Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

Term Loan and Revolving Facility

Pursuant to a loan agreement (as amended to date, the “Credit Agreement”), the Company previously entered into a term loan totaling $1,650.0 million in aggregate principal amount with Deutsche Bank AG (the “Term Loan”) and an accompanying $100.0 million revolving loan (the “Revolving Facility”). The Term Loan has been repriced on multiple occasions, and in December 2022, the Term Loan was amended to replace the original LIBOR base interest rate with SOFR. The Term Loan now bears interest at an annual rate of adjusted SOFR (SOFR plus 0.10% for a credit risk adjustment), plus 2.50%, with a 0.75% adjusted SOFR floor. The Company typically selects a one-month interest period, resulting in interest expense incurred using one-month term SOFR. All other terms of the Term Loan remain unchanged, including maturity of the Term Loan in November 2026. The interest rate on the Revolving Facility was also modified to use adjusted SOFR as the base rate beginning December 30, 2022. The Revolving Facility now bears interest at an annual rate of adjusted SOFR plus 3.75%, with no adjusted SOFR floor, and a maturity date in November 2024. Principal payments equal $16.5 million per annum (one percent of the full principal amount of the Term Loan), payable quarterly, with the remaining principal due upon maturity.

In the fourth quarter of 2022, the Company prepaid $100.0 million of principal on the Term Loan. As of June 30, 2023 and December 31, 2022, the Company reported an aggregate of $1,496.3 million and $1,504.6 million in borrowings under the Term Loan, respectively. These amounts do not include $15.3 million and $17.4 million of net unamortized deferred financing costs as of June 30, 2023 and December 31, 2022, respectively. The net principal balance in borrowings in the accompanying condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 amounted to $1,481.0 million and $1,487.2 million, respectively. As of June 30, 2023 and December 31, 2022, based upon over-the-counter

bid levels (Level 2 - market approach), the fair value of the borrowings under the Term Loan was $1,499.2 million and $1,494.3 million, respectively. The Company had not borrowed under the Revolving Facility as of June 30, 2023 or December 31, 2022.

The Credit Agreement restricts the Company’s ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA” as defined in the Credit Agreement) and unlimited exceptions based on achievement and maintenance of specified leverage ratios, for, among other things, incurring indebtedness and liens and making investments, restricted payments for dividends and share repurchases, and payments of subordinated indebtedness. The Credit Agreement also contains an annual mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement), which is phased out based on achievement and maintenance of specified leverage ratios. As of December 31, 2022, the Company was below the specified leverage ratio, and a mandatory prepayment sweep was therefore not required.

The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan. With respect to the Revolving Facility, the Credit Agreement requires the Company to maintain a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default. The Company was in compliance with all covenants as of June 30, 2023.

Interest on Debt

Total interest incurred includes amortization of deferred financing fees and capitalized interest. The following table presents the interest and amortization of deferred financing fees related to the Term Loan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In thousands)				(In thousands)
Total interest incurred	$	21,971	$	15,931	$	43,307	$	31,233
Amortization of deferred financing fees	$	1,130	$	1,200	$	2,240	$	2,382
Capitalized interest	$	1,396	$	475	$	2,726	$	864

As of each of June 30, 2023 and December 31, 2022, accrued interest on the Term Loan was $0.3 million.