Debt

3 Months Ended

Dec. 31, 2021

Secured Debt

Debt Instrument [Line Items]

Debt

8. Debt

Term Loans

On October 4, 2017, the Company entered into a $200.0 million term loan with the lenders pursuant to the terms of a credit agreement. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing.

The Company’s obligations under the term loan are also guaranteed by Azenta US, Inc. (fka Brooks Life Sciences, Inc. and BioStorage Technologies, Inc.) as the guarantor, subject to the terms and conditions of the credit agreement. The Company and the guarantor granted the lenders a perfected first priority security interest in substantially all of the assets of the Company and the guarantor to secure the repayment of the term loan.

The loan principal amount under the credit agreement may be increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of the term loan plus any additional amount such that the secured leverage ratio of the Company is less than 3.00 to 1.00.

Subject to certain conditions stated in the credit agreement, the Company may redeem the term loan at any time at its option without a significant premium or penalty, except for a repricing transaction, as defined in the credit agreement. The Company is required to redeem the term loan at the principal amount then outstanding upon occurrence of certain events, including (i) net proceeds received from the sale or other disposition of the Company’s or the guarantor’s assets, subject to certain limitations, (ii) casualty and condemnation proceeds received by the Company or the guarantor, subject to certain exceptions, or (iii) net proceeds received by the Company or the guarantor from the issuance of debt or disqualified capital stock after October 4, 2017. Commencing on December 31, 2018, the Company was required to make principal payments equal to the excess cash flow amount, as defined in the credit agreement. Such prepayments are equal to 50% of the preceding year excess cash flow amount reduced by voluntary prepayments of the term loan, subject to certain limitations.

The deferred financing costs are accreted over the term of the loan using the effective interest rate method and are included in “Interest expense” in the accompanying unaudited Consolidated Statements of Operations. At December 31, 2021, the outstanding principal balance of the term loan was $49.7 million, excluding unamortized deferred financing costs of $0.3 million.

The credit agreement contains certain customary representations and warranties, covenants and events of default. If any of the events of default occur and are not waived or cured within applicable grace periods, any unpaid amounts under the credit agreement will bear an annual interest rate at 2.00% above the rate otherwise applicable under the terms and conditions of such agreement. The credit agreement does not contain financial maintenance covenants. As of December 31, 2021, the Company was in compliance with all covenants and conditions under the credit agreement.

During the three months ended December 31, 2021, the weighted average stated interest rate paid on all outstanding debt was 2.7%. During the three months ended December 31, 2021, the Company incurred aggregate interest expense of $0.4 million in connection with the borrowings, including $0.1 million of deferred financing costs amortization.

The following are the future minimum principal payment obligations under all of the Company’s outstanding debt as of December 31, 2021 (in thousands):

	Amount
2022	$	—
2023		—
2024		—
2025		50,000
Total outstanding principal balance		50,000
Unamortized deferred financing costs		(298)
		49,702
Current portion of long-term debt		—
Non-current portion of long-term debt	$	49,702

On February 1, 2022, subsequent to the close of our first fiscal quarter of 2022, the Company settled the Term Loan using proceeds from the sale of its semiconductor automation business.