LONG-TERM DEBT

12 Months Ended

Jul. 31, 2019

12.

LONG-TERM DEBT

The components of long-term debt are as follows:


	July 31, 2019			July 31, 2018
Term loan	$	1,832,341		$	–
Unsecured notes		27,878			–
Other debt		94,124			–
Total long-term debt		1,954,343			–
Debt issuance costs, net of amortization		(51,720	)		–
Total long-term debt, net of debt issuance costs		1,902,623			–
Less: current portion of long-term debt		(17,370	)		–
Total long-term debt, net, less current portion	$	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 1.0% of the initial term loan balance, payable quarterly in 0.25% installments starting on May 1, 2019. As of July 31, 2019, however, we had made sufficient payments on the U.S. tranche to fulfill all annual payment requirements over the term of the loan. The interest rate on the U.S. portion of the term loan is an annual base rate plus 2.75%, or LIBOR plus 3.75%, and the interest rate on the Euro portion is at EURIBOR plus 4.00%, with interest on the U.S. base rate tranche payable quarterly, and interest on the U.S. LIBOR portion and the Euro tranche payable monthly. As of July 31, 2019, the entire U.S. term loan tranche balance of $

1,146,968

was subject to a LIBOR-based rate of 6.1875%, but the interest rate on $849,550 of that balance was fixed at 6.2160% through an interest rate swap by swapping the underlying

1-month

LIBOR rate for a fixed rate of 2.4660%. The total interest rate on the July 31, 2019, Euro term loan tranche balance of $685,373 was 4.00%. In addition, 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 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. During fiscal 2019, $100,000 was drawn on the ABL in connection with the acquisition of EHG and was also paid in full in fiscal 2019, resulting in no borrowings outstanding on the ABL agreement as of July 31, 2019. 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.

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, 2019

eligible receivable and inventory balances totaled $608,763.

The unsecured notes of 25,000 Euro ($27,878) relate to long-term debt assumed at the closing of the acquisition of EHG. There are two series, 20,000 Euro ($22,302) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($5,576) 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 considers cash that is pledged as collateral against 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, 2020	$	18,826
For the fiscal year ending July 31, 2021		19,549
For the fiscal year ending July 31, 2022		18,264
For the fiscal year ending July 31, 2023		18,382
For the fiscal year ending July 31, 2024		18,463
For the fiscal year ending July 31, 2025 and thereafter		1,860,859
	$	1,954,343

For fiscal 2019, interest expense on the term loan and ABL was $56,932. The Company incurred fees totaling $56,166 and $14,010 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 $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 and 2017, interest expense on the Company’s previous asset-based credit agreement discussed below was $1,939 and $7,002, respectively.

Interest expense for fiscal 2019 also includes $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 and 2017 included $1,570 of amortization of debt issuance costs related to the Company’s previous asset-based credit agreement.

The carrying value of the Company’s long-term debt, excluding debt issuance costs, approximates fair value at July 31, 2019 as the balance is subject to variable market interest rates that the Company believes are market rates for a similarly situated company. The fair value of the Company’s debt is largely estimated using Level 2 inputs as defined by ASC 820 and discussed in Note 10 to the Consolidated Financial Statements.