Debt

6 Months Ended

Apr. 03, 2020

DEBT

As of April 3, 2020, we are party to a credit agreement dated as of May 8, 2014 with a syndicate of lenders and Goldman Sachs Bank USA (“Goldman Sachs”), as administrative agent (as amended on February 13, 2015, August 31, 2016, March 10, 2017, May 19, 2017, May 2, 2018 and May 9, 2018, the “Credit Agreement”).

As of April 3, 2020, the Credit Agreement consisted of term loans with an initial aggregate principal amount of $700.0 million (the “Term Loans”) and a revolving credit facility with an aggregate borrowing capacity of $160.0 million (the “Revolving Facility”). The Revolving Facility will mature in November 2021 and the Term Loans will mature in May 2024 and bear interest at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 2.25%; and (ii) for base rate loans, a rate per annum equal to the greater of (a) the prime rate quoted in the print edition of the Wall Street Journal, Money Rates Section, (b) the federal funds rate plus one-half of 1.00% and (c) the LIBOR rate applicable to a one-month interest period plus 1.00% (but, in each case, not less than 1.00%), plus an applicable margin of 1.25%.

All principal amounts outstanding and interest rate information as of April 3, 2020, for the Credit Agreement were as follows (in thousands, except rate data):



	Principal Outstanding	LIBOR Rate	Margin	Effective Interest Rate
Term loans	$669,529	0.99%	2.25%	3.24%

As of April 3, 2020, approximately $6.6 million of deferred financing costs remain unamortized, of which $6.1 million is related to the Term Loans and is recorded as a direct reduction of the recognized debt liabilities in our accompanying condensed consolidated balance sheet, and $0.5 million is related to the Revolving Facility and is recorded in other long-term assets in our accompanying condensed consolidated balance sheet.

The Term Loans and Revolving Facility are secured by a first priority lien on substantially all of our assets and provide that we must comply with certain financial and non-financial covenants.

The Term Loans are payable in quarterly principal installments of approximately $1.7 million on the last business day of each calendar quarter, with the remainder due on the maturity date. In the event that we divest a business, the net cash proceeds of the divestment are generally required, subject to certain exceptions, to be applied to repayment of outstanding Term Loans except to the extent we reinvest such proceeds in assets useful for our business within 18 months of receiving the proceeds. If we enter into a binding agreement to reinvest such proceeds within 18 months of receiving them, we have until the later of 18 months following our receipt of the proceeds and six months following the date of such agreement to complete the reinvestment.

As of April 3, 2020, we had $160.0 million of borrowing capacity under our Revolving Facility, however, we would be subject to certain financial covenants if we were to borrow more than $50 million of the Revolving Facility.

As of April 3, 2020, the following remained outstanding on the Term Loans (in thousands):



	April 3, 2020
Principal balance	$	669,529
Unamortized discount	(2,809		)
Unamortized deferred financing costs	(6,113		)
Total term loans	660,607
Current portion	6,885
Long-term, less current portion	$	653,722

As of April 3, 2020, the minimum principal payments under the Term Loans in future fiscal years were as follows (in thousands):



	Amount
2020 (remainder of fiscal year)	$	3,442
2021	6,885
2022	6,885
2023	6,885
2024	645,432
Total	$	669,529

The fair value of the Term Loans was estimated to be approximately $595.9 million as of April 3, 2020, and was determined using Level 2 inputs, including a quoted rate from a financial institution.