Debt and Credit Lines

12 Months Ended

Nov. 30, 2018

Short-term debt consists of the following debt obligations that are due within the next twelve months:



	November 30,
	2019		2018
	(Dollars in millions)
$350 million Term Loan B, due 2023, current portion (interest at 5.03% and 5.55% respectively)	$	3.5	$	3.5
Capital lease obligations, current portion	0.8		0.7
Total	$	4.3	$	4.2

The Company’s long-term debt consists of the following:



	November 30,
	2019			2018
	(Dollars in millions)
$350 million Term Loan B, due 2023 (interest at 5.03% and 5.55% respectively)	$	298.6		$	302.1
Senior Secured Revolving Credit Facility, due 2021 (interest at 3.25% and 3.88% respectively)	19.0			12.0
Capital lease obligations	14.9			15.6
Gross debt	332.5			329.7
Less: current portion	(4.3		)	(4.2		)
Unamortized original issue discount	(1.7		)	(2.1		)
Debt issuance costs	(3.7		)	(4.7		)
Total long-term debt, net of current portion	$	322.8		$	318.7

The following table summarizes payments on long-term debt (excluding capital lease obligations) through maturity:



Year Ending November 30:	(Dollars in millions)
2020	$	3.5
2021	22.5
2022	3.5
2023	288.1
Thereafter	—

The weighted-average interest rate on the Company’s short-term debt was 5.57% and 5.40% during 2019 and 2018, respectively.

Term Loan

The Company's $350.0 million Term Loan B matures on August 26, 2023 and is primarily secured by all real property, plant, and equipment of the Company's U.S. facilities and fully and unconditionally and jointly and severally guaranteed by the material U.S. subsidiaries of the Company. The Term Loan B carries a variable interest rate based on, at the Company’s option, either a eurodollar rate or a base rate, in each case plus an applicable margin. The eurodollar rate is a periodic fixed rate equal to the ICE London Interbank Offered Rate (“LIBOR”) subject to a floor of 1.00%. The applicable margin for the eurodollar rate was originally 4.25%. The base interest rate is a fluctuating rate equal to the higher of (i) the Prime Rate, (ii) the sum of the Federal Funds Effective Rate plus 0.50%, or (iii) the one-month eurodollar rate plus 1.00%. The applicable margin for the base rate was originally 3.25%. Annual principal payments consist of $3.5 million due in quarterly installments plus potential annual excess free cash flow payments as defined in the Term Loan B agreement, with any remaining balance to be paid on August 26, 2023. The Company is no longer subject to a prepayment penalty and can prepay any amount at any time upon proper notice and is subject to a minimum dollar requirement. Prepayments will be applied towards any required annual excess free cash flow payment.

Additionally, the Term Loan B originally provided for additional borrowings of the greater of $85.0 million or an amount based on a senior secured leverage ratio, as defined in the Term Loan B agreement, provided that certain requirements are met. The Term Loan B contains affirmative and negative covenants, including limitations on additional debt, certain investments and acquisitions outside of the Company’s line of business. The Term Loan B requires the Company to maintain a total net leverage ratio of less than 5.0 to 1.0. The Company is in compliance with this covenant with a total net leverage ratio of 4.0 to 1.0 at November 30, 2019.

On March 2, 2018, the Company amended its Term Loan B agreement. Primarily, the Term Loan amendment (1) reduces the margins for borrowings under the Term Loan Agreement by 100 basis points to 3.25% for Eurodollar rate loans and 2.25% for base rate loans and (2) permits the Company to request additional term loans or incremental equivalent debt borrowings (the “Additional Term Loans”) in a maximum aggregate amount equal to the greater of (a) $120.0 million (an increase from $85.0 million previously) and (b) an aggregate principal amount such that, on a pro forma basis (giving effect to any Additional Term Loans), the Company’s senior secured net debt leverage ratio will not exceed 5.0 to 1.0. The amendment also incorporated fallback provisions to address the phasing out of LIBOR, as discussed in more detail under Item 1A. Risk Factors of this Form 10-K.

