Debt and Other Financing Activities

9 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt and Other Financing Activities

NOTE H – DEBT AND OTHER FINANCING ACTIVITIES

The following table summarizes Ashland’s current and long-term debt as of the dates reported in the Condensed Consolidated Balance Sheets.

(In millions)	June 30, 2022			September 30, 2021
3.375% Senior Notes, due 2031	$	450		$	450
2.00% Senior Notes, due 2028 (Euro 500 million principal)		522			580
6.875% notes, due 2043		282			282
Term loan A		—			250
Accounts receivable securitizations		—			117
6.50% junior subordinated notes, due 2029		59			57
Revolving credit facility		—			225
Other (a)		(11	)		9
Total debt		1,302			1,970
Short-term debt (includes current portion of long-term debt)		—			(374	)
Long-term debt (less current portion)	$	1,302		$	1,596

(a)Includes $15 million and $17 million of debt issuance cost discounts as of June 30, 2022 and September 30, 2021, respectively. Additionally, at September 30, 2021, Other included a European short-term loan facility with an outstanding balance of $23 million.

As of June 30, 2022, Ashland had no long-term debt (excluding debt issuance costs) maturing within the next 5 years.

Accounts Receivable Facilities and Off-Balance Sheet Arrangements

U.S. Accounts Receivable Sales Program

Ashland maintains a U.S. Accounts Receivable Sales Program entered into during fiscal 2021. Ashland accounts for the receivables transferred to buyers as sales. Ashland recognizes any gains or losses based on the excess of proceeds received net of buyer’s discounts and fees compared to the carrying value of the assets. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statement of Condensed Consolidated Cash Flows. Losses on sale of assets, including related transaction expenses are recorded within the Net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting guarantee liability when warranted. When applicable, Ashland discloses the amount of the receivable that serves as over-collateralization as a restricted asset.

Ashland recognized a loss of $1 million for the three and nine months ended June 30, 2022 and 2021, respectively, within the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss) associated with sales under the program. Ashland has recorded $50 million in sales at June 30, 2022 against the buyer’s limit, which was $125 million at June 30, 2022 compared to $113 million of sales at September 30, 2021 against the buyer's limit, which was $125 million at September 30, 2021. Ashland transferred $140 million and $167 million in receivables to the special purpose entity as of June 30, 2022 and September 30, 2021, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of June 30, 2022 and September 30, 2021 of less than $1 million. As of June 30, 2022, the year-to-date gross cash proceeds received for receivables transferred and derecognized was $205 million, of which $268 million was collected, which included collections from the sales in prior year transferred to the buyer. The difference of $63 million for receivables transferred and derecognized versus collected represents the impact of a net reduction in accounts receivable sales volume during the current year.

Foreign Accounts Receivable Securitization Facility

Ashland continues to maintain its Foreign 2018 Accounts Receivable Securitization Facility. Ashland accounts for the Foreign 2018 Accounts Receivable Securitization Facility as secured borrowings, and the receivables sold pursuant to the facility are included in the Consolidated Balance Sheets as accounts receivable. Ashland repaid all outstanding borrowings under the facility during the nine months ended June 30, 2022 for a total of $113 million. At June 30, 2022 and September 30, 2021, the outstanding amounts of accounts receivable transferred by Ashland were $159 million and $152 million, respectively, and borrowing (denominated in multiple currencies) under the facility were zero and $117 million, respectively.

Debt Repayments

2020 Credit Agreement

During the nine months ended June 30, 2022, Ashland prepaid its Term loan A principal balance of $250 million.

Other Debt

During the nine months ended June 30, 2022, Ashland repaid the outstanding balance on its European short-term loan facility for $23 million.

Available borrowing capacity and liquidity

The borrowing capacity remaining under the 2020 Credit Agreement which included the $600 million Revolving Credit Facility was $581 million due to an outstanding balance of zero, as well as a reduction of $19 million for letters of credit outstanding as of June 30, 2022. Ashland's total borrowing capacity at June 30, 2022 was $686 million, which included $105 million of available capacity from the Foreign 2018 Accounts Receivable Securitization Facility.

Additionally, Ashland had $58 million of available liquidity under its current U.S. Accounts Receivable Sales Program as of June 30, 2022.

Covenants related to current Ashland debt agreements

Ashland's debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of June 30, 2022, Ashland is in compliance with all debt agreement covenant restrictions.

The maximum consolidated net leverage ratio permitted under Ashland's current credit agreement (the 2020 Credit Agreement) is 4.0. At June 30, 2022, Ashland’s calculation of the consolidated net leverage ratio was 1.2.

The minimum required consolidated interest coverage ratio under the 2020 Credit Agreement during its entire duration is 3.0. At June 30, 2022, Ashland’s calculation of the interest coverage ratio was 9.7.