024 and December 31, 2024, an aggregate of $20.0 million aggregate principal amount of 2029 Senior Notes are redeemable, at our option, with no premium. The 2029 Senior Notes are redeemable, at our option, beginning on January 15, 2025, at a premium of 5% through January 14, 2026. This premium declines to 2.0% through January 14, 2027, and 1.0% through January 14, 2028, after which we may redeem the notes at par value.

The obligation to pay principal and interest on the 2029 Senior Notes is jointly and severally guaranteed on a full and unconditional basis by ProFrac LLC, and subject to certain exceptions, our domestic subsidiaries. The 2029 Senior Notes are secured on a first priority basis by substantially all of the assets of ProFrac Corp. and ProFrac LLC and our wholly owned domestic subsidiaries.

The 2029 Senior Notes contain a covenant requiring us to maintain a minimum loan to value (“LTV”) ratio of 0.75 to 1.00. This ratio is the aggregate unpaid principal amount of the 2019 Senior Notes divided by the orderly liquidation value of our applicable assets. The 2029 Senior Notes contain covenants that could, in certain circumstances, limit our ability to issue additional debt, repurchase or pay dividends on our common or preferred stock, sell our assets, or enter into certain other transactions. We were in compliance with all of the covenants in the indenture governing our 2029 Senior Notes at December 31, 2023.

Alpine 2023 Term Loan

In December 2023, our Alpine subsidiary entered into a senior secured term loan credit agreement (the “Alpine Term Loan Credit Agreement”) that matures in January 2029, with CLMG Corp. as administrative agent and collateral agent, and the lenders party thereto, providing for a term loan of $365.0 million (the “Alpine 2023 Term Loan”). The Company primarily used these proceeds to repay outstanding principal amounts of the 2022 Term Loan, the REV Note, and the First Financial loan.

Borrowings under the Alpine 2023 Term Loan accrue interest at either an Adjusted SOFR rate or a base rate, plus an applicable margin of 7.25% per annum with a 3.00% Adjusted SOFR floor. The Adjusted SOFR rate is equal to the applicable Secured Overnight Financing Rate plus 0.11448% per annum. The effective interest rate was 14.3% as of December 31, 2023.

The Alpine 2023 Term Loan requires minimum quarterly payments including principal payments of $5.0 million on June 30, 2024, September 30, 2024, and December 31, 2024, and $15.0 million on the last day of each calendar quarter thereafter. In connection with any voluntary prepayment of the Alpine 2023 Term Loan prior to December 27, 2025, Alpine will be required to pay the Minimum Earnings Amount (as defined in the Alpine Term Loan Credit Agreement), which generally represents the interest on the principal amount repaid that would be owed through December 27, 2025. Voluntary prepayments made after December 27, 2025 through December 27, 2026, will incur a premium of 2%. This premium declines to 1.0% for voluntary prepayments made after December 27, 2026 through December 27, 2027. The Alpine 2023 Term Loan may be prepaid at par after December 27, 2027.

The Alpine 2023 Term Loan is guaranteed by ProFrac Holding Corp. and all of Alpine’s subsidiaries. The Alpine 2023 Term Loan is secured by a lien on, and security interest in, substantially all of Alpine’s assets.

Commencing with the fiscal quarter ending September 30, 2024, the Alpine 2023 Term Loan contains a covenant requiring us not to exceed a maximum Total Net Leverage Ratio (as defined in the Alpine Term Loan Credit Agreement) of 2.00 to 1.00. This ratio is generally the consolidated total debt of Alpine divided by an adjusted EBITDA calculation. The Alpine 2023 Term Loan contains covenants that limit Alpine’s ability to issue additional debt, pay dividends or distributions, sell its assets, or enter into certain other transactions.

Alpine was in compliance with all covenants, and there were no existing defaults or events of default related to the Alpine 2023 Term Loan as of December 31, 2023.

2022 ABL Credit Facility

On March 4, 2022, ProFrac LLC, ProFrac II, LLC, as borrower, and certain of the Company’s wholly owned subsidiaries as obligors, entered into a senior secured asset-based revolving credit agreement that expires on March 4, 2027 (as amended, the

“2022 ABL Credit Facility”), with a group of lenders with JPMorgan Chase Bank N.A., as administrative agent and collateral agent.

