Long-term Debt and Credit Agreement

6 Months Ended

Jul. 02, 2022

Debt Disclosure [Abstract]

Long-term Debt and Credit Agreement

Note 15. Long-term Debt and Credit Agreement

The Company’s long-term debt as of July 2, 2022 and December 31, 2021 consisted of the following:

	July 2, 2022			December 31, 2021
4.000% notes due 2029	$	300		$	300
Seven-year variable rate A&R Term B Facility		1,137			943
Unamortized deferred financing costs		(15	)		(13	)
Total outstanding indebtedness		1,422			1,230
Less: Amounts expected to be paid within one year		12			10
Total long-term debt due after one year	$	1,410		$	1,220

As of July 2, 2022 and July 3, 2021, the interest rate for the Amendment and Restatement Agreement (“A&R”) Term B Facility (defined below) was 3.59% and 2.75%, respectively, and there were no borrowings and no letters of credit issued under the A&R Revolving Credit Facility (as defined below). During the six months ended July 3, 2021, the Company incurred debt extinguishment costs of $23 million related to the execution of the A&R Credit Agreement (as defined below) and a partial redemption of previously outstanding senior notes. As of July 2, 2022, the Company was in compliance with all covenants related to the A&R Credit Agreement and the Senior Notes due 2029 (as defined below).

The Company assessed the amounts recorded under the Amendment and Restatement Agreement Term B Facility, the Senior Notes due 2029, and the A&R Revolving Credit Facility. The Company determined that the A&R Revolving Credit Facility approximated fair value. As of July 2, 2022, the A&R Term B Facility and the Senior Notes due 2029 had approximate fair values of $1,100 million and $236 million, respectively. The fair values of the debt are based on the quoted inactive prices and are therefore classified as Level 2 within the valuation hierarchy.

Senior Notes due 2029

On August 26, 2021, the Company issued $300 million in principal amount of 4% senior unsecured notes due in 2029 (the “Senior Notes due 2029”). The Senior Notes due 2029 are senior unsecured obligations of Resideo guaranteed by Resideo’s existing and future domestic subsidiaries and rank equally with all of Resideo’s senior unsecured debt and senior to all of Resideo’s subordinated debt.

Credit Agreement

On February 12, 2021, the Company entered into an Amendment and Restatement Agreement with JP Morgan Chase Bank N.A. as administrative agent (the “A&R Credit Agreement”). This agreement effectively replaced the Company’s previous senior secured credit facilities.

The A&R Credit Agreement provides for a (i) seven-year senior secured term B loan facility in an aggregate principal amount of $950 million (the “A&R Term B Facility”) and (ii) a five-year senior secured revolving credit facility in an aggregate principal amount of $500 million (the “A&R Revolving Credit Facility” and, together with the A&R Term B Facility, the “A&R Senior Credit Facilities”).

On March 28, 2022, the A&R Credit Agreement was further amended to include an additional aggregate principal amount of $200 million in the loans.

Refer to Note 18. Long-Term Debt and Credit Agreement in the Company’s 2021 Annual Report on Form 10-K for further discussion regarding the Company’s long-term debt and credit agreement.