Debt

12 Months Ended

Jun. 30, 2022

Debt

Debt

6.   Debt

Term Loans and Revolving Credit Facilities

In April 2021, we entered into an amended and restated credit agreement (the “2021 Credit Agreement”) under which we had a term A loan in an aggregate initial principal amount of $300,000 (the “2021 Term A Loan”) and a revolving credit facility under which we can borrow up to $250,000, subject to the terms of the agreement (the “2021 Revolver” and together with the 2021 Term A Loan, the “2021 Credit Facilities”). The 2021 Credit Agreement amends and restates the credit agreement entered into in June 2017 (the “2017 Credit Agreement”). The 2021 Credit Facilities were used to refinance all of the Term A loans and revolving credit facility amounts outstanding under the 2017 Credit Agreement and to pay fees and expenses of the transaction. The 2021 Revolver contains a letter of credit facility.

Borrowings under the 2021 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 2021 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 3.50:1.00; (ii) less than 3.50:1.00 but greater than or equal to 2.25:1.00; or, (iii) less than 2.25:1.00, the 2021 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 3.50:1.00; (ii) less than 3.50:1.00 but greater than or equal to 2.25:1.00; or, (iii) less than 2.25:1.00, the 2021 Credit Facilities have applicable rates equal to 1.00%; 0.75%; and, 0.50%, respectively.

Pursuant to the terms of the 2021 Credit Agreement, the 2021 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 2021 Credit Facilities shall have occurred and be continuing at the time such distribution is declared. Indebtedness under the 2021 Credit Facilities is collateralized by a first priority lien on substantially all assets of Phibro and certain of our domestic subsidiaries. The 2021 Credit Agreement contains an acceleration clause should an event of default (as defined in the agreement) occur. The 2021 Credit Facilities mature in April 2026.

The 2021 Credit Agreement requires, among other things, compliance with financial covenants that permitted: (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. The 2021 Credit Agreement contains an acceleration clause should an event of default (as defined in the 2021 Credit Agreement) occur. As of June 30, 2022, we were in compliance with the financial covenants.

As of June 30, 2022, we had $145,000 in borrowings under the 2021 Revolver and had outstanding letters of credit of $2,479, leaving $102,521 available for borrowings and letters of credit under the 2021 Revolver, subject to restrictions in our 2021 Credit Facilities. 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 $150,000 of notional principal that effectively converts the floating LIBOR portion of our interest obligation on that amount of debt to a fixed interest rate of 1.8325%. The agreement matured in June 2022. We designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “Note 14— Derivatives.”

In March 2020, we entered into an interest rate swap agreement on an additional $150,000 of notional principal that effectively converts the floating LIBOR portion of our interest obligation on that amount of debt to a fixed rate of 0.62%. In July 2022, this agreement increased to a notional principal amount of $300,000 through June 2025, and effectively converts the floating LIBOR portion of our interest obligation on $300,000 of debt to a fixed interest rate of 0.62%. We designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “Note 14 — Derivatives.”

As of June 30, 2022, the interest rates for the 2021 Revolver and the Term A Loan were 3.20% and 2.37%, respectively. The weighted-average interest rates for the 2021 Revolver were 2.08% and 2.21% for the years ended June 30, 2022 and 2021, respectively. The weighted-average interest rates for the Term A Loan were 2.99% and 3.27% for the years ended June 30, 2022 and 2021, respectively.

Long-Term Debt

As of June 30	2022		2021
2021 Term A Loan due April 2026	$	288,750	$	298,125
Unamortized debt issuance costs		(825)		(1,040)
		287,925		297,085
Less: current maturities		(15,000)		(9,375)
	$	272,925	$	287,710

Aggregate Maturities of Long-Term Debt and Revolver

For the Years Ending June 30		Annual Maturities		Interest Payments
2023	$	15,000	$	11,806
2024		16,875		11,287
2025		24,375		10,605
2026		377,500		10,844
Total	$	433,750	$	44,542

For purposes of estimating future interest payments until the maturity of the 2021 Credit Facilities, we assumed the 2021 Term A Loan will decrease in accordance with the scheduled debt amortization and the 2021 Revolver continues unchanged at the June 30, 2022, balance. We assumed the March 2020 interest rate swap agreement remains in place through its June 2025 maturity and future interest rates and applicable rates are the same as the rates at June 30, 2022.