DEBT

6 Months Ended

Mar. 31, 2020

In connection with the Acquisition, we entered into a seven-year credit agreement (the "Credit Agreement") by and among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, which provides for senior secured financing of up to $1,265.0 million, consisting of a term loan facility in an aggregate principal amount of $1,065.0 million (the "Term Loan Facility") and a revolving credit facility in an aggregate principal amount of up to $200.0 million (the "Revolving Credit Facility"), including a letter of credit sub-facility of up to $50.0 million. The Term Loan Facility and the Revolving Credit Facility are referred to as the “Credit Facilities". The Revolving Credit Facility requires that the Company maintain a maximum first lien secured net leverage ratio, as defined in the Credit Agreement, of 4.00 to 1.00 as of the last day of each fiscal quarter if any borrowing under the Revolving Credit Facility is outstanding, commencing with the first full fiscal quarter after the Acquisition Date. As of March 31, 2020, our maximum first lien secured net leverage ratio was 2.02 to 1.00.

The Term Loan Facility matures on November 15, 2025, the seven-year anniversary of the Acquisition Date, and amortizes in equal quarterly installments of 0.25% of the initial principal amount, starting with the first full fiscal quarter after the Acquisition Date. The Revolving Facility matures on November 15, 2023, the five-year anniversary of the Acquisition Date. In addition, the Company is required to prepay outstanding loans under the Term Loan Facility, subject to certain exceptions, with up to 50% of the Company’s annual excess cash flow, as defined under the Credit Agreement, and 100% of the net cash proceeds of certain recovery events and non-ordinary course asset sales.

At March 31, 2020, the fair value of the Term Loan Facility, using level 2 inputs, approximated its carrying value of $941,687 as the loans bears a floating market rate of interest. As of March 31, 2020, $10,650 of the Term Loan Facility was classified as short-term, and $16,420 of debt issuance costs related to our Term Loan Facility were presented as a reduction of long-term debt.

On March 13, 2020, the Company drew $150.0 million under the Revolving Credit Facility as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of uncertain global economic conditions resulting from the Pandemic. Prior to this, the Company had not drawn any amounts under the Revolving Credit Facility. As of March 31, 2020, $150.0 million was outstanding under the Revolving Credit Facility, and our available credit under the Revolving Credit Facility was $50.0 million, including our letter of credit sub-facility. Borrowings under the Revolving Credit Facility are classified as short-term debt. Proceeds from the Revolving Credit Facility are included in Cash and cash equivalents in the Company's Consolidated Balance Sheet as of March 31, 2020. Due to the short-term nature of the borrowing under the Revolving Credit Facility, its carrying value approximates fair value.

During the first quarter of fiscal year 2020, the Company amended the Credit Agreement to reduce the interest rate on term loan borrowings. The amended Term Loan Facility and amended Credit Facilities are referred to as "Amended Term Loan Facility" and "Amended Credit Facilities", respectively. Borrowings under the Amended Credit Facilities bear interest at a rate per annum equal to, at the Company’s option, either (a) a LIBOR, subject to a 0.00% floor, or (b) a base rate, in each case plus an applicable margin of, in the case of borrowings under the Amended Term Loan Facility, 2.00% for LIBOR loans and 1.00% for base rate loans and, in the case of borrowings under the Revolving Credit Facility, initially, 1.50% for LIBOR loans and 0.50% for base rate loans. The applicable margin for borrowings under the Revolving Credit Facility varies depending on the Company’s first lien secured net leverage ratio. The Company is also required to pay a commitment fee currently equal to 0.25% per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee under the Revolving Credit Facility varies depending on the Company’s first lien secured net leverage ratio.

In the second quarter of fiscal 2019, we entered into a floating-to-fixed interest rate swap contract to hedge the variability in our LIBOR-based interest payments on approximately 70% of our Term Loan Facility balance. See Note 12 of this Report on Form 10-Q for additional information.

Principal repayments of the Term Loan Facility are generally made on the last calendar day of each quarter if that day is considered a business day.

As of March 31, 2020, scheduled principal repayments of the Term Loan were:


Fiscal Year	Principal Repayments
Remainder of 2020	$	5,325
2021	10,650
2022	10,650
2023	10,650
2024	10,650
Greater than 5 years	893,762
Total	$	941,687