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Debt
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Debt Debt
Debt at September 30, 2022 and December 31, 2021 was as follows (in millions): 
September 30,
2022		December 31,
2021
ATI Inc. 5.875% Notes due 2027
350.0 350.0 
ATI Inc. 5.125% Notes due 2031
350.0 350.0 
ATI Inc. 4.875% Notes due 2029
325.0 325.0 
ATI Inc. 3.5% Convertible Senior Notes due 2025
291.4 291.4 
ATI Inc. 4.75% Convertible Senior Notes due 2022
— 84.2 
Allegheny Ludlum 6.95% Debentures due 2025 (a)
150.0 150.0 
Term Loan due 2027200.0 200.0 
U.S. revolving credit facility— — 
Foreign credit facilities8.5 27.4 
Finance leases and other72.4 85.7 
Debt issuance costs(18.0)(20.8)
Debt1,729.3 1,842.9 
Short-term debt and current portion of long-term debt28.9 131.3 
Long-term debt$1,700.4 $1,711.6 
 
(a) The payment obligations of these debentures issued by Allegheny Ludlum, LLC are fully and unconditionally guaranteed by ATI.
Revolving Credit Facility

On September 9, 2022, the Company amended and restated its Asset Based Lending (ABL) Credit Facility, which is collateralized by the accounts receivable and inventory of the Company’s operations. As amended, the ABL facility also provides the Company with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility. This amendment and restatement extended the ABL facility through September 2027 and includes an increase of $100 million in the revolving credit facility, to $600 million. The ABL continues to include a letter of credit sub-facility of up to $200 million and a $200 million term loan (Term Loan), and with the amendment now includes a swing loan facility of up to $60 million. The Term Loan can be prepaid in increments of $25 million if certain minimum liquidity conditions are satisfied. In addition, as amended, the Company has the right to request an increase of up to $300 million in the maximum amount available under the revolving credit facility for the duration of the ABL. The Company has a $50 million floating-for-fixed interest rate swap which converts a portion of the Term Loan to a 4.21% fixed interest rate. The swap matures in June 2024.

The ABL, as amended, has interest rates that are consistent with the previous facility, replacing LIBOR with Secured Overnight Financing Rate (SOFR) plus an applicable SOFR adjustment. The Term Loan, as amended, has an interest rate of 2.0% above adjusted SOFR. As amended, the applicable interest rate for revolving credit borrowings under the ABL facility includes interest rate spreads based on available borrowing capacity that range between 1.25% and 1.75% for SOFR-based borrowings and between 0.25% and 0.75% for base rate borrowings.
The ABL facility contains a financial covenant whereby the Company must maintain a fixed charge coverage ratio of not less than 1.00:1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL revolving credit portion of the facility is less than the greater of (i) 10% of the then applicable maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance, or (ii) $60.0 million. The Company was in compliance with the fixed charge coverage ratio as of September 30, 2022. Additionally, the Company must demonstrate minimum liquidity specified by the facility during the 90-day period immediately preceding the stated maturity date of its 3.5% Convertible Senior Notes due 2025 and the 6.95% Debentures due 2025 issued by the Company’s wholly owned subsidiary, Allegheny Ludlum LLC. Costs associated with entering into the ABL amendment were $2.4 million, and are being amortized to interest expense over the extended term of the facility ending September 2027, along with $1.7 million of unamortized deferred costs previously recorded for the ABL. The ABL, as amended, also contains customary affirmative and negative covenants for credit facilities of this type, including limitations on the Company’s ability to incur additional indebtedness or liens or to enter into investments, mergers and acquisitions, dispositions of assets and transactions with affiliates, some of which are more restrictive, at any time during the term of the ABL when the Company’s fixed charge coverage ratio is less than 1.00:1.00 and its undrawn availability under the revolving portion of the ABL is less than the greater of (a) $120 million or (b) 20% of the sum of the maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance.

