Long-Term Debt

12 Months Ended

Mar. 31, 2020

Long-term debt is summarized as follows (in millions):


	March 31, 2020		March 31, 2019
Term loan (1)	$	620.8	$	718.4
4.875% Senior Notes due 2025 (2)	495.7		495.0
Revolving credit facility (3)	249.2		—
Securitization facility borrowings (4)	74.9		—
Finance leases and other subsidiary debt (5)	32.8		24.6
Total	1,473.4		1,238.0
Less current maturities	76.4		1.2
Long-term debt	$	1,397.0	$	1,236.8

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(1)Includes unamortized debt issuance costs of $4.2 million and $6.6 million at March 31, 2020 and March 31, 2019, respectively.

(2)Includes unamortized debt issuance costs of $4.3 million and $5.0 million at March 31, 2020 and March 31, 2019, respectively.

(3)Includes unamortized debt issuance costs of $0.8 million at March 31, 2020.

(4)Includes unamortized debt issuance costs of $0.1 million at March 31, 2020.

(5)See more information related to finance leases within Note 14, Leases.

Senior Secured Credit Facility

At March 31, 2020, the Company’s Third Amended and Restated First Lien Credit Agreement, as amended (the “Credit Agreement”), is funded by a syndicate of banks and other financial institutions and provides for (i) a $725.0 million term loan facility (which was reduced to $625.0 million as a result of a December 2019 voluntary prepayment, as discussed below) and (ii) a $264.0 million revolving credit facility. As of March 31, 2020, the Company was in compliance with all applicable covenants under the Credit Agreement, including compliance with a maximum permitted total net leverage ratio (the Company's sole financial maintenance covenant under the revolving credit facility discussed below) of 6.75 to 1.0. The Company's total net leverage ratio was 2.1 to 1.0 as of March 31, 2020.

Term Debt

On November 21, 2019, the Company entered into an Incremental Assumption Agreement (the “Amendment”) with Credit Suisse AG, Cayman Islands Branch, as administrative agent and as the refinancing term lender, relating to the Credit Agreement. Prior to the Amendment, the term loan facility under the Credit Agreement, which was originally issued in an aggregate principal amount of $800.0 million, had a principal balance of $725.0 million on account of a $75.0 million voluntary prepayment by the Company in fiscal 2019 ("Prior Term Loan"). The Amendment provided for the issuance of a term loan facility in an aggregate principal amount of $725.0 million ("Term Refinancing Loan") and the proceeds were used to repay in full the aggregate principal amount of the Prior Term Loan.

The Term Refinancing Loan has a maturity date of August 21, 2024, and there are no required principal payments due or scheduled under the term debt until the maturity date. Borrowings under the Term Refinancing Loan, as amended, bear interest at either (i) an Adjusted LIBOR Rate (subject to a 0% floor) plus an applicable margin of 1.75% (which was reduced from 2.0%) or at an alternative base rate plus an applicable margin of 0.75% (which was reduced from 1.00%). At March 31, 2020 and 2019, the borrowings under the Term Refinancing Loan and Prior Term Loan had weighted-average effective interest rates of 2.74% and 4.49%, respectively. During the years ended March 31, 2020 and 2019, the borrowings under the Term Refinancing Loan and Prior Term Loan had weighted-average effective interest rates of 3.96% and 4.30%, respectively.

During fiscal 2020, the Company recognized a $1.5 million loss on the debt extinguishment in connection with the aforementioned Amendment, which was comprised of $0.7 million of refinancing related costs, as well as a non-cash write-off of debt issuance costs associated with previously outstanding debt of $0.8 million. Additionally, the Company capitalized $0.1 million of direct costs associated with the Term Refinancing Loan, which will be amortized over the life of the loan as interest expense using the effective interest method. Following the Amendment, the Company made a voluntary prepayment on its Term Refinancing Loan of $100.0 million in the third quarter of fiscal 2020. In connection with this prepayment, the Company recognized an additional $0.7 million loss on debt extinguishment to write-off a portion of the unamortized debt issuance costs.

During fiscal 2019, the Company made a voluntary prepayment on its Prior Term Loan of $75.0 million. In connection with this prepayment, the Company recognized a $0.7 million loss on debt extinguishment to write off a portion of the unamortized debt issuance costs.

