8. Borrowing Arrangements


	December 31
	2016		2015
U.S. credit agreement borrowings	$	225,000	$	107,700
Japanese term loan borrowings		—		3,741
Total long-term debt	$	225,000	$	111,441
Less current portion of long-term debt		(5,000)		(7,500)
Net long-term debt	$	220,000	$	103,941

U.S. Amended Credit Agreement

On October 4, 2016, the Company entered into the First Amended and Restated Credit Agreement (Amended Credit

Agreement) which amended the Company’s existing U.S. Credit Agreement (Credit Agreement) described below. The Amended Credit Agreement increases the Company’s total borrowing capacity to $400 million, comprised of a $300 million revolving credit facility (Amended Revolver) and a $100 million term loan facility (Term Loan). The Amended Credit Agreement extends the term of the Amended Revolver to October 4, 2021 and the maturity date of the Term Loan to October 4, 2023.

The Amended Revolver contains a $75 million sublimit for the issuance of letters of credit, and a $15 million sublimit for swing loans. The Company also has the option to increase the Amended Revolver by a maximum of $100 million with the consent of the Lenders. Availability under the Amended Credit Agreement is conditioned upon various customary conditions.

Upon entering into the Amended Credit Agreement, the Company incurred issuance costs of $0.8 million of which approximately $0.1 million were expensed and the remainder were deferred and are being amortized over the term of the Amended Revolver and Term Loan facilities. A quarterly nonrefundable commitment fee is payable by the Company based on the unused availability under the Amended Revolver and was equal to 0.23% as of December 31, 2016.

The interest rate on amounts owed under the Amended Revolver and Term Loan will be, at the Company’s option, either (i) a fluctuating Base Rate or (ii) an adjusted LIBOR rate plus in each case, an applicable margin based on the Company’s leverage ratio as set forth in the Amended Credit Agreement. The interest rate charged on amounts owed under swing loans will be either (i) a fluctuating Base Rate or (ii) such other interest rates as the lender and the Company may agree to from time to time. The interest rate per annum on outstanding borrowings ranged from 2.51% to 2.62% as of December 31, 2016.

The Company borrowed the full $100 million under the Term Loan on October 4, 2016 and repaid all amounts owed under the Credit Agreement. During the fourth quarter of 2016, the Company borrowed $160 million under the Amended Revolver to finance the acquisition of the New Business. Beginning January 1, 2017, the Company will be required to make quarterly repayments under the Term Loan equal to 1.25% of the outstanding balance until January 1, 2019, at which time the quarterly repayments will increase to 2.0% until the remaining balance is due on the October 4, 2023 maturity date. As a result, $5.0 million is shown as current portion of long-term debt within the consolidated balance sheet as of December 31, 2016.

Total outstanding borrowings and availability under the Amended Revolver as of December 31, 2016 were $125.0 million and $172.5 million respectively, after considering borrowings and outstanding letters of credit of $2.5 million. Total outstanding borrowings under the Term Loan were $100 million and there was no remaining availability as of December 31, 2016. Borrowings and repayments are presented on a gross basis within the Company’s consolidated statement of cash flows.

Certain domestic subsidiaries of the Company unconditionally guarantee all indebtedness and obligations related to borrowings under the Amended Credit Agreement. The Company’s obligations under the Amended Credit Agreement are unsecured.

The Amended Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type. The Company is permitted to pay dividends so long as the sum of availability under the Amended Credit Agreement and the amount of U.S. cash on hand is at least $50.0 million, and debt is less than or equal to 2.75x earnings before interest, taxes, depreciation and amortization. In addition, the Amended Credit Agreement includes limitations on the Company and its subsidiaries with respect to indebtedness, additional liens, disposition of assets or subsidiaries, and transactions with affiliates. The Company must comply with certain financial covenants including a minimum interest coverage ratio and a maximum leverage ratio as defined within the Credit Agreement. The Company was in compliance with all such covenants as of December 31, 2016. The Credit Agreement also provides for customary events of default, including failure to pay principal or interest when due, breach of representations and warranties, certain insolvency or receivership events affecting the Company and its subsidiaries and a change in control of the Company. If an event of default occurs, the lenders would be under no further obligation to make loans or issue letters of credit. Upon the occurrence of certain events of default, all outstanding obligations of the Company automatically would become immediately due and payable, and other events of default would allow the agent to declare all or any portion of the outstanding obligations of the Company to be immediately due and payable.

In February 2017, an amendment was signed to the Amended Credit Agreement, which, among other things, removes the quarterly leverage ratio requirement for the Company to pay dividends to its stockholders and replaces it with an annual dividend dollar restriction of $14.0 million.

U.S. Credit Agreement

On November 6, 2013, the Company entered into the Credit Agreement which provided for a senior unsecured revolving credit facility (Revolver) in an amount up to $225.0 million. As a result of amendments, the expiration date of the Revolver was November 6, 2020. In April 2016, an amendment was signed to the Credit Agreement that increased the threshold for a “Permitted Acquisition.” Refer to Note 20 for further information. The Credit Agreement also provided for senior unsecured delayed draw term loans (Delayed Draw Term Loans) in an aggregate amount up to $75.0 million which were scheduled to expire on November 6, 2020. Beginning January 1, 2016, the Company began making quarterly repayments. As a result, as of December 31, 2015, $7.5 million was shown as current portion of long-term debt within the consolidated balance sheet.

