Debt

12 Months Ended

Jun. 30, 2018

5. Debt

Term Loans and Revolving Credit Facilities

In June 2017, we entered into a new credit agreement (the “Credit Agreement”). Under the Credit Agreement, lenders extended credit to us in the form of a Term A loan, with an aggregate principal amount of $250,000 (the “Term A Loan”) and a revolving credit facility, with an aggregate principal amount of $250,000 (the “Revolver,” and together with the Term A Loan, the “Credit Facilities”). We used the proceeds from the Credit Facilities to repay all debt outstanding under the previous credit facilities as of the closing date and to pay fees and expenses of the transaction. We recorded a $2,598 loss on extinguishment of debt for certain unamortized debt issuance costs and debt discount related to the retired debt.

Borrowings under the Credit Facilities bear interest at rates based on the ratio of the Company and its subsidiaries’ net consolidated first lien indebtedness to the Company and its subsidiaries’ consolidated EBITDA (the “First Lien Net Leverage Ratio”). The interest rate per annum applicable to the loans under the Credit Facilities is based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either (1) a Eurodollar rate determined by reference to LIBOR with a term as selected by the Company, or (2) a base rate determined by reference to the highest of (a) the rate as publicly announced from time to time by Bank of America as its “prime rate,” (b) the federal funds effective rate plus 0.50% and (c) the LIBOR daily floating rate plus 1.00%.

In the case of LIBOR and Eurodollar rate loans, if the First Lien Net Leverage Ratio is (i) equal to or greater than 3.00:1.00; (ii) less than 3.00:1.00 but greater than or equal to 2.25:1.00; or, (iii) less than 2.25:1.00, the Credit Facilities have applicable rates equal to 2.00%; 1.75%; and, 1.50%, respectively. In the case of base rate loans, if the First Lien Net Leverage Ratio is (i) equal to or greater than 3.00:1.00; (ii) less than 3.00:1.00 but greater than or equal to 2.25:1.00; or, (iii) less than 2.25:1.00, the Credit Facilities have applicable rates equal to 1.00%; 0.75%; and, 0.50%, respectively.

Pursuant to the terms of the Credit Agreement, the Credit Facilities are subject to various covenants that, among other things and subject to the permitted exceptions described therein, restrict us and our subsidiaries with respect to: (i) incurring additional debt; (ii) making certain restricted payments or making optional redemptions of other indebtedness; (iii) making investments or acquiring assets; (iv) disposing of assets (other than in the ordinary course of business); (v) creating any liens on our assets; (vi) entering into transactions with affiliates; (vii) entering into merger or consolidation transactions; and (viii) creating guarantee obligations; provided, however, that we are permitted to pay distributions to stockholders out of available cash subject to certain annual limitations and so long as no default or event of default under the Credit Facilities shall have occurred and be continuing at the time such distribution is declared. Indebtedness under the Credit Facilities is collateralized by a first priority lien on substantially all assets of Phibro and certain of our domestic subsidiaries. The Credit Agreement contains an acceleration clause should an event of default (as defined in the agreement) occur. The Credit Facilities mature on June 29, 2022.

The Credit Agreement requires, among other things, compliance with financial covenants that permit: (i) a maximum First Lien Net Leverage Ratio of 4.00:1.00 and, (ii) a minimum interest coverage ratio of 3.00:1.00, each calculated on a trailing four-quarter basis. As of June 30, 2018, we were in compliance with the financial covenants.

As of June 30, 2018, we had $70,000 in borrowings under the Revolver and had outstanding letters of credit of $4,191, leaving $175,809 available for borrowings and letters of credit under the Revolver. We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The terms of these letters of credit are all less than one year.

In July 2017, we entered into an interest rate swap agreement on $150 million of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. We designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “—Derivatives.”

As of June 30, 2018, the interest rates for the Revolver and the Term A Loan were 3.59% and 3.43%, respectively. The weighted-average interest rates for the outstanding revolving credit facilities were 3.20% and 3.48% for the years ended June 30, 2018 and 2017, respectively. The weighted-average interest rates for the term loans were 3.33% and 4.06% for the years ended June 30, 2018 and 2017, respectively.

Foreign Credit Facilities

Our Israel subsidiaries have aggregate credit facilities available of approximately $13.8 million (the “Israel Credit Facilities”). As of June 30, 2018, we had no outstanding borrowings or other commitments outstanding under the Israel Credit Facilities. Interest rate elections under the Israel Credit Facilities are LIBOR plus 2.25% or Prime Rate plus 0.50%. The Israel Credit Facilities mature in March and August 2019.

Long-Term Debt

As of June 30	June 30, 2018			June 30, 2017
Term A Loan due June 2022		$	243,750		$	250,000
Capitalized lease obligations			118			—
			243,868			250,000
Unamortized debt issuance costs and debt discount			(1,487)			(1,859)
			242,381			248,141
Less: current maturities			(12,579)			(6,250)
		$	229,802		$	241,891

Aggregate Maturities of Long-Term Debt

For the Years Ended June 30
2019	$	12,579
2020		12,539
2021		18,750
2022		200,000
Total	$	243,868