Quarterly report pursuant to Section 13 or 15(d)

Debt And Derivatives

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Debt And Derivatives
 9 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Debt And Derivatives DEBT AND DERIVATIVES
Table 6.1: Details of Debt
June 30, 2024 September 30, 2023
(in thousands)
Term Loan A $ 650,000  $ 909,375 
Term Loan B 500,000  344,934 
Subsidiary loan agreements 5,003  3,220 
Total debt principal 1,155,003  1,257,529 
Less: Unamortized debt-issuance costs and discounts (14,350) (7,536)
Total debt 1,140,653  1,249,993 
Less: Current portion of long-term debt (39,952) (86,844)
Long-term debt $ 1,100,701  $ 1,163,149 
Our principal credit agreements are held within the United States. In addition, we hold revolving credit facilities in Australia, Canada, and the United Kingdom.
On May 30, 2024, we amended our credit agreement with J.P. Morgan Chase Bank, N.A. (the "Amended Credit Agreement"), which replaced our previous arrangement with the same bank (the "Original Credit Agreement"). The Amended Credit Agreement is available for general corporate purposes, including the funding of working capital, capital expenditures, and possible future acquisitions.
The Amended Credit Agreement has three components.
•A Term Loan A facility (the "TLA"), which initially comprises $650 million. This facility matures on May 30, 2029. The interest rates are variable, based upon a combination of a Secured Overnight Financing Rate ("SOFR") and a margin based on our leverage. The margin can vary between 1.0% and 2.0%. At loan inception, it was set at 1.5% and will remain at this level until our December 2024 leverage calculation is submitted, which is likely to be in February 2025.
•A Term Loan B facility, which initially comprises $500 million. This facility matures on May 30, 2031. The interest rates are based upon SOFR, subject to a floor of 0.5%, plus a fixed 2.0% margin.
•A revolving credit facility, which enables us to borrow or utilize up to $750 million. The interest on this facility is generally based upon the same rates as those used for the TLA. In addition, we are charged a commitment fee between 0.125% and 0.30% on used funds, the fee being based upon our leverage.
The Amended Credit Agreement requires us to comply with various covenants, the terms of which are consistent with the Original Credit Agreement and customary for agreements of this type. At June 30, 2024, we are in compliance with all covenants. We do not believe that these covenants restrict our ability to successfully operate the business or to pay dividends.
The Amended Credit Agreement is, subject to customary exceptions, secured by substantially all of the assets of the Company and its wholly owned material domestic subsidiaries, and guaranteed by each of the Company’s wholly owned material domestic subsidiaries.
Bank charges incurred in amending the Original Credit Agreement have been reported as a reduction to gross debt and will be amortized over the respective lives of the loans. The Amended Credit Agreement is considered a modification of the Original Credit Agreement, and accordingly, many of the costs deferred under this arrangement will continue to be deferred prospectively.
Following the establishment of the Amended Credit Agreement, our future minimum principal payments are as follows:
Table 6.2: Details of Future Minimum Principal Payments Due
Amount Due
(in thousands)
July 1, 2024 through September 30, 2024 $ 14,378 
Year ended September 30, 2025 37,500 
Year ended September 30, 2026 41,562 
Year ended September 30, 2027 53,750 
Year ended September 30, 2028 57,813 
Years ended thereafter 950,000 
Interest Rate Derivative Instruments
We utilize interest rate swaps to reduce our risk from interest rates, which we have designated as cash flow hedges. We had entered into interest rate swaps against the Original Credit Agreement which we will continue to utilize on the Amended Credit Agreement.
•We have arrangements for a combined notional amount of $500 million, which hedges a SOFR component of our TLA to a fixed amount of 2.31%. These arrangements expire in May 2026.
•We have an arrangement for a notional amount of $150 million, which hedges a SOFR component of our TLA to a fixed amount of 4.38%. This arrangement expires in September 2024.
At June 30, 2024 and September 30, 2023, we had assets of $21.0 million and $31.0 million, respectively, related to these interest rate swaps. These were recorded as "other assets" within our consolidated balance sheets. As these instruments are considered effective cash flow hedges, gains and losses based upon interest rate fluctuations are recorded within "accumulated other comprehensive income" within our consolidated financial statements.