Upon entering into the Credit Agreement, the Company incurred issuance costs of $0.8 million, which were deferred and were being amortized over the term of the Revolver and Delayed Draw Term Loan facilities. Upon termination of the Credit Agreement, approximately $0.2 million of these previously deferred issuance costs were written off, while the remainder continued to be deferred and amortized over the life of the Amended Revolver. A quarterly nonrefundable commitment fee was payable by the Company based on the unused availability under the Revolver and was equal to 0.15% as of December 31, 2015. The interest rate options under the Credit Agreement were the same as those under the Amended Credit Agreement described above. The interest rate per annum on outstanding borrowings ranged from 1.25% to 1.40% as of December 31, 2015.

Total outstanding borrowings and availability under the Revolver were $32.7 million and $189.9 million, respectively, as of December 31, 2015, after considering borrowings and outstanding letters of credit of $2.4 million. Total outstanding borrowings under the Delayed Draw Term Loans were $75.0 million as of December 31, 2015 and there was no remaining availability.

Certain domestic subsidiaries of the Company unconditionally guaranteed all indebtedness and obligations related to borrowings under the Credit Agreement. The Company’s obligations under the Credit Agreement were unsecured. The Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type which were similar to the covenants currently in effect for the Amended Credit Agreement. The Company was in compliance with all such covenants as of December 31, 2015.

Japanese Credit Agreement

On March 24, 2016, Calgon Carbon Japan (CCJ) entered into a 2.0 billion Japanese Yen unsecured revolving loan facility agreement (Japanese Credit Agreement) which expires on March 24, 2019. The Japanese Credit Agreement replaced the Term Loan Agreement (Japanese Term Loan) and Working Capital Loan (Japanese Working Capital Loan) agreement that CCJ previously had in place which are described below. As of December 31, 2016, CCJ had no amounts outstanding under the Japanese Credit Agreement. Any outstanding borrowings would be shown as long-term debt within the consolidated balance sheets, and borrowings and repayments are presented on a gross basis within the Company’s consolidated statements of cash flows.

A quarterly nonrefundable commitment fee is payable by CCJ based on the unused availability under the Japanese Credit Agreement and is equal to 0.18%. Total availability under the Japanese Credit Agreement was 2.0 billion Japanese Yen, or $17.1 million as of December 31, 2016. The Japanese Credit Agreement bears interest based on the Tokyo Interbank Offered Rate of interest (TIBOR), plus an applicable margin based on the Company’s leverage ratio as defined in the U.S. Credit Agreement, which averaged 1.31% per annum as of December 31, 2016. The Company is jointly and severally liable as the guarantor of CCJ’s obligations under the Japanese Credit Agreement. CCJ may make voluntary prepayments of principal and interest after providing prior written notice and before the full amount then outstanding is due and payable on the March 24, 2019 expiration date.

Prior Japanese Loans

Prior to March 31, 2016, CCJ maintained a Japanese Term Loan and Japanese Working Capital Loan. These agreements were terminated on March 31, 2016, and replaced by the Japanese Credit Agreement described above. The Company was jointly and severally liable as the guarantor of CCJ’s obligations and the Company permitted CCJ to grant a security interest and continuing lien in certain of its assets, including inventory and accounts receivable, to secure its obligations under both loan agreements. The amount of the assets available to be pledged was in excess of the outstanding obligation as of December 31, 2015.

The Japanese Term Loan provided for a principal amount of 1.0 billion Japanese Yen and bore interest based on the Uncollateralized Overnight Call Rate plus an applicable margin which averaged 0.7% per annum as of December 31, 2015. As of December 31, 2015, CCJ had 450 million Japanese Yen or $3.7 million outstanding. The outstanding borrowings were shown as long-term debt within the consolidated balance sheets. Borrowings and repayments were presented on a gross basis within the Company’s consolidated statements of cash flows.

The Japanese Working Capital Loan provided for borrowings up to 1.5 billion Japanese Yen, and bore interest based on the Short-term Prime Rate. As of December 31, 2015, CCJ had no outstanding borrowings under this facility.

Chinese Credit Facility

The Company maintained an Uncommitted Revolving Loan Facility Letter (Facility Letter) which provided for an uncommitted line of credit totaling 5.0 million Renminbi (RMB) or $0.8 million. This Facility Letter was scheduled to expire on July 19, 2016, but was cancelled in April 2016. The Company was jointly and severally liable as the guarantor under the Facility Letter. There were no outstanding borrowings under this facility as of December 31, 2015.

Belgian Credit Facility

The Company maintains an unsecured Belgian credit facility totaling 2.0 million Euros. Bank guarantees of 1.2 million Euros and 0.9 million Euros were issued as of December 31, 2016 and 2015, respectively.

United Kingdom Credit Facility

The Company maintains a United Kingdom credit facility totaling 0.6 million British Pounds Sterling. Bank guarantees of 0.4 million British Pounds Sterling were issued as of December 31, 2016 and 2015, respectively.

Italian Credit Facility

The Company maintains an Italian credit facility totaling 2.9 million Euros. Bank guarantees of 1.7 million Euros were issued as of December 31, 2016. In addition, surety bonds totaling 1.0 million Euros were outstanding as of December 31, 2016.

Maturities of Debt

The Company intends to make principal payments on debt outstanding as of December 31, 2016 of $5.0 million in 2017, $5.0 million in 2018, $8.0 million in 2019, $8.0 million in 2020, and $133.0 million in 2021.

Interest Expense

The Company’s interest expense for the years ended December 31, 2016, 2015, and 2014 totaled $2.4 million, $0.8 million, and $0.3 million, respectively. These amounts are net of interest costs capitalized of $0.3 million, $0.4 million, and $0.6 million for the years ended December 31, 2016, 2015, and 2014, respectively.