Debt

6 Months Ended

Jun. 29, 2019

DEBT

Total debt consisted of the following:



Debt Description	Maturity	Interest Rate at June 29, 2019	June 29, 2019			December 29, 2018
ABL Facility	May 31, 2024	5.75%	$	9		$	81		⁽¹⁾
ABS Facility	September 21, 2020	3.40%	100			275
Term Loan Facility (net of $5 of unamortized deferred financing costs)	June 27, 2023	4.40%	2,129			2,145
Senior Notes (net of $5 of unamortized deferred financing costs)	June 15, 2024	5.88%	595			595
Obligations under financing leases	2019–2026	2.00% - 6.17%	363			352
Other debt	2021–2031	5.75% - 9.00%	9			9
Total debt			3,205			3,457
Current portion of long-term debt			(104		)	(106		)
Long-term debt			$	3,101		$	3,351

(1) Consists of outstanding borrowings under our former asset based senior secured revolving credit facility.

At June 29, 2019, after considering interest rate swaps that fixed the interest rate on $733 million of principal of the Term Loan Facility described below, approximately 47% of the Company’s total debt was at a floating rate.

ABL Facility—On May 31, 2019, USF completed a refinancing of its asset based senior secured revolving credit facility with a new asset based senior secured revolving credit facility (the “ABL Facility”). The ABL Facility provides USF with loan commitments having a maximum aggregate principal amount of $1,700 million, comprised of (1) $1,400 million of commitments effective as of May 31, 2019 and (2) $300 million of commitments that may become effective at any time on or prior to November 30, 2019, subject to, among other things, the consummation of the contemplated acquisition by USF of Services Group of America, Inc.’s (“SGA”) Food Group of Companies. The ABL Facility includes subfacilities for the issuance of up to $800 million of letters of credit and up to $170 million of swing line loans. Extensions of credit under the ABL Facility are subject to availability under a “borrowing base” comprised of various percentages of the value of certain eligible accounts receivable, inventory, transportation equipment and cash and cash equivalents, which also serve as collateral for borrowings under the ABL Facility.

Borrowings under the ABL Facility bear interest, at USF's periodic election, at a rate equal to the sum of an alternative base rate (“ABR”), as defined under the ABL Facility, plus a margin ranging from 0% to 0.50%, or the sum of a London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 1.00% to 1.50%, in each case based on USF’s excess availability under the ABL Facility. The margin under the ABL Facility at June 29, 2019 was 0.25% for ABR loans and 1.25% for LIBOR loans. The ABL Facility also carries a commitment fee of 0.25% per annum on the average unused amount of the commitments under the ABL Facility.

The ABL Facility is scheduled to mature on May 31, 2024, subject to a springing maturity date in the event that more than $300 million of aggregate principal amount of indebtedness under either the Term Loan Facility or the Senior Notes remains outstanding on a date that is 60 days prior to the maturity date for the Term Loan Facility or the Senior Notes, respectively.

The ABL Facility is secured by certain designated receivables not pledged under the ABS Facility, as well as inventory and certain transportation equipment owned by USF. Additionally, lenders under the ABL Facility have a second priority interest in all of the capital stock of USF and its domestic subsidiaries, as defined under the ABL Facility, and substantially all other non-real estate assets of USF and its subsidiaries not pledged under the ABS Facility.

The ABL Facility contains customary covenants, including, among other things, covenants that restrict USF's ability to pay dividends or engage in certain mergers or consolidations. The ABL Facility also contains customary events of default, including, among other things, the failure to pay interest or principal when due, cross default provisions, the failure of representations and warranties contained in the ABL Facility agreements to be true in all material respects when made or deemed made, and certain insolvency events. If an event of default occurs and remains uncured, principal amounts then outstanding under the ABL Facility, together with all accrued unpaid interest and any other amounts owed, may be declared immediately due and payable and the commitments under the ABL Facility may be terminated.

The Company incurred $4 million of lender fees and third party costs associated with the ABL Facility which were capitalized as deferred financing costs. These deferred financing costs, along with $1 million of unamortized deferred financing costs related to the former asset based senior secured revolving credit facility, will be amortized through May 31, 2024, the ABL Facility maturity date.

As of June 29, 2019, USF had $9 million of outstanding borrowings, and had issued letters of credit totaling $370 million, under the ABL Facility. Outstanding letters of credit included: (1) $299 million issued in favor of certain commercial insurers to secure USF’s obligations with respect to its self-insurance program, (2) $70 million issued to secure USF’s obligations with respect to certain real estate leases, and (3) $1 million issued for other obligations. There was available capacity under the ABL Facility of $970 million at June 29, 2019.

ABS Facility—Under the ABS Facility, USF sells, on a revolving basis, its eligible receivables to the Receivables Company. See Note 5, Accounts Receivable Financing Program. The maximum capacity under the ABS Facility is $800 million. Borrowings under the ABS Facility were $100 million at June 29, 2019. The Company, at its option, can request additional borrowings up to the maximum commitment, provided sufficient eligible receivables are available as collateral. There was available capacity under the ABS Facility of $665 million at June 29, 2019.

Term Loan Facility—USF's senior secured term loan facility (the “Term Loan Facility”) had an outstanding balance of $2.1 billion at June 29, 2019. The table above reflects the June 29, 2019 interest rate on the unhedged portion of the Term Loan Facility. With respect to the portion of the Term Loan Facility subject to interest rate hedging agreements, as of June 29, 2019 the effective interest rate was 3.70%.

Restrictive Covenants

USF's credit agreements and indentures contain customary covenants. These include, among other things, covenants that restrict USF’s ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends, or engage in mergers or consolidations. As of June 29, 2019, USF had $1.1 billion of restricted payment capacity under these covenants, and approximately $2.3 billion of its net assets were restricted considering the net deferred tax assets and intercompany balances that eliminate in consolidation.