Senior Secured Revolving Credit Facility

The Company also has a Senior Secured Revolving Credit Facility (the "Facility") with a potential availability of $90.0 million, which can be further increased up to $140.0 million subject to additional borrowing base assets and lender approval. The Facility matures on August 26, 2021. The Facility is secured by U.S. accounts receivable, inventory (collectively the “Eligible Borrowing Base”) and intangible assets. Availability under the Facility will fluctuate depending on the Eligible Borrowing Base and is determined by applying customary advance rates to the Eligible Borrowing Base. The Facility includes a $5.0 million sub-limit for the issuance of commercial and standby letters of credit and a $10.0 million sub-limit for swingline loans. Outstanding letters of credit on November 30, 2019 were $0.4 million. The Facility contains affirmative and negative covenants, similar to the Term Loan B, including limitations on additional debt, certain investments and acquisitions outside of the Company’s line of business. If the average excess availability of the Facility falls below $25.0 million during any fiscal quarter, the Company must then maintain a fixed charge coverage ratio greater than 1.1 to 1.0 as defined in the agreement. Average excess availability is defined as the average daily amount available for borrowing under the Facility during the Company’s fiscal quarter. The Company was in compliance with this requirement as the average excess availability did not fall below $25.0 million during the fourth quarter of 2019.

Advances under the Facility bear interest, at the Company’s option, at either an alternate base rate or a eurodollar rate, in each case plus an applicable margin. The alternate base interest rate is a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 0.50%. The eurodollar rate is a periodic fixed rate equal to LIBOR. Applicable margins are based on the Company’s average daily excess availability during the previous fiscal quarter. If average excess availability is greater than $50.0 million, the applicable margin will

be 1.50% on eurodollar loans and 0.50% on base rate borrowings. If average excess availability is greater than or equal to $25.0 million but less than or equal to $50.0 million, the applicable margin will be 1.75% on eurodollar loans and 0.75% on base rate borrowings. If average excess availability is less than $25.0 million, the applicable margin will be 2.00% on eurodollar loans and 1.00% on base rate borrowings. The commitment fee for unused credit lines will be 0.25% if outstanding borrowings on the Facility are greater than or equal to 50% of the maximum revolver amount and 0.375% if outstanding borrowings are less than 50% of the maximum revolver amount.

At November 30, 2019, there was $19.0 million borrowed under the Facility and the amount available for borrowing was $32.1 million.

Eurodollar Revolving Loan

On May 31, 2018, the Company established a Eurodollar Revolving Loan (the "Revolver") with a potential availability of €16.0 million to provide additional liquidity and working capital flexibility in Europe. The terms of the Revolver are materially consistent with the Company's U.S. Facility, including the maturity date of August 26, 2021. The Company amended the Revolver effective June 14, 2019. Total borrowing capacity of the Revolver was increased from €16.0 million to €25.0 million. This Revolver contains a €9.0 million expansion feature the Company may exercise in the future to gain additional liquidity should secured collateral of accounts receivable increase. At November 30, 2019 there were no amounts borrowed under the Revolver and the amount available for borrowing under the Revolver was €19.0 million.

Other Debt

The Company maintains borrowing facilities at certain foreign subsidiaries, which consist of working capital credit lines and facilities for the issuance of letters of credit. As of November 30, 2019, total borrowing capacity for foreign working capital credit lines and letters of credit facilities were $12.1 million, of which all was available for utilization. These letters of credit support commitments made in the ordinary course of business.

Capital Lease Obligations

At November 30, 2019, the Company had assets under capital leases totaling $13.8 million, which are included in property, plant, and equipment in the accompanying Consolidated Balance Sheets.

The following is a schedule by year of future minimum lease payments for this capital lease together with the present value of the net minimum lease payments as of November 30, 2019.



Year Ending November 30:	(Dollars in millions)
2020	$	1.5
2021	1.5
2022	1.4
2023	1.5
2024	1.5
Thereafter	13.6
Total minimum lease payments	21.0
Less: Amount representing estimated executory costs	(0.5		)
Net minimum lease payments	20.5
Less: Amount representing interest	(5.6		)
Present value of minimum lease payments	$	14.9

Debt Issuance Costs and Original Issue Discounts

Debt issuance costs and original issue discounts incurred in connection with the issuance of the Company's debt are being amortized over the respective terms of the underlying debt, including any amendments. Total amortization expense of debt issuance costs and original issue discounts is included as a component of interest expense and was $1.7 million, $1.3 million, and $1.5 million for 2019, 2018, and 2017, respectively. During the first quarter of 2018, the Company made a $40.0 million prepayment and determined this constituted a partial extinguishment of debt and such, wrote-off $0.8 million of debt issuance costs and original issue discounts.