Debt And Derivatives DEBT AND DERIVATIVES
Table 6.1: Details of Debt
June 30, 2024 September 30, 2023
(in thousands)
Term Loan A $ 650,000  $ 909,375 
Term Loan B 500,000  344,934 
Subsidiary loan agreements 5,003  3,220 
Total debt principal 1,155,003  1,257,529 
Less: Unamortized debt-issuance costs and discounts (14,350) (7,536)
Total debt 1,140,653  1,249,993 
Less: Current portion of long-term debt (39,952) (86,844)
Long-term debt $ 1,100,701  $ 1,163,149 
Our principal credit agreements are held within the United States. In addition, we hold revolving credit facilities in Australia, Canada, and the United Kingdom.
On May 30, 2024, we amended our credit agreement with J.P. Morgan Chase Bank, N.A. (the "Amended Credit Agreement"), which replaced our previous arrangement with the same bank (the "Original Credit Agreement"). The Amended Credit Agreement is available for general corporate purposes, including the funding of working capital, capital expenditures, and possible future acquisitions.
The Amended Credit Agreement has three components.
•A Term Loan A facility (the "TLA"), which initially comprises $650 million. This facility matures on May 30, 2029. The interest rates are variable, based upon a combination of a Secured Overnight Financing Rate ("SOFR") and a margin based on our leverage. The margin can vary between 1.0% and 2.0%. At loan inception, it was set at 1.5% and will remain at this level until our December 2024 leverage calculation is submitted, which is likely to be in February 2025.
•A Term Loan B facility, which initially comprises $500 million. This facility matures on May 30, 2031. The interest rates are based upon SOFR, subject to a floor of 0.5%, plus a fixed 2.0% margin.
•A revolving credit facility, which enables us to borrow or utilize up to $750 million. The interest on this facility is generally based upon the same rates as those used for the TLA. In addition, we are charged a commitment fee between 0.125% and 0.30% on used funds, the fee being based upon our leverage.
The Amended Credit Agreement requires us to comply with various covenants, the terms of which are consistent with the Original Credit Agreement and customary for agreements of this type. At June 30, 2024, we are in compliance with all covenants. We do not believe that these covenants restrict our ability to successfully operate the business or to pay dividends.
The Amended Credit Agreement is, subject to customary exceptions, secured by substantially all of the assets of the Company and its wholly owned material domestic subsidiaries, and guaranteed by each of the Company’s wholly owned material domestic subsidiaries.
Bank charges incurred in amending the Original Credit Agreement have been reported as a reduction to gross debt and will be amortized over the respective lives of the loans. The Amended Credit Agreement is considered a modification of the Original Credit Agreement, and accordingly, many of the costs deferred under this arrangement will continue to be deferred prospectively.
Following the establishment of the Amended Credit Agreement, our future minimum principal payments are as follows:
Table 6.2: Details of Future Minimum Principal Payments Due
Amount Due
(in thousands)
July 1, 2024 through September 30, 2024 $ 14,378 
Year ended September 30, 2025 37,500 
Year ended September 30, 2026 41,562 
Year ended September 30, 2027 53,750 
Year ended September 30, 2028 57,813 
Years ended thereafter 950,000 
Interest Rate Derivative Instruments
We utilize interest rate swaps to reduce our risk from interest rates, which we have designated as cash flow hedges. We had entered into interest rate swaps against the Original Credit Agreement which we will continue to utilize on the Amended Credit Agreement.
•We have arrangements for a combined notional amount of $500 million, which hedges a SOFR component of our TLA to a fixed amount of 2.31%. These arrangements expire in May 2026.
•We have an arrangement for a notional amount of $150 million, which hedges a SOFR component of our TLA to a fixed amount of 4.38%. This arrangement expires in September 2024.
At June 30, 2024 and September 30, 2023, we had assets of $21.0 million and $31.0 million, respectively, related to these interest rate swaps. These were recorded as "other assets" within our consolidated balance sheets. As these instruments are considered effective cash flow hedges, gains and losses based upon interest rate fluctuations are recorded within "accumulated other comprehensive income" within our consolidated financial statements.