Borrowings and Debt

12 Months Ended

Dec. 31, 2019

The Company’s borrowings were comprised of the following as of the dates indicated (in millions):



	December 31, 2019					December 31, 2018
(in millions)	Carrying value		Fair Value		Fair Value Level	Carrying value		Fair Value		Fair Value Level
Third party borrowings:
$450 million revolving credit facility expiring August 22, 2022⁽²⁾⁽³⁾	$	140.0	$	140.0	2	$	—	$	—
$275 million 4.80% Senior Notes Due July 27, 2026⁽¹⁾	272.4		287.2		2	272.2		266.0		2
$125 million 5.125% Senior Notes Due August 1, 2031⁽¹⁾	121.4		126.4		2	121.1		102.3		2
Total third party borrowings	$	533.8	$	553.6		$	393.3	$	368.3
Non-recourse borrowing:
Non-recourse seed capital facility expiring January 15, 2021⁽³⁾	$	35.0	$	35.0	2	$	—	$	—
Total non-recourse borrowing	$	35.0	$	35.0		$	—	$	—
Total borrowings	$	568.8	$	588.6		$	393.3	$	368.3


(1)	The difference between the principal amounts and the carrying values of the senior notes in the table above reflects the unamortized debt issuance costs and discounts.


(2)	Revolving credit facility of $350 million set to expire on October 15, 2019 was terminated. A new revolving credit facility of $450 million was executed on August 20, 2019.


(3)	Fair value approximates carrying value because the credit facilities have variable interest rates based on selected short term market rates.

Revolving credit facility

On August 20, 2019, the Company entered into a $450 million senior unsecured revolving credit facility with Citibank, as administrative agent and issuing bank, and RBC Capital Markets and BMO Capital Markets Corp. as joint lead arrangers and joint book runners (the “Credit Facility”). Subject to certain conditions, the Company may borrow up to an additional $150 million under the Credit Facility. The Credit Facility has a maturity date of August 22, 2022. The previous revolving credit facility with Citibank, which had a maturity date of October 15, 2019, was terminated. Upon entry into the Credit Facility, the Company made an initial drawdown of $210 million under the Credit Facility to fully repay the $210 million outstanding under its previous credit facility. The Company paid down $70 million of the amount outstanding under the Credit Facility during the third and fourth quarter of 2019.

Borrowings under the Credit Facility bear interest, at the Company’s option, at either the per annum rate equal to (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the one month Adjusted LIBO Rate plus 1.0%, plus, in each case an additional amount based on its credit rating or (b) the London interbank

offered rate for a period, at the Company’s election, equal to one, two, three or six months plus an additional amount ranging from 1.125% to 2.00%, with such additional amount based on its credit rating. In addition, the Company is charged a commitment fee based on the average daily unused portion of the Credit Facility at a per annum rate ranging from 0.125% to 0.45%, with such amount based on the Company’s credit rating.

Moody’s Investor Service, Inc. and Standard & Poor’s have each assigned an investment-grade rating to the Company’s senior, unsecured long-term indebtedness. As a result of the assignment of the credit ratings, the Company’s interest rate on outstanding borrowings was set at LIBOR + 1.50% and the commitment fee on the unused portion of the revolving credit facility was set at 0.20%. Under the Credit Facility, the ratio of third-party borrowings to trailing twelve months Adjusted EBITDA cannot exceed 3.0x, and the interest coverage ratio must not be less than 4.0x. At December 31, 2019, the Company is in compliance with these debt covenants.

Senior Notes

In July 2016, the Company issued $275.0 million of 4.80% Senior Notes due 2026 (the “2026 Notes”) and $125.0 million of 5.125% Senior Notes due 2031 (the “2031 Notes”). The Company used the net proceeds of these offerings to finance the acquisition of Landmark in August 2016, settle an outstanding interest rate lock, purchase seed capital from OM plc and pay down the balance of the Company’s previous revolving credit facility.

4.80% Senior Notes Due July 2026

The $275.0 million 2026 Notes were sold at a discount of $(0.5) million and the Company incurred debt issuance costs of $(3.0) million, which are being amortized to interest expense over the ten-year term. The 2026 Notes can be redeemed at any time prior to the scheduled maturity in part or in aggregate, at the greater of the 100% principal amount at that time or the sum of the remaining scheduled payments discounted at the treasury rate (as defined) plus 0.5%, together with any related accrued and unpaid interest.

5.125% Senior Notes Due August 2031

The Company incurred debt issuance costs of $(4.3) million in connection with the issuance of the $125.0 million 2031 Notes, which are being amortized to interest expense over the fifteen-year term. The 2031 Notes can be redeemed at any time, on or after August 1, 2019 at a redemption price equal to 100.0% of the principal amount together with any related accrued and unpaid interest.

The fair value of the senior notes was determined using broker quotes and any recent trading activity for each of the notes listed above, which are considered Level II inputs.

Non-recourse seed capital facility

In July 2017, the Company purchased all remaining seed capital investments covered by the Seed Capital Management Agreement from OM plc for $63.4 million. The Company financed this purchase in part through borrowings under a non-recourse seed capital facility collateralized by its seed capital holdings. The Company entered into this facility as of July 17, 2017, and could borrow up to $65.0 million, so long as the borrowing does not represent more than 50% of the value of the permitted seed capital collateral. The non-recourse seed facility bears interest at LIBOR +1.55% with a commitment fee on the unused portion of this facility of 0.95%. The facility currently has a maturity date of January 15, 2021 and includes a six-month evergreen renewal option. At December 31, 2019, amounts outstanding under this non-recourse seed capital facility amounted to $35.0 million. Per the terms of the Company’s Credit Facility, drawdowns under this facility are excluded from the Company’s third party debt levels for purposes of calculating the Company’s credit ratio covenants.

Interest expense

Interest expense incurred amounted to $32.2 million, $24.9 million and $24.5 million for the years ended December 31, 2019, 2018 and 2017 respectively. Interest expense consists of interest accrued on the long-term debt and credit facilities, commitment fees and amortization of debt-related costs. The weighted average interest rate on all debt obligations, excluding consolidated Funds, was 5.28%, 6.08% and 6.02% in each of 2019, 2018 and 2017, respectively.

As of December 31, 2019, the aggregate maturities of debt commitments, based on their contractual terms, are as follows:



	Future minimum debt commitments
2020	$	—
2021	35.0
2022	140.0
2023	—
2024	—
Thereafter	400.0
Total	$	575.0

The Company was in compliance with the required covenants related to borrowings and debt facilities as of December 31, 2019.