Indebtedness

12 Months Ended

Mar. 31, 2020

Note 17: Indebtedness

In June 2019, the Company executed the Fourth Amended and Restated Credit Agreement with a syndicate of banks that provides for a multi-currency $250.0 million revolving credit facility expiring in June 2024, which modified the Company’s then-existing revolver that would have expired in November 2021. In addition, this credit agreement provided for both U.S. dollar- and euro-denominated term loan facilities, with repayments continuing into fiscal 2025. These term loans replaced the previously-existing term loans with repayments scheduled through fiscal 2022. As a result of the credit agreement modification, the Company deferred debt issuance costs of $1.1 million, which are being amortized over the term of the debt. Borrowings under both the revolving credit and term loan facilities bear interest at a variable rate, based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below. At March 31, 2020, the weighted-average interest rates for revolving credit facility borrowings and the term loans were 3.0 percent and 2.8 percent, respectively. At March 31, 2020, the Company’s revolving credit facility borrowings totaled $127.2 million and domestic letters of credit totaled $5.3 million, resulting in available borrowings under the revolving credit facility of $117.5 million.

In January 2020, the Company issued $100.0 million of 5.9 percent Senior Notes with repayments ending in fiscal 2029. The Company used the majority of the proceeds to satisfy the remaining principal balance of the 6.8 percent Senior Notes, which were scheduled to mature in August 2020. As a result of the credit agreement modification, the Company deferred debt issuance costs of $1.7 million, which are being amortized over the term of the debt.

Based upon the terms of the credit agreement, the Company determined that borrowings under its revolving credit facility should be classified as long-term debt. Accordingly, the Company has reclassified borrowings of $47.1 million under its revolving credit facility from short-term to long-term debt on the March 31, 2019 balance sheet and within the related disclosures.

Long-term debt consisted of the following:

io	Fiscal year of maturity	March 31, 2020			March 31, 2019

Term loans	2025	$	189.4		$	238.4
Revolving credit facility	2025		127.2			47.1
5.9% Senior Notes	2029		100.0			-
5.8% Senior Notes	2027		50.0			50.0
6.8% Senior Notes	2021		-			85.0
Other (a)			6.0			14.3
			472.6			434.8
Less: current portion			(15.6	)		(48.6	)
Less: unamortized debt issuance costs			(5.0	)		(4.0	)
Total long-term debt		$	452.0		$	382.2

(a)

Other long-term debt primarily includes borrowings by foreign subsidiaries and finance lease obligations.

Long-term debt matures as follows:

Fiscal Year
2021	$	15.6
2022		21.7
2023		21.7
2024		21.7
2025		273.6
2026 & beyond		118.3
Total	$	472.6

The Company also maintains credit agreements for its foreign subsidiaries, with outstanding short-term borrowings at March 31, 2020 and 2019 of $14.8 million and $18.9 million, respectively.

Provisions in the Company’s credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various covenants and include certain cross-default clauses. Under its primary credit agreements in the U.S., the Company has provided liens on substantially all domestic assets. Also, as specified in the credit agreement, the term loans may require prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, the Company is required to represent to the lenders that there has been no material adverse effect, as defined in the credit agreement, on its business, property, or results of operations.

The Company is subject to a leverage ratio covenant, which requires the Company to limit its consolidated indebtedness, less a portion of its cash balance, both as defined by the credit agreements, in relation to its consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”). The leverage ratio covenant limit was 3.25 to 1 through the fourth quarter of fiscal 2020. The Company is also subject to an interest expense coverage ratio covenant, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense. The Company was in compliance with its debt covenants as of March 31, 2020.

In May 2020, the Company executed amendments to its primary credit agreements in the U.S. Under the amended agreements, the leverage ratio covenant limit is temporarily raised. The leverage ratio covenant limit in fiscal 2021 is 4.00 to 1, 4.75 to 1, 5.25 to 1, and 5.75 to 1 for the first, second, third, and fourth quarters, respectively. In fiscal 2022, the leverage ratio covenant limit is 4.75 to 1, 3.75 to 1, and 3.50 to 1 for the first, second and third quarters, respectively, and subsequently returns to 3.25 to 1 for the fourth quarter of fiscal 2022.

The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable maturities. As of March 31, 2020 and 2019, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of approximately $131.3 million and $137.2 million, respectively. The fair value of the Company’s long-term debt is categorized as Level 2 within the fair value hierarchy. Refer to Note 3 for the definition of a Level 2 fair value measurement.