The 2022 ABL Credit Facility, as amended, provides for a maximum availability of $325.0 million. The maximum availability of credit under the 2022 ABL Credit Facility is limited at any time to the lesser of the lenders committed amounts or a borrowing base. The borrowing base is based on percentages of eligible accounts receivable and eligible inventory, which serve as collateral for the ABL Credit Facility, and is subject to certain reserves. Assets of our Alpine subsidiary are excluded from the borrowing base. If at any time borrowings and letters of credit issued under the credit facility exceed the borrowing base, we will be required to repay an amount equal to such excess. As of December 31, 2023, the maximum availability under the ABL credit facility was limited to our eligible borrowing base of $210.9 million with $117.4 million of borrowings outstanding and $10.1 million of letters of credit outstanding, resulting in approximately $83.4 million of remaining availability.

Borrowings under the 2022 ABL Credit Facility accrue interest at either a SOFR rate or a base rate, plus an applicable margin. The applicable margin for SOFR rate loans ranges from 1.5% to 2.0% and for base rate loans ranges from 0.5% to 1.0%. The 2022 ABL Credit Facility bears an unused line fee ranging from 0.250% to 0.375%. The effective interest rate was 9.5% as of December 31, 2023.

We are required by the 2022 ABL Credit Facility to maintain minimum liquidity of $15.0 million at all times. If the amount available under the 2022 ABL Credit Facility is less than the greater of 12.5% of our maximum availability or $30.0 million, we will be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, to the extent such conditions continue for at least five consecutive business days, and we will be subject to the cash dominion provisions under the agreement.

The 2022 ABL Credit Facility contains certain customary representations and warranties and affirmative and negative covenants. The negative covenants include, subject to customary exceptions, limitations on indebtedness, dividends, distributions and certain other payments, investments, acquisitions, prepayments of specified junior indebtedness, amendments of specified junior indebtedness, transactions with affiliates, dispositions, mergers and consolidations, liens, restrictive agreements, sale and leaseback transactions, changes in fiscal periods and changes in line of business. The Company was in compliance with all covenants, and there were no existing defaults or events of default related to the 2022 ABL Credit Facility as of December 31, 2023.

Monarch Note

In connection with our acquisition of Monarch in December 2022, $87.5 million of the purchase price was financed through a seller-financed note (the “Monarch Note”, see “Note 4 - Business Combinations” for additional information). The Monarch Note matures in December 2024 and bears interest at an annual rate of 2.5%.

The Monarch Note requires minimum quarterly payments of $10.9 million. Alpine has an option to prepay the loan in whole or in part without penalty or premium. The Monarch Note is secured by Alpine’s equity interest in Monarch, substantially all of the assets of Monarch, and real property acquired in connection with the Monarch Acquisition.

The Monarch Note was initially measured at fair value in connection with the Monarch Acquisition, resulting in recording a debt discount of $10.4 million. We amortize such discount as an adjustment to interest expense using the effective interest method over the term of the Monarch Note. As of December 31, 2023, our effective interest rate on the Monarch Note was 12.1%.

Equify Notes

In connection with our acquisition of USWS in November 2022 (see “Note 4 - Business Combinations” for additional information), we assumed two equipment financing notes with Equify Financial, LLC, a related party to the Company controlled by the Wilks Parties. At acquisition, these notes had principal balances of $11.9 million and $12.3 million, have terms through August 2027 and October 2027, and bear interest at an annual rate of 14.8% and 15.5%, respectively. The Equify Notes were initially measured at fair value in connection with the USWS Acquisition, resulting in recording a debt premium of $3.6 million. We amortize such premium as an adjustment to interest expense using the effective interest method over the term of the Equify Notes. As of December 31, 2023, the effective interest rates on the Equify Notes were 3.4% and 4.2%. These notes are collateralized by certain equipment in our stimulation services segment.

Other Indebtedness

The Company has other indebtedness of $13.8 million including equipment financing notes, insurance premium financing and light-duty vehicle loans.

