Debt

9 Months Ended

Sep. 30, 2020

DEBT

Long-term debt consists of:


		September 30, 2020						December 31, 2019
	Interest Rate at September 30, 2020	Principal		Unamortized Debt Costs		Total		Principal		Unamortized Debt Costs		Total
Term loan maturing 2026, variable interest rate	3.19%	$	199.3	$	(3.0)	$	196.2	$	300.0	$	(5.1)	$	294.9
2013 Notes, maturing 2023, fixed interest rate	4.50%	—		—		—		275.0		(1.5)		273.5
2014 Notes, maturing 2025, fixed interest rate	5.37%	300.0		(1.2)		298.8		300.0		(1.5)		298.5
2020 Notes, maturing 2028, fixed interest rate	4.75%	275.0		(3.9)		271.1		—		—		—
ABL Credit Agreement, variable interest rate	3.50%	—		—		—		13.5		—		13.5
Finance leases		21.2		—		21.2		22.0		—		22.0
Total debt		795.4		(8.2)		787.2		910.5		(8.1)		902.4
Less: current portion		(1.7)		—		(1.7)		(17.9)		—		(17.9)
Net long-term portion		$	793.7	$	(8.2)	$	785.5	$	892.6	$	(8.1)	$	884.5

At September 30, 2020, we were in compliance with covenants in our various credit agreements. The maturity of our Term Loan Agreement is subject to the refinancing of our 2014 Notes. If the 2014 Notes are not refinanced 91 days before their maturity, the Term Loan Credit Agreement will become due.

During the third quarter of 2020, in connection with the issuance of the 2020 Notes, we redeemed the 2013 Notes in full. This redemption resulted in a loss on early debt extinguishment of $3.2 million consisting of $1.2 million related to the write off unamortized debt cost along with the premium on debt redemption of $2.1 million.

Term Loan Credit Agreement

The Term Loan Credit Agreement matures on July 26, 2026. We are required to repay the aggregate outstanding principal amount in quarterly installments in an aggregate amount for each such date equal to the aggregate principal amount of the initial loan amount (as such amount may be adjusted pursuant to the prepayment provisions of the Term Loan Credit Agreement) multiplied by 0.25%. Through the third quarter of 2020, we have made voluntary prepayments of $100 million. These prepayments were applied against our quarterly required installments through 2026. In connection with the voluntary repayments, we recorded $1.6 million in early debt extinguishment related to the write off of associated deferred debt fees.

In addition, we must make mandatory prepayments of principal under the Term Loan Credit Agreement upon the occurrence of certain specified events, including certain asset sales (subject to customary reinvestment rights), debt issuances not permitted under the Term Loan Credit Agreement, and based on a percentage, which may vary from 0% to 50% depending on our secured leverage ratio, of annual Excess Cash Flows in excess of certain threshold amounts, less any voluntary prepayments under the Term Loan Credit Agreement. Any remaining outstanding principal balance under the Term Loan Credit Agreement is repayable on the maturity date. Amounts repaid or prepaid by us with respect to the loans under the Term Loan Credit Agreement cannot be reborrowed. We may, at our option, prepay any borrowings under the Term Loan Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances).

We may add one or more incremental term loan facilities to the Term Loan Credit Agreement, subject to obtaining commitments from any participating lenders and certain other conditions, in an amount not to exceed (1) $100 million, plus (2) the amount of all voluntary prepayments of the Term Loan Credit Agreement (other than prepayments funded with long-term indebtedness), plus (3) an additional amount, so long as after giving effect to the incurrence of such additional amount, our pro forma first lien secured leverage ratio would not exceed 2.00x to 1.00x. At September 30, 2020 our pro forma first lien secured ratio was 0.65x. Under the Term Loan Credit Agreement, loans generally may bear interest based on LIBOR or an annual base rate, as applicable, plus, in each case, an applicable margin. When our leverage ratio is (i) less

than or equal to 4.25 to 1.00, the margin is 3.00% per annum in the case of LIBOR loans and of 2.00% per annum in the case of annual base rate loans and (ii) greater than 4.25 to 1.00, the margin is 3.25% per annum in the case of LIBOR loans and of 2.25% per annum in the case of annual base rate loans. At September 30, 2020, our leverage ratio was 2.80x and therefore our applicable margin on LIBOR loans was 3.00%.

ABL Credit Agreement

The ABL Credit Agreement matures on July 26, 2024 and includes a $250 million revolving loan commitment, subject to borrowing base limitations based on a percentage of applicable eligible receivables and eligible inventory. Based upon our Consolidated Balance Sheet as of September 30, 2020, our borrowings supported up to $234.2 million availability under the line of which no borrowings were outstanding and $4.4 million was utilized to issue letters of credit. We may, at our option, prepay any borrowings under the ABL Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances). Borrowings under the ABL Credit Agreement are also subject to mandatory prepayment in certain circumstances, including in the event that borrowings exceed applicable borrowing base limits. We may also increase commitments under the ABL Credit Agreement in an aggregate principal amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions.

The ABL Credit Agreement also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10 to 1.00, provided that the financial covenant under the ABL Credit Agreement is only applicable when unused availability falls below $25 million. As of September 30, 2020, our fixed charge coverage ratio was approximately 4.31x which included the impact of our voluntary debt prepayments. Our ability to utilize our ABL Credit Agreement could be limited in the future by our bond indentures which have limitations on liens.

2020 Notes

In 2020, we issued $275 million aggregate principal amount of senior notes (2020 Notes) due August 2028 with an interest rate of 4.75%.

The Notes are unsecured and effectively subordinated to all of the Company’s existing and future secured debt, including borrowings under its existing credit facilities. The Notes are guaranteed on an unsecured basis by each of the Company’s existing direct and indirect domestic subsidiaries, and will be guaranteed by each of the Company’s future direct and indirect domestic subsidiaries, subject to certain exceptions. If the Company is unable to make payments on the Notes when they are due, each Guarantor is obligated to make such payments.

The Indenture contains covenants that, among other things, limit our ability and the ability of any of our subsidiaries to (i) enter into sale leaseback transactions, (ii) incur liens and (iii) consolidate, merge or sell all or substantially all of our assets. In addition, the Indenture requires, among other things, we provide certain reports to holders of the Notes. These covenants are subject to a number of exceptions, limitations and qualifications as set forth in the Indenture.

We may redeem all or a portion of the 2020 notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2020 Notes upon the sale of certain assets and upon a change in control.