Annual report pursuant to Section 13 and 15(d)

Debt

v3.21.2
Debt
 12 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Debt DEBT
Table 9.1: Details of Debt
As of September 30,
2021 2020
(in thousands)
Term Loan A, due 2026 $ 1,086,250  $ — 
Term Loan B, due 2028 399,000  — 
Subsidiary loan agreements 38,281  28,895 
Total debt principal 1,523,531  28,895 
Less: Unamortized debt-issuance costs and discounts (13,839) — 
Total debt 1,509,692  28,895 
Less: Current portion of long-term debt (80,555) (10,878)
Long-term debt $ 1,429,137  $ 18,017 
On May 28, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent ("Credit Agreement"), which replaced our existing revolving credit facility. The Credit Agreement provided for the following three components.
•$1.10 billion term loan facility ("Term Loan A") which matures on May 28, 2026;
•$400.0 million term loan facility ("Term Loan B") which matures May 28, 2028;
•$600.0 million revolving credit facility ("Revolver") which matures May 28, 2026.
The interest rates applicable to loans under the Credit Agreement are floating rates based upon the London Interbank Offered Rate ("LIBOR") plus a margin. Term Loan A and the Revolver margins are dependent upon our leverage ratio. Term Loan B is set to LIBOR plus 2.00% subject to a floor of 0.50%. Since execution of the Credit Agreement, the interest rates for Term Loan A and the Revolver have been LIBOR plus 1.75%. After September 30, 2021, we may reduce our interest rates on both Term Loan A and the Revolver to LIBOR plus 1.50% based on the attainment of a total leverage ratio of 2.5 or better. The Company anticipates this rate adjustment in first quarter of fiscal year 2022, as the net total leverage ratio as of September 30, 2021 was 2.3. LIBOR is anticipated to be phased out over the next 18 months, and alternative benchmark rates have been identified in this agreement. This is the only significant arrangement within the Company that utilizes LIBOR. As of September 30, 2021, the annual effective interest rate, including original issue discount and amortization of debt issuance costs, was 2.05%.
The Credit Agreement is available for general corporate purposes, including the funding of working capital, capital expenditures, and possible future acquisitions. In addition to borrowings, it allows us to continue to issue letters of credit when necessary. As of September 30, 2021, the company had no outstanding balance on the corporate Revolver.
Under the terms of the Credit Agreement, the Company is required to comply with certain covenants, the terms of which are customary and include a net total leverage ratio and a net interest coverage ratio. The net total leverage ratio is calculated as total outstanding debt and contingent consideration liabilities less the greater of (a) unrestricted cash or (b) $75.0 million. With certain exceptions, the covenant requires the net total leverage ratio, as defined by the Credit Agreement to be less than 4.0, calculated over the previous twelve months. The net interest coverage ratio is calculated as EBITDA divided by interest expense, over the previous twelve months, all defined by the Credit Agreement. The covenant requires a net interest coverage ratio of 3.0 or greater. As of September 30, 2021, as defined by the Credit Agreement, the company calculated a net total leverage ratio of 2.3 and net interest coverage ratio of 17.0. The company was in compliance with all applicable covenants under the Credit Agreement as of September 30, 2021. We do not believe that the covenants represent a significant restriction to our ability to successfully operate the business or to pay our dividends.
Costs incurred in establishing the Credit Agreement have been reported as a reduction to the gross debt balance and will be amortized over the respective lives of the arrangements. Prior to the completion of the acquisition of VES, we entered into a bridging loan facility to ensure that funds were available in the event that our new credit facility would not be available in time. We did not use this interim facility. The cost of this facility of $8.5 million was included within "other (expense)/income, net" on our consolidated statements of operations for the year ended September 30, 2021.
In addition to the corporate Credit Agreement, we hold smaller credit facilities in Australia and the United Kingdom. These allow our businesses to borrow to meet any short-term working capital needs.
Table 9.2: Details of Future Minimum Principal Payments Due
Amount Due
(in thousands)
Year ended September 30, 2022 $ 83,303 
Year ended September 30, 2023 72,898 
Year ended September 30, 2024 93,455 
Year ended September 30, 2025 93,375 
Year ended September 30, 2026 801,500 
Thereafter 379,000 
Total Payments $ 1,523,531