LONG-TERM DEBT

12 Months Ended

Jul. 31, 2020

The components of long-term debt are as follows:


	July 31, 2020		July 31, 2019
Term loan	$	1,597,091	$	1,832,341

Unsecured notes	29,620		27,878
Other debt	84,500		94,124
Total long-term debt	1,711,211		1,954,343
Debt issuance costs, net of amortization	(44,563)		(51,720)
Total long-term debt, net of debt issuance costs	1,666,648		1,902,623
Less: current portion of long-term debt	(13,817)		(17,370)
Total long-term debt, net, less current portion	$	1,652,831	$	1,885,253

On February 1, 2019, the Company entered into a seven-year term loan (“term loan”) agreement, which consisted of both a United States dollar-denominated term loan tranche of $1,386,434 and a Euro-denominated term loan tranche of 617,718 Euro ($708,584 at closing date exchange rate) and a $750,000 asset-based credit facility (“ABL”). Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL matures on February 1, 2024.

Under the term loan, both the U.S. and Euro tranches required annual principal payments of 1.00% of the initial term loan balance, payable quarterly in 0.25% installments starting on May 1, 2019. As of July 31, 2020, however, the Company had made sufficient payments on both the U.S. and Euro tranches to fulfill all annual principal payment requirements over the term of the loan.

Borrowings under the U.S. term loan bear interest at LIBOR or Alternate Base Rate ("ABR" as defined in the term loan facility agreement) plus an applicable margin of 3.75% for LIBOR-based loans or 2.75% for ABR-based loans. Interest on the Euro portion of the term loan is at EURIBOR (subject to a 0.00% floor) plus 4.00%. Interest is payable quarterly for ABR-based loans and monthly for LIBOR and EURIBOR-based loans.

As of July 31, 2020, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate totaling 3.938%, but the interest rate on $673,400 of that balance was fixed at 6.216% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. As of July 31, 2019, the entire outstanding U.S. term loan tranche balance of $1,146,968 was subject to a LIBOR-based rate totaling 6.188%, but the interest rate on $849,550 of that balance was fixed at 6.216% through the March 18, 2019 interest rate swap noted above.

The total interest rate on both the July 31, 2020 and July 31, 2019 outstanding Euro term loan tranche balances of $655,191 and $685,373, respectively, was 4.00%.

The Company must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuances and receipt of annual cash flows in excess of certain amounts. No such specified events occurred during fiscal 2020 or fiscal 2019. The Company may, at its option, prepay any borrowings under the term loan, in whole or in part, at any time without premium or penalty (except in certain circumstances). The Company may add one or more incremental term loan facilities to the term loan, subject to obtaining commitments from any participating lenders and certain other conditions.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The ABL carries interest at an annual base rate plus 0.25% to 0.75%, or LIBOR plus 1.25% to 1.75%, based on adjusted excess availability as defined in the ABL agreement. This agreement also includes a 0.25% unused facility fee. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without premium or penalty. There were no borrowings outstanding on the ABL agreement as of July 31, 2020 and July 31, 2019.

The ABL contains a financial covenant which requires the Company to maintain a minimum consolidated fixed-charge coverage ratio of 1.0X, although the covenant is only applicable when adjusted excess availability falls below a threshold of the greater of a) 10% of the lesser of the borrowing base availability or the revolver line total, or b) $60,000. Up to $75,000 of the ABL is available for the issuance of letters of credit, and up to $75,000 is available for swingline loans. The Company may also increase commitments under the ABL by up to $150,000 by obtaining additional commitments from lenders and adhering to certain other conditions. The unused availability under the ABL is generally available to the Company for general operating purposes, and based on July 31, 2020 eligible receivable and inventory balances and net of amounts drawn, if any, totaled approximately $660,000.

The unsecured notes of 25,000 Euro ($29,620) at July 31, 2020 relate to long-term debt assumed at the closing of the acquisition of EHG. There are two series, 20,000 Euro ($23,696) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($5,924) with an interest rate of 2.534% maturing February 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and interest rates ranging from 1.40% – 3.43%. The Company considered cash that was pledged as collateral against real estate loans or certain revolving debt obligations within its European rental fleet obligations to be restricted cash.

Total contractual debt maturities are as follows:


For the fiscal year ending July 31, 2021	$	13,817
For the fiscal year ending July 31, 2022	12,027
For the fiscal year ending July 31, 2023	12,150
For the fiscal year ending July 31, 2024	12,277
For the fiscal year ending July 31, 2025	35,848
For the fiscal year ending July 31, 2026 and thereafter	1,625,092
	$	1,711,211

For fiscal 2020, interest expense on the term loan, ABL and other debt facilities was $93,475. The Company incurred fees totaling $56,166 and $14,010 in fiscal 2019 to secure the term loan and ABL, respectively, and those amounts are being amortized ratably over the respective seven and five-year terms of those agreements. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are included in interest expense, of $10,743 for fiscal 2020. The unamortized balance of the ABL facility fees was $9,807 at July 31, 2020 and is included in Other long-term assets in the Consolidated Balance Sheets.

For fiscal 2019, interest expense on the term loan and ABL was $56,932. The Company recorded total charges related to the amortization of the term loan and ABL fees, which are included in interest expense, of $5,404 for fiscal 2019. The unamortized balance of the ABL facility fees was $12,609 at July 31, 2019 and is included in Other long-term assets in the Consolidated Balance Sheets.

For fiscal 2018, interest expense on the Company’s previous asset-based credit agreement discussed below was $1,939.

Interest expense for fiscal 2019 also included $785 of amortization expense of capitalized debt fees related to the Company’s previous asset-based credit agreement that was terminated on February 1, 2019 with the new financing obtained with the EHG acquisition. Interest expense for fiscal 2018 included $1,570 of amortization of debt issuance costs related to the Company’s previous asset-based credit agreement.

The fair value of the Company's term loan debt at July 31, 2020 and July 31, 2019 was $1,565,866 and $1,806,010, respectively. The carrying value of the Company’s term loan debt, excluding debt issuance costs, was $1,597,091 and $1,832,341 at July 31, 2020 and July 31, 2019, respectively. The fair value of the Company’s debt is primarily estimated using Level 2 inputs as defined by ASC 820.