Subsequent Events

6 Months Ended

Aug. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

AIS Joint Venture

On September 30, 2022, the Company completed the previously announced joint venture between the Company and Fernweh Group LLC ("Fernweh"). Under the agreement with Fernweh, AZZ contributed its AZZ Infrastructure Solutions segment (“AIS”) to AIS Investment Holdings LLC (the “AIS JV”), and sold a 60% controlling interest in the AIS JV to Fernweh at an implied enterprise value of AIS of $300.0 million. The Company received proceeds from the sale of approximately $108.0 million, as well as $120.0 million that was funded by committed debt financing taken on by the AIS JV immediately preceding the transaction. Following the close of the joint venture transaction, the AIS segment will be deconsolidated and the Company's 40% joint venture investment will be accounted for under the equity method of accounting. The Company used the cash received from the transaction to repay $210.0 million on the Term Loan B, $15.0 million on the Revolving Credit Facility and $3.0 million for working capital purposes. See Note 3 for further information about the AIS segment.

Interest Rate Swap

We manage our exposure to fluctuations in interest rates using a mix of fixed and variable-rate debt. We utilize fixed rate interest rate swap agreements to change the variable interest rate to a fixed rate on a portion of our variable-rate debt.

On September 27, 2022, the Company entered into a fixed-rate interest rate swap agreement, amended to October 31, 2022 to change the SOFR-based component of the interest rate on a portion of the Company's variable-rate debt to a fixed rate of 4.277% (the “2022 Swap”). The 2022 Swap has a notional amount of $550.0 million and a maturity date of September 30, 2025. The objective of the 2022 Swap is to eliminate the variability of cash flows in interest payments on the first $550.0 million of variable-rate debt attributable to changes in benchmark one-month SOFR interest rates. The hedged risk is the interest rate risk exposure to changes in interest payments, attributable to changes in benchmark one-month SOFR interest rates over the interest rate swap term. The changes in cash flows of the interest rate swap are expected to exactly offset changes in cash flows of the variable-rate debt. We designated the 2022 Swap as a cash flow hedge at inception. Cash settlements of the 2022 Swap are recognized in interest expense.