Components of Debt



	September 30,
	2016		2015
(In millions)
Term loan facility under Credit Agreement	$	575.0	$	—
Revolving facility under Credit Agreement	—		—
5.500% Senior Notes due 2024	425.0		—
Total debt	1,000.0		—
Less debt discount	2.8		—
Less deferred debt costs	11.1		—
Less current portion of long-term debt	5.8		—
Debt payable after one year	$	980.3	$	—

Credit Agreement

On September 30, 2016, Versum entered into a credit agreement (the “Credit Agreement”) providing for a senior secured first lien term loan B facility of $575 million (the “Term Facility”, and the loans “Term Loans”) and a senior secured first lien revolving credit facility of $200 million (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facilities”). The Senior Credit Facilities are guaranteed by Versum’s material direct and indirect wholly-owned domestic restricted subsidiaries and secured by substantially all of the assets of Versum and its subsidiary guarantors.

Versum incurred $1.5 million in costs related to the set-up of the Revolving Facility and $8.4 million in costs associated with the Term Facility. On September 30, 2016, Versum borrowed $575 million under the Term Facility and incurred an original issue discount of $2.8 million associated with this borrowing. Versum distributed substantially all the proceeds to Air Products as consideration for the contribution of assets by Air Products in connection with the Separation.

Subject to certain terms and conditions, the Credit Agreement allows for incremental term loan facilities, incremental revolving credit facilities, or increases to the existing commitments under the Senior Credit Facilities in an aggregate amount of up to $300 million plus an unlimited additional amount if the first lien net leverage ratio, on a pro forma basis, is less than or equal to 2.00:1.00.

Borrowings under the Term Facility bear interest at a rate of either LIBOR (adjusted for statutory reserve requirements), subject to a minimum floor of 0.75%, plus a margin of 2.50% or an alternate base rate, subject to a minimum floor of 1.75%, plus a margin of 1.50% (effective rate of 3.34% as of September 30, 2016). The Term Facility matures on September 30, 2023, and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Term Facility, with the balance payable on September 30, 2023.

Borrowings under the Revolving Facility bear interest initially at a rate of either LIBOR (adjusted for statutory reserve requirements) plus a margin of 2.00% or an alternate base rate plus a margin of 1.00%, and after delivery of the financial statements for the first full fiscal quarter, subject to a 0.25% margin reduction based on achieving a first lien net leverage ratio of 1.00:1.00 for the prior four-quarter period. A commitment fee of 0.375% initially, subject to a reduction to 0.25% based on achieving a first lien net leverage ratio of 1.00:1.00 for the prior four-quarter period after delivery of the financial statements for the first full fiscal quarter, on the unused portion of the Revolving Facility is payable quarterly in arrears. Letter of credit fees are payable on outstanding letters of credit under the Revolving Facility, and fronting fees equal to a percentage to be agreed with each issuing bank (not to exceed 0.125%) are payable to the issuing banks. The Revolving Facility matures on September 30, 2021. A maximum first lien net leverage ratio covenant (total debt net of cash on hand to total adjusted EBITDA) of 3.25:1.00 will apply if we draw upon the Revolving Facility. As of September 30, 2016, we had availability of $200 million under Revolving Facility.

Loans under the Term Facility are mandatorily repayable upon the occurrence of certain events, including, among others, (1) non-ordinary course asset sales or other dispositions of property (subject to customary exceptions and reinvestment rights set forth in the Credit Agreement) and (2) issuances of debt by Versum and its restricted subsidiaries (other than certain permitted debt described in the Credit Agreement). Further, the Credit Agreement provides that, commencing with Versum’s fiscal year ending on September 30, 2017, a percentage of excess cash flow ranging from 0% to 50%, depending on the first lien net leverage ratio, is required to be used to prepay the Term Facility. Versum may voluntarily prepay the Term Facility or reduce the unutilized commitment of the Revolving Facility at any time without premium or penalty other than a prepayment premium and customary breakage costs. If all or any portion of the Term Facility is repriced or refinanced prior to September 30, 2017, in a transaction where the primary purpose of which is to reduce the effective interest cost or weighted average yield of the Term Facility (other than in connection with a change of control or a transformational acquisition), Versum must pay 101.0% of the amount of the loans repaid or refinanced.

The Credit Agreement contains negative covenants which place restrictions, subject to customary exceptions and baskets, on the incurrence of debt, the granting of liens, fundamental changes in Versum’s business, the making of investments, sales of assets, mergers and acquisitions, the making of restricted payments, transactions with affiliates, entering into restrictive agreements, making changes to Versum’s fiscal year, violating laws, and modifying Versum’s governing documents in a manner materially adverse to the lenders. Further, the Credit Agreement obligates Versum to undertake certain actions, including, among others, (1) delivering notices of default and notices of certain other events that would reasonably be expected to have a material adverse effect, (2) complying with laws, (3) paying taxes, (4) preserving Versum’s existence, (5) maintaining properties and insurance, and (6) delivering audited and unaudited financial statements at the times set forth in the Credit Agreement.

The Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants, cross-default and cross-acceleration, material judgments, ERISA events, invalidity of loan documents, change of control and bankruptcy or insolvency.

If we fail to stay in compliance with our covenants or experience an event of default, we could be forced to repay the outstanding borrowings under the Senior Credit Facility. Any such acceleration of such obligation in excess of $100 million would also result in a default under the indenture governing the Notes described below, which could lead to the note holders electing to declare the principal, premium, if any, and accrued and unpaid interest on the then outstanding notes immediately due and payable.

Senior Notes

On September 30, 2016, Versum issued $425 million of 5.5% Senior Notes due 2024. The Notes are unsecured senior obligations of Versum, guaranteed by each of Versum’s subsidiaries that is a guarantor under the Senior Credit Facilities. The Notes bear interest at a rate of 5.5% per annum payable semiannually on March 15 and September 15 of each year, commencing on March 15, 2017. The Notes will mature on September 30, 2024. Versum incurred $1.25 million in debt issuance costs associated with the Notes. Versum distributed the Notes in a non-cash transaction to Air Products as consideration for the contribution of assets by Air Products in connection with the Separation.

Versum may, at its option, redeem some or all of the Notes during such times and at such prices as described in the Indenture, plus accrued and unpaid interest, if any, to the date of redemption.

The Indenture governing the Notes contains various affirmative and negative covenants. Subject to a number of exceptions and qualifications, the restrictive covenants limit our ability and the ability of our restricted subsidiaries to, among other things, incur or guarantee additional indebtedness, pay dividends or make distributions to stockholders and parent entities, repurchase and redeem capital stock, make investments and acquisitions, engage in transactions with affiliates, create liens, merge or consolidate with other companies, transfer or sell assets, including the capital stock of subsidiaries, and prepay, redeem or repurchase indebtedness subordinated to the Notes. In addition, if the Notes achieve an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the Indenture, Versum will not be subject to certain of such covenants.

The Indenture provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable. Any such acceleration in excess of $100 million would also result in a default under the Credit Agreement, which may cause the lenders to declare the principal and accrued and unpaid interest on the then outstanding Senior Credit Facilities immediately due and payable.

Maturities

Maturities of long-term debt are as follows:



	Total Debt
(In millions)
Payments due for the year ended September 30,
2017	$	5.8
2018	5.8
2019	5.8
2020	5.8
2021	5.8
Thereafter	971.0
Total	$	1,000.0