During fiscal 2018, the Company recognized an $11.9 million loss on the debt extinguishment associated with the Prior Term Loan, which was comprised of $3.9 million of refinancing-related costs, as well as a non-cash write-off of unamortized debt issuance costs of $8.0 million. Additionally, the Company capitalized $0.8 million and $6.0 million of direct costs associated with the Prior Term Loan, which are being amortized over the life of the loans as interest expense using the effective interest method.

Revolving Credit Facility

The Credit Agreement includes a $264.0 million revolving credit facility that has a maturity date of March 15, 2023. For revolving commitments, the Company's applicable margin above the base rate is 2.00% in the case of ABR borrowings and 3.00% in the case of Eurocurrency borrowings, subject to a net first lien leverage test. In the event the Company's net first lien leverage ratio is less than 1.5 to 1.0, its applicable margin on both ABR and Eurocurrency borrowings would decrease by twenty-five (25) basis points. The Company's net first lien leverage ratio was 2.1 to 1.0 as of March 31, 2020.

In addition to paying interest on outstanding principal, the Company is subject to a commitment fee to the lenders under the revolving credit facility with respect to the unutilized commitments thereunder at a rate equal to 0.50% per annum.

At March 31, 2020, $250.0 million was borrowed under the revolving credit facility. No amount was borrowed under the revolving credit facility at March 31, 2019. As of and during the year ended March 31, 2020 borrowings under the revolving credit facility had weighted-average effective interest rates of 4.00%. As of March 31, 2020 and 2019, $4.7 million and $5.6 million of the revolving credit facility were considered utilized in connection with outstanding letters of credit, respectively.

4.875% Senior Notes due 2025

On December 7, 2017, the Company issued $500.0 million aggregate principal amount of 4.875% senior notes due December 15, 2025 (the “Notes”). The Notes were issued by RBS Global, Inc. and Rexnord LLC (Company subsidiaries; collectively, the “Issuers”) pursuant to an Indenture, dated as of December 7, 2017 (the “Indenture”), by and among the Issuers, the domestic subsidiaries of the Company (with certain exceptions) as guarantors named therein (the “Subsidiary Guarantors”) and Wells Fargo Bank, National Association (the “Trustee”). The Notes are general senior unsecured obligations of the Issuers. Rexnord Corporation separately entered into a Parent Guarantee with the Trustee whereby it guaranteed certain obligations of the Issuers under the Indenture. The Notes pay interest semi-annually on June 15 and December 15. The Notes were not and

will not be registered under the Securities Act of 1933 or any state securities laws. Debt issuance costs associated with the Notes are being amortized over the life of the Notes as interest expense using the effective interest method.

The Issuers may redeem some or all of the Notes at any time or from time to time prior to December 15, 2020 at certain "make-whole" redemption prices (as set forth in the Indenture) and after December 15, 2020 at specified redemption prices (as set forth in the Indenture). Additionally, the Issuers may redeem up to 40% of the aggregate principal amount of the Notes at any time or from time to time prior to December 15, 2020 with the net proceeds of specified equity offerings at specified redemption prices (as set forth in the Indenture). Upon a change of control (as defined in the Indenture), the Issuers will be required to make an offer to purchase the Notes at a price equal to 101% of the principal amount of the Notes on the date of purchase plus accrued interest.

The Indenture contains customary covenants, such as restrictions on the Issuers and its restricted subsidiaries (but not on Rexnord Corporation) incurring or guaranteeing additional indebtedness or issuing certain preferred shares, paying dividends and making other restricted payments and creating or incurring certain liens. The Notes and Indenture do not contain any financial covenants. The Notes and Indenture contain customary events of default, including the failure to pay principal or interest when due, breach of covenants, cross-acceleration to other debt of the Issuers or restricted subsidiaries in excess of $50 million and bankruptcy events, all subject to terms, including notice and cure periods, as set forth in the Indenture.

