Debt

6 Months Ended

Jul. 02, 2022

Debt Disclosure [Abstract]

Debt

Debt

Debt consists of the following (in thousands):

	July 2, 2022		January 1, 2022
Amended Credit Agreement:
Revolving Credit Facility	$	—	$	160,000
Term A-1 facility	400,000		—
Less unamortized deferred loan costs	(809)		—
Carrying value Term A-1 facility	399,191		—
Term A-2 facility	500,000		—
Less unamortized deferred loan costs	(1,167)		—
Carrying value Term A-2 facility	498,833		—
Term Loan B	200,000		200,000
Less unamortized deferred loan costs	(1,618)		(1,928)
Carrying value Term Loan B	198,382		198,072
6% Senior Notes due 2030 with effective interest of 6.20%	750,000		—
Less unamortized deferred loan costs	(9,397)		—
Carrying value 6% Senior Notes due 2030	740,603		—
5.25% Senior Notes due 2027 with effective interest of 5.47%	500,000		500,000
Less unamortized deferred loan costs	(4,548)		(4,959)
Carrying value 5.25% Senior Notes due 2027	495,452		495,041
3.625% Senior Notes due 2026 - Denominated in euro with effective interest of 3.83%	537,506		582,980
Less unamortized deferred loan costs - Denominated in euro	(4,142)		(5,031)
Carrying value 3.625% Senior Notes due 2026	533,364		577,949
Other Notes and Obligations	48,004		32,319
	2,913,829		1,463,381
Less Current Maturities	32,695		24,407
	$	2,881,134	$	1,438,974

As of July 2, 2022, the Company had outstanding debt under the Company's 3.625% Senior Notes due 2026 denominated in euros of €515.0 million. In addition, at July 2, 2022, the Company had finance lease obligations denominated in euros of approximately €4.2 million.

As of July 2, 2022, the Company had other notes and obligations of $48.0 million that consist of various overdraft facilities of approximately $0.1 million, a China working capital line of credit of approximately $13.7 million and other debt of approximately $34.2 million, including U.S. finance lease obligations of approximately $6.1 million.

On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013, with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto. Effective March 2, 2022, the Company, and certain of its subsidiaries entered into an amendment (the "Eighth Amendment") with its lenders to the Amended Credit Agreement. Among other things, the Eighth Amendment (a) added a new delayed draw incremental term facility (the “term A-2 facility”) and new incremental Term Loans pursuant thereto, in an aggregate principal amount of up to $500.0 million, which is available to the Company for general corporate purposes, including acquisitions and capital expenditures, and will mature on December 9, 2026 and (b) updated and modified certain other terms and provisions of the Amended Credit Agreement to reflect the addition of the term A-2 facility to the Amended Credit Agreement.

The interest rate applicable to any borrowings under the revolving loan facility will equal the adjusted term secured overnight financing rate (SOFR) for U.S. dollar borrowings or the adjusted euro interbank rate (EURIBOR) for euro borrowings or the adjusted daily simple Sterling overnight index average (SONIA) for British pound borrowings or

CDOR for Canadian dollar borrowings plus 1.25% per annum or base rate or the adjusted term SOFR for U.S. dollar borrowings or Canadian prime rate for Canadian dollar borrowings or the adjusted daily simple European short term rate (ESTR) for euro borrowings or the adjusted daily SONIA rate for British pound borrowings plus 0.25% per annum subject to certain step-ups or step-downs based on the Company's total leverage ratio. The interest rate applicable to any borrowing under the delayed draw term A-1 facility will equal the adjusted term SOFR plus a minimum of 1.50% per annum subject to certain step-ups based on the Company's total leverage ratio. The interest rate applicable to any borrowing under the delayed draw term A-2 facility will equal the adjusted term SOFR plus 1.25% per annum subject to certain step-ups or step-downs based on the Company's total leverage ratio. The interest rate applicable to any borrowings under the term loan B facility will equal the base rate plus 1.00% or LIBOR plus 2.00%.

As of July 2, 2022, the Company had (i) $400.0 million outstanding under the term A-1 facility at SOFR plus a margin of 1.50% per annum for a total of 3.1253% per annum, (ii) $500.0 million outstanding under the term A-2 facility at SOFR plus a margin of 1.25% per annum for a total of 2.8753% per annum and (iii) $200.0 million outstanding under the term loan B facility at LIBOR plus a margin of 2.00% per annum for a total of 3.12% per annum. As of July 2, 2022, the Company had revolving loan facility availability of $1,446.0 million under the Amended Credit Agreement taking into account amounts borrowed, ancillary facilities of $50.1 million and letters of credit issued of $3.9 million. The Company also had foreign bank guarantees of approximately $11.2 million and U.S. bank guarantees of approximately $10.9 million that are not part of the Company's Amended Credit Agreement at July 2, 2022. The Company capitalized approximately $1.2 million of deferred loan costs as of July 2, 2022 in connection with the Eighth Amendment.

6% Senior Notes due 2030. On June 9, 2022, Darling issued and sold $750.0 million aggregate principal amount of 6% Senior Notes due 2030 (the “6% Notes”). The 6% Notes, which were offered in a private offering, were issued pursuant to a Senior Notes Indenture, dated as of June 9, 2022 (the “6% Indenture”), among Darling, the subsidiary guarantors party thereto from time to time, and Truist Bank, as trustee. The gross proceeds from the offering, together with cash on hand, were used to repay the Company's outstanding revolver borrowings and for general corporate purposes, including to pay the discount of the initial purchasers and to pay the other fees and expenses related to the offering.

The 6% Notes will mature on June 15, 2030. Darling will pay interest on the 6% Notes on June 15 and December 15 of each year, commencing on December 15, 2022. Interest on the 6% Notes accrues from June 9, 2022 at a rate of 6% per annum and is payable in cash. The 6% Notes are guaranteed on a senior unsecured basis by Darling and all of Darling's restricted subsidiaries (other than foreign subsidiaries) that are borrowers under or that guarantee the Senior Secured Credit Facilities (collectively, the “6% Guarantors”). The 6% Notes and the guarantees thereof are senior unsecured obligations of Darling and the 6% Guarantors and rank equally in right of payment to all of Darling's and the 6% Guarantors' existing and future senior unsecured indebtedness. The 6% Indenture contains covenants limiting Darling's ability and the ability of its restricted subsidiaries to grant liens to secure indebtedness and merge with or into other companies or otherwise dispose of all or substantially all of Darling's assets. The Company capitalized approximately $9.5 million of deferred loan costs as of July 2, 2022 in connection with the 6% Notes.

Other than for extraordinary events such as change of control and defined assets sales, Darling is not required to make mandatory redemption or sinking fund payments on the 6% Notes. The 6% Notes are redeemable, in whole or in part, at any time on or after June 15, 2025 at the redemption prices specified in the 6% Indenture. Darling may redeem the 6% Notes in whole, but not in part, at any time prior to June 15, 2025, at a redemption price equal to 100% of the principal amount of the 6% Notes redeemed, plus accrued and unpaid interest to the redemption date and an Applicable Premium as specified in the 6% Indenture and all additional amounts (if any) then due or which will become due on the redemption date as a result of the redemption or otherwise (subject to the rights of holders on the relevant record dates to receive interest due on the relevant interest payment date and additional amounts (if any) in respect thereof).

As of July 2, 2022, the Company believes it is in compliance with all of the financial covenants under the Amended Credit Agreement, as well as all of the other covenants contained in the Amended Credit Agreement, the 6% Senior Notes due 2030, the 5.25% Senior Notes due 2027 and the 3.625% Senior Notes due 2026.