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Debt

3 Months Ended

Aug. 31, 2021

DEBT

The following table summarizes the carrying value of the Company's debt as of the dates indicated:



	August 31, 2021		May 31, 2021		August 31, 2020
US Revolving Loan	$	75.0	$	175.0	$	200.0
Unsecured lines of credit		7.4		7.9		8.5
UK Loan		7.1		7.3		11.4
Total debt	$	89.5	$	190.2	$	219.9
Less lines of credit, short-term debt and current portion of long-term debt		(89.5)		(182.9)		(19.9)
Total long-term debt	$	—	$	7.3	$	200.0

The Company's debt obligations as of August 31, 2021 have maturities of one year or less.

US Loan Agreement

Scholastic Corporation and Scholastic Inc. (each, a “Borrower” and together, the “Borrowers”) are parties to a 5-year credit facility with certain banks (the “Loan Agreement”) with a maturity date of January 5, 2022. The Loan Agreement allows the Company to borrow, repay or prepay and reborrow at any time prior to the maturity date. On December 16, 2020, the Company entered into an amendment to the Loan Agreement (the "Amendment") with a syndicate of banks and Bank of America, N.A., as administrative agent (the "Agent"). The Amendment was accounted for as a debt modification. The principal terms of the credit agreement, as modified, include the following:

•the aggregate maximum commitments of the lenders is $250.0, a reduction from the $375.0 pre-amendment commitments;

•in addition to the pre-amendment covenants, the Company is subject to a new covenant requiring Consolidated Liquidity (as defined) of a minimum amount of $200.0;

•the securitization of the Company’s inventory and accounts receivable;

•a modified limitation on asset sales (not to exceed 10% of Consolidated Total Assets, as defined, excluding sale of collateral);

•a facility fee rate of 0.40%;

•a limitation on Acquisitions (as defined) to an aggregate amount of $25.0 per fiscal year;

•the interest pricing is dependent upon the Borrower’s election of a rate that is either:

◦a Eurodollar Rate equal to the London interbank offered rate (LIBOR), subject to a minimum of 0.25%, plus a spread equal to 1.60% for any Eurodollar Rate Advance;

- or -

◦a Base Rate equal to the higher of (i) the prime rate, (ii) the prevailing Federal Funds rate plus 0.50% or (iii) the Eurodollar Rate for a one month interest period plus 1.00% plus, in each case, a spread equal to 0.60% for any Base Rate Advance;

•restricted payments (e.g., for dividends and share repurchases, etc.) are limited to the "builder basket" in the amended credit agreement together with an additional requirement that the Company have Consolidated Liquidity (as defined) not less than $300.0.

•a portion of the revolving credit facility, up to a maximum of $50.0, is available for the issuance of letters of credit. In addition, a portion of the revolving credit facility, up to a maximum of $15.0, is available for swingline loans.

Under the Loan Agreement, as amended, interest on amounts borrowed is due and payable in arrears on the last day of the interest period (defined as the period commencing on the date of the advance and ending on the last day of the period selected by the Borrower at the time each advance is made). As of August 31, 2021, the all-in borrowing rate on the outstanding borrowings was 1.85%.

As of August 31, 2021, the Company had current outstanding borrowings of $75.0 under the Loan Agreement. The Company incurred this obligation in the fourth quarter of fiscal 2020 as a precautionary measure due to the uncertainty resulting from the COVID-19 pandemic. While this obligation is not due until the January 5, 2022 maturity date, the Company may, from time to time, make payments to reduce this obligation when cash from operations becomes available for this purpose. During the first quarter of fiscal 2022, the Company paid down $100.0 of the borrowing. The Company intends to amend and extend the current Loan Agreement prior to its expiration on January 5, 2022.

The Company was in compliance with required covenants for all periods presented.

At August 31, 2021, the Company had open standby letters of credit totaling $4.3 issued under certain credit lines, including $0.4 under the Loan Agreement and $3.9 under the domestic credit lines discussed below.

UK Loan Agreement

On January 24, 2020, Scholastic Limited UK entered into a term loan facility with a borrowing limit of £6.6 to fund the construction of the new UK facility in Warwickshire. The loan had an original maturity date of July 31, 2021, which was extended to July 31, 2022 in May 2021. Under the agreement, the principal balance is due in full in a single payment on the last day of the term and interest on the amount borrowed is due and payable quarterly. The interest was charged at 1.77% per annum over the Base Rate until July 31, 2021 and 2.25% per annum over the Base Rate thereafter. The Base Rate is currently equal to 0.10% per annum and is subject to change. As of August 31, 2021, the Company had $4.3 outstanding on the loan and $4.7 remaining available credit under this facility.

On September 23, 2019, Scholastic Limited UK entered into a term loan agreement to borrow £2.0 to fund a land purchase in connection with the construction of the new UK facility in Warwickshire. The loan had an original maturity date of July 31, 2021, which was extended to July 31, 2022 in May 2021. Under the agreement, the principal balance is due in full in a single payment on the last day of the term and interest on the amount borrowed is due and payable quarterly. The interest was charged at 1.77% per annum over the Base Rate until July 31, 2021 and 2.25% per annum over the Base Rate thereafter. The Base Rate is currently equal to 0.10% per annum and is subject to change. As of August 31, 2021, the Company had $2.8 outstanding on the loan.

Lines of Credit

As of August 31, 2021, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $10.0. There were no outstanding borrowings under these credit lines as of August 31, 2021, May 31, 2021 and August 31, 2020. As of August 31, 2021, availability under these unsecured money market bid rate credit lines totaled $6.1. All loans made under these credit lines are at the sole discretion of the lender and at an interest rate and term agreed to at the time each loan is made, but not to exceed 365 days. These credit lines may be renewed, if requested by the Company, at the option of the lender.

As of August 31, 2021, the Company had various local currency international credit lines totaling $27.9 underwritten by banks primarily in the United States, Canada and the United Kingdom. Outstanding borrowings under these facilities were $7.4 at August 31, 2021 at a weighted average interest rate of 4.8%, $7.9 at May 31, 2021 at a weighted average interest rate of 4.7%, and $8.5 at August 31, 2020 at a weighted average interest rate of 4.2%. As of August 31, 2021, the amounts available under these facilities totaled $20.5. These credit lines are typically available for overdraft borrowings or loans up to 364 days and may be renewed, if requested by the Company, at the sole option of the lender.