Accounts Receivable Securitization Program

The Company has an amended accounts receivable securitization facility (the "Securitization") with Wells Fargo & Company ("Wells Fargo"). Pursuant to the agreements evidencing the Securitization, Rexnord Funding LLC ("Rexnord Funding") (a wholly owned bankruptcy-remote special purpose subsidiary) has granted Wells Fargo a security interest in all of its current and future receivables and related assets in exchange for a credit facility permitting borrowings of up to a maximum aggregate amount of $100.0 million outstanding from time to time. Such borrowings are used by Rexnord Funding to finance purchases of accounts receivable. The amount of advances available will be determined based on advance rates relating to the eligibility of the receivables held by Rexnord Funding at that time. Advances bear interest based on LIBOR plus 1.20%. The last date on which advances may be made is December 30, 2020, unless the maturity of the Securitization is otherwise accelerated. In addition to other customary fees associated with financings of this type, Rexnord Funding pays an unused line fee to Wells Fargo based on any unused portion of the Securitization facility. If the average daily outstanding principal amount during a calendar month is less than 50% of the average daily aggregate commitment in effect during such month, the unused line fee is 0.50% per annum; otherwise, it is 0.375% per annum.

The Securitization constitutes a "Permitted Receivables Financing" under the Credit Agreement and does not qualify for sale accounting under ASC 860, Transfers and Servicing. Any borrowings under the Securitization are accounted for as secured borrowings on the Company's consolidated balance sheets. Financing costs associated with the Securitization are recorded within "Interest expense, net" in the consolidated statements of operations if revolving loans or letters of credit are obtained under the facility.

At both March 31, 2020 and March 31, 2019, the Company's borrowing capacity under the Securitization was $100.0, respectively, based on the current accounts receivables balance. As of March 31, 2020 and 2019, $75.0 million and $0.0 million was borrowed under the Securitization, respectively. In addition, $5.7 million and $7.1 million of available borrowing capacity under the Securitization was considered utilized in connection with outstanding letters of credit at March 31, 2020 and March 31, 2019, respectively. As of and during the year ended March 31, 2020, borrowings under the Securitization had weighted-average effective interest rates of 2.19% and 2.09%, respectively. As of March 31, 2020, the Company was in compliance with all applicable covenants and performance ratios contained in the Securitization.

Other Subsidiary Debt

Prior to 2016, the Company received an aggregate of $9.8 million in net proceeds from financing agreements related to facility modernization projects at two North American manufacturing facilities. These financing agreements were structured with unrelated third party financial institutions (the "Investors") and their wholly-owned community development entities in connection with the Company's participation in transactions qualified under the federal New Market Tax Credit program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended. Upon closing of these transactions, the Company provided an aggregate of $27.6 million to the Investor, in the form of loans receivable, with a term of 30 years bearing an interest rate of approximately 2.0% per annum. Under the terms of the financing agreements and upon meeting certain conditions, both the Investors and the Company have the ability to trigger forgiveness of the net debt. During fiscal year 2019, $23.4 million of the associated loans and $17.9 million of the related loans receivable were forgiven by both the Investors and the Company resulting in a non-cash gain on debt extinguishment of $5.0 million, net of the write-off of $0.5 million of unamortized debt issuance costs associated with the forgiven debt. During fiscal 2020, the remaining $14.0 million of aggregate loans and $9.7 million of loans receivable remaining were also jointly forgiven by the Company and the Investors, resulting in a non-cash gain on debt extinguishment of $3.2 million. As of March 31, 2020, there are no outstanding balances related to the New Market Tax Credit related debt.

At March 31, 2020 and 2019, in addition to the aforementioned New Market Tax Credit, various wholly owned subsidiaries had additional debt of $32.8 million and $10.6 million, respectively, comprised primarily of borrowings held by various foreign subsidiaries and finance lease obligations. For more information related to finance leases, see Note 14, Leases.

Future Debt Maturities

Future maturities of debt as of March 31, 2020, excluding the unamortized debt issuance costs of $9.4 million, were as follows (in millions):


Years ending March 31:
2021	$	76.5
2022	1.3
2023	251.3
2024	1.4
2025	626.4
Thereafter	525.9
	$	1,482.8

Cash interest paid for the fiscal years ended March 31, 2020, 2019 and 2018 was $55.9 million, $63.8 million and $69.9 million, respectively.