Restricted Assets

Our Alpine 2023 Term Loan requires us to segregate collateral associated with Alpine and limits our ability to use Alpine's cash or assets to satisfy our obligations or the obligations of our other subsidiaries. We also have limited ability to provide Alpine with liquidity to satisfy its obligations. See “Note 15 - Business Segments” for certain financial information for Alpine, which is our proppant production segment.

2022 Term Loan Credit Facility (Extinguished)

On March 4, 2022, ProFrac LLC, ProFrac Holdings II, LLC (“ProFrac II LLC”), as borrower, and certain of the Company’s wholly owned subsidiaries as obligors, entered into a senior secured term loan credit agreement that expires on March 4, 2025 (as amended, the “2022 Term Loan Credit Facility”), with Piper Sandler Finance LLC, as administrative agent and collateral agent, and the lenders party thereto, providing for a term loan facility in an aggregate amount of $450.0 million.

In December 2023, amounts outstanding under the 2022 Term Loan were repaid with proceeds received from the issuance of our Senior Secured Notes and the 2023 Alpine Term Loan, resulting in loss on extinguishment of debt of $35.4 million.

Borrowings under the 2022 Term Loan Credit Facility accrued interest at either a SOFR rate or a base rate, plus an applicable margin. The applicable margin for SOFR rate loans ranged from 7.25% to 8.00% and for base rate loans ranged from 6.25% to 7.00%.

The 2022 Term Loan Credit Facility was guaranteed by ProFrac LLC and all of the Company’s material existing subsidiaries and certain direct and indirect future U.S. restricted subsidiaries of the Company. The 2022 Term Loan Credit Facility was secured by a lien on, and security interest in, substantially all of ours and each such guarantor’s assets.

The 2022 Term Loan Credit Facility contained certain customary representations and warranties and affirmative and negative covenants. The 2022 Term Loan Credit Facility contained customary events of default. The Company was in compliance with all covenants, and there were no defaults or events of default related to the 2022 Term Loan Credit Facility.

REV Note (Extinguished)

In connection with our acquisition of REV in December 2022, $39.0 million of the purchase price was financed through a seller-financed note (the “REV Note”, see “Note 4 - Business Combinations” for additional information). The REV Note matured on June 30, 2025 and bore interest at an annual rate of 2.25%.

In December 2023, amounts outstanding under the REV Note were repaid with proceeds received from the issuance of our Senior Secured Notes and the 2023 Alpine Term Loan, resulting in loss on extinguishment of debt of $1.0 million.

One of the REV Sellers joined the Company in a management capacity upon the acquisition of REV.

First Financial Loan (Extinguished)

In December 2021, the Company entered into a $30.0 million loan with First Financial Bank, N.A. (“First Financial Loan”). The First Financial Loan had a maturity date of January 1, 2024 with an interest rate of LIBOR plus 3.5%, and the loan was to be repaid by equal payments of principal and interest beginning in February 2022.

In December 2023, amounts outstanding under the First Financial Loan were repaid with proceeds received from the issuance of our Senior Secured Notes and the 2023 Alpine Term Loan.

Flotek Convertible Notes (Extinguished)

In February 2022, Flotek entered into a private investment in public equity transaction (the “PIPE Transaction”) with a consortium of investors to secure growth capital. Pursuant to the PIPE Transaction, Flotek issued $11.2 million in aggregate initial principal amount of Flotek Convertible Notes to parties other than the Company. The Flotek Convertible Notes accrued paid-in-kind interest at a rate of 10% per annum, had a maturity of one year, and were convertible into common stock of Flotek. In March 2022, $3.0 million of Flotek Convertible Notes were converted at a holder’s option into approximately 2.8 million shares of Flotek common stock. In February 2023, Flotek's convertible notes matured and all $12.7 million principal amount were converted to shares of Flotek common stock, which is classified as "Noncontrolling interests" in our consolidated balance sheets.

The Flotek Convertible Notes were obligations of Flotek and had no recourse or claim against the assets of ProFrac Holding Corp. or its other consolidated subsidiaries.

Maturities of Debt

As of December 31, 2023, the principal maturity schedule for our debt outstanding is as follows: