Debt

9 Months Ended

Sep. 30, 2023

Debt for the Company consists of the following:


	September 30, 2023			December 31, 2022
(in millions, except percentages)	Amount		Rate	Amount		Rate	Maturity Date
2019 Credit Agreement:
Term A Facility	$	598.0	(1)	$	638.8	(2)	October 16, 2024
Revolver	135.0		(1)	337.0		(2)	October 16, 2024
2031 Senior Notes	800.0		3.875%	800.0		3.875%	October 15, 2031
2029 Senior Notes	800.0		4.000%	800.0		4.000%	April 15, 2029
Securitized debt	162.0		(3)	139.3		(4)	April 7, 2025
Finance lease obligations (5)	72.6			78.7			Various
Other	58.7			37.0			Various
Total debt	2,626.3			2,830.8
Less: Deferred financing costs	17.8			20.5
Total debt, net	2,608.5			2,810.3
Less: Current portion	70.0			70.4
Total long-term debt, net	$	2,538.5		$	2,739.9


(1)			Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.375% as of September 30, 2023.
(2)			Interest at LIBOR plus applicable margin of 1.250% as of December 31, 2022.
(3)			Interest at one month SOFR index plus 10 basis points of credit spread adjustment, plus 85 basis points.
(4)			Interest at one month LIBOR index plus 70 basis points.
(5)			New finance lease obligations are a non-cash financing activity.

As of September 30, 2023, the Company was in compliance with all applicable debt covenants.

2023 Credit Agreement

On October 10, 2023, the Company entered into the 2023 Credit Agreement with a syndicate of banks. The 2023 Credit Agreement replaced the Company's 2019 Credit Agreement. The 2023 Credit Agreement provides for a $1.15 billion revolving credit facility, a $500.0 million term loan facility, and an incremental facility in an aggregate amount of up to the greater of $850.0 million and additional amounts subject to the conditions set forth in the 2023 Credit Agreement, plus the amount of certain prepayments, plus an additional unlimited amount subject to compliance with a maximum consolidated secured leverage ratio test. The 2023 Credit Agreement has a $60.0 million sub-facility for the issuance of letters of credit.

Borrowings under the 2023 Credit Agreement will generally bear interest, at the election of Tempur Sealy International and the other subsidiary borrowers, at either (i) base rate plus the applicable margin, (ii) "Eurocurrency" rate plus the applicable margin, (iii) "RFR" rate plus the applicable margin or (iv) a "Term Benchmark" rate plus the applicable margin. The aforementioned rates are defined in the 2023 Credit Agreement, which was previously filed as an exhibit to the Company's Current Report on Form 8-K, which was filed on October 11, 2023. For the revolving credit facility and the term loan facility (a) the initial applicable margin for base rate advances was 0.625% per annum and the initial applicable margin for Eurocurrency rate, RFR rate and Term Benchmark advances was 1.625% per annum, and (b) following the delivery of financial statements for the fiscal quarter ending March 31, 2024 and for subsequent fiscal quarters, such applicable margins will be determined by a pricing grid based on the consolidated total net leverage ratio of the Company.

Obligations under the 2023 Credit Agreement are guaranteed by the Company's existing and future direct and indirect wholly-owned domestic subsidiaries, subject to certain exceptions and are secured by a security interest in substantially all of Tempur Sealy International’s and the other subsidiary borrowers' domestic assets and the domestic assets of each subsidiary guarantor, whether owned as of the closing or thereafter acquired, including a pledge of 100.0% of the equity interests of each subsidiary owned by the Company or a subsidiary guarantor that is a domestic entity (subject to certain limited exceptions) and 65.0% of the voting equity interests of any direct first tier foreign entity owned by the Company or a subsidiary guarantor.

The 2023 Credit Agreement requires compliance with certain financial covenants providing for maintenance of a minimum consolidated interest coverage ratio, maintenance of a maximum consolidated total net leverage ratio, and maintenance of a maximum consolidated secured