Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.22.1
Debt
 6 Months Ended
Mar. 31, 2022
Debt Disclosure [Abstract]  
Debt DEBT
Table 7.1: Details of Debt
March 31, 2022 September 30, 2021
(in thousands)
Term Loan A, due 2026 $ 1,058,750  $ 1,086,250 
Term Loan B, due 2028 397,000  399,000 
Subsidiary loan agreements 3,971  38,281 
Total debt principal 1,459,721  1,523,531 
Less: Unamortized debt-issuance costs and discounts (12,424) (13,839)
Total debt 1,447,297  1,509,692 
Less: Current portion of long-term debt (59,911) (80,555)
Long-term debt $ 1,387,386  $ 1,429,137 
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; and
•$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%.
At execution of the Credit Agreement, the interest rates for Term Loan A and the Revolver was LIBOR plus 1.75%. During the first quarter of fiscal quarter 2022, we were able to lower 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 2.50 or better. As of March 31, 2022, the net total leverage ratio was 2.4. If we can achieve a net total leverage ratio of less than 2.00, the interest rates for Term Loan A and the Revolver could be further lowered to LIBOR plus 1.375%; conversely if the net leverage ratio increases to 2.50 or greater, the rate would revert back to LIBOR plus 1.75%. LIBOR is anticipated to be phased out over the next 18 months, and alternative benchmark rates have been identified in this agreement. This is our only significant arrangement that utilizes LIBOR. As of March 31, 2022, the annual effective interest rate, including original issue discount and amortization of debt issuance costs, was 2.4%.
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 March 31, 2022, we had no outstanding balance on the Revolver.
Under the terms of the Credit Agreement, we are 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 less the lower of (a) unrestricted cash or (b) $75.0 million divided by adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA"). 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. The covenant requires a net interest coverage ratio of 3.0 or greater. As of March 31, 2022, as defined by the Credit Agreement, we calculated a net total leverage ratio of 2.4 and net interest coverage ratio of 15.3. We were in compliance with all applicable covenants under the Credit Agreement as of March 31, 2022, and 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. In addition to the corporate Credit Agreement, we hold smaller credit facilities in Australia, Canada, and the United Kingdom. These allow our businesses to borrow to meet any short-term working capital needs.
Table 7.2: Details of Future Minimum Principal Payments Due
Amount Due
(in thousands)
April 1, 2022 through September 30, 2022 $ 32,963 
Year ended September 30, 2023 66,383 
Year ended September 30, 2024 86,500 
Year ended September 30, 2025 93,375 
Year ended September 30, 2026 801,500 
Thereafter 379,000 
Total payments $ 1,459,721