Financing Arrangements and Debt

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Financing Arrangements and Debt

Note E – Financing Arrangements and Debt

Revolving Credit Facility

As of September 30, 2024, the Company had an $800.0 million revolving credit facility (RCF). The RCF is a senior unsecured guaranteed facility was set to expire on November 17, 2027. At September 30, 2024, the Company had no outstanding borrowings under the RCF and $0.4 million of outstanding letters of credit, which reduce the borrowing capacity of the RCF. At September 30, 2024, the interest rate in effect on borrowings under the RCF would have been 7.20%. At September 30, 2024, the Company was in compliance with all covenants related to the RCF.

Subsequent Event - Revolving Credit Facility

On October 7, 2024, the Company entered into a credit agreement governing a $1,200.0 million senior unsecured guaranteed revolving credit facility (New RCF) with a maturity date on October 7, 2029. The New

RCF, which is effective October 2024, extends the borrowing term and increases the borrowing capacity of the previous RCF. On the date the Company achieves certain credit ratings (Investment Grade Ratings Date), certain covenants will be modified as set forth in the New RCF. In addition, prior to the Investment Grade Ratings Date, the Company will be required to comply with a maximum consolidated leverage ratio of 3.25x and a minimum consolidated interest coverage ratio of 2.50x. From and after the Investment Grade Ratings Date, the Company will be required to comply with a maximum ratio of consolidated total debt to consolidated total capitalization of 60%. Borrowings under the New RCF bear interest at rates based on either the “Alternate Base Rate”, the “Adjusted Term Secured Overnight Financing Rate (SOFR) Rate”, or the “Adjusted Daily Simple SOFR Rate”, respectively, plus the “Applicable Rate”. The “Alternate Base Rate” of interest is the highest of (a) the Wall Street Journal prime rate in effect on such day, (b) the New York Federal Reserve Bank (NYFRB) Rate in effect on such day plus ½ of 1% and (c) the Adjusted Term SOFR Rate for a one-month interest period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day) plus 1%. The “Adjusted Term SOFR Rate” of interest is equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%. The “Adjusted Daily Simple SOFR Rate” of interest is equal to (a) the Daily Simple SOFR, plus (b) 0.10%. The “Applicable Rate” of interest means, for any day, the applicable rate per annum based upon the ratings of Moody’s Investors Service, Inc. and Standard and Poor’s Rating Services, respectively, as set forth in the grid included in the full text of the credit agreement governing the New RCF. The Company has incurred $12.4 million in transaction costs and will record the amount to “Deferred charges and other assets” in the Consolidated Balance Sheets, which will be amortized to interest expense over the term of the New RCF.

Debt Extinguishment

In May 2024, the Company paid a total of $50.5 million to complete the open market repurchases of $26.5 million aggregate principal of its 5.875% senior notes due 2027 (2027 Notes) and $23.5 million aggregate principal of its 6.375% senior notes due 2028 (2028 Notes). The cash costs of the debt extinguishment of $0.5 million is included in “Interest expense, net” on the Consolidated Statements of Operations for the nine months ended September 30, 2024.

In September 2023, the Company redeemed the remaining $248.7 million principal amount outstanding of its 5.750% senior notes due 2025 (2025 Notes). The non-cash costs of the debt extinguishment of $0.9 million is included in “Interest expense, net” on the Consolidated Statements of Operations for the nine months ended September 30, 2023.

Debt Offering

On September 19, 2024, the Company announced the public offering (the Offering) of $600.0 million aggregate principal amount of 6.000% senior notes due 2032. This Offering was pursuant to the shelf registration statement on file with the U.S. Securities and Exchange Commission (SEC) that permits the offer and sale of debt and/or equity securities. Subsequent to quarter end, the shelf registration statement was renewed through October 15, 2027.

Subsequent Event - Debt Offering

On October 3, 2024, the Company closed the Offering of $600.0 million aggregate principal amount of new senior notes that bear interest at a rate of 6.000% per annum and mature on October 1, 2032. The Company has incurred transaction costs of $10.1 million on the issuance of these new notes. The Company will pay interest semi-annually on April 1 and October 1 of each year, beginning April 1, 2025. The proceeds of the $600.0 million notes will be used to fund the repurchase and repayment of debt. To date, the Company has repurchased and canceled an aggregate $521.1 million of its notes, comprised of: $258.8 million of the 2027 Notes, $200.2 million of the 2028 Notes and $62.1 million of the 7.050% senior notes due 2029 (2029 Notes). The total cost of the debt extinguishment was $18.2 million: consisting of cash costs of $14.9 million and non-cash costs of $3.3 million.