As of September 30, 2022, there were no outstanding borrowings under the revolving portion of the ABL facility, and $40.8 million was utilized to support the issuance of letters of credit. There were no revolving credit borrowings under the ABL facility during the first nine months of 2022 or 2021. The Company also has foreign credit facilities, primarily in China, that total $58 million based on September 30, 2022 foreign exchange rates, under which $8.5 million and $27.4 million was drawn as of September 30, 2022 and December 31, 2021, respectively.
2025 Convertible Notes

As of September 30, 2022, the Company had $291.4 million aggregate principal amount of 3.5% Convertible Notes due 2025 (2025 Convertible Notes) outstanding, which mature on June 15, 2025. As of September 30, 2022 and December 31, 2021, the fair value of the 2025 Convertible Notes was $535 million and $379 million, respectively, based on the quoted market price, which is classified in Level 1 of the fair value hierarchy. The 2025 Convertible Notes have a 3.5% cash coupon rate that is payable semi-annually in arrears on each June 15 and December 15. Including amortization of deferred issuance costs, the effective interest rate is 4.2% for the third quarters and nine months ended September 30, 2022 and 2021. Remaining deferred issuance costs were $5.2 million and $6.5 million at September 30, 2022 and December 31, 2021, respectively. Interest expense on the 2025 Convertible Notes was as follows:
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Contractual coupon rate$2.5 $2.5 $7.6 $7.6 
Amortization of debt issuance costs0.4 0.5 1.3 1.3 
   Total interest expense$2.9 $3.0 $8.9 $8.9 

The Company does not have the right to redeem the 2025 Convertible Notes prior to June 15, 2023. On or after June 15, 2023 and prior to the 41st scheduled trading day immediately preceding the maturity date, the Company may redeem all or any portion of the 2025 Convertible Notes, at its option, at a redemption price equal to 100% of the principal amount thereof, plus any accrued and unpaid interest, if the last reported sale price of ATI’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on the trading day immediately preceding the date on which ATI provides written notice of redemption.

The initial conversion rate for the 2025 Convertible Notes is 64.5745 shares of ATI common stock per $1,000 principal amount of the 2025 Convertible Notes, equivalent to an initial conversion price of approximately $15.49 per share (18.8 million shares). Prior to the close of business on the business day immediately preceding March 15, 2025, the 2025 Convertible Notes will be convertible at the option of the holders of 2025 Convertible Notes only upon the satisfaction of specified conditions and during certain periods. Thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2025 Convertible Notes will be convertible at the option of holders of 2025 Convertible Notes at any time regardless of these conditions. Conversions of the 2025 Convertible Notes may be settled in cash, shares of ATI’s common stock or a combination thereof, at ATI’s election.

ATI entered into privately negotiated capped call transactions with certain of the initial purchasers of the 2025 Convertible Notes or their respective affiliates (collectively, the Counterparties). The capped call transactions are expected generally to reduce potential dilution to ATI’s common stock upon any conversion of the 2025 Convertible Notes and/or offset any cash
payments ATI is required to make in excess of the principal amount of converted 2025 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the capped call transactions initially is approximately $19.76 per share, and is subject to adjustments under the terms of the capped call transactions.
2022 Convertible Notes

During the second quarter of 2022, $82.5 million of the 2022 Convertible Senior Notes were converted into 5.7 million shares of ATI common stock, with the remaining $1.7 million of outstanding principal balance paid in cash for notes that were not converted. The conversion rate for the 2022 Convertible Notes was 69.2042 shares of ATI common stock per $1,000 principal amount of the 2022 Convertible Notes, equivalent to a conversion price of $14.45 per share.

As of December 31, 2021, the fair value of the 2022 Convertible Notes was $102 million based on the quoted market price, which is classified in Level 1 of the fair value hierarchy. Interest on the 2022 Convertible Notes at the 4.75% cash coupon rate was payable semi-annually in arrears on each January 1 and July 1. Including amortization of deferred issuance costs, the effective interest rate was 5.4% for the third quarter ended September 30, 2021 and nine months ended September 30, 2022 and 2021. Remaining deferred issuance costs were $0.3 million at December 31, 2021. Interest expense on the 2022 Convertible Notes was as follows:
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Contractual coupon rate$— $1.0 $2.0 $3.0 
Amortization of debt issuance costs— 0.2 0.3 0.4 
   Total interest expense$— $1.2 $2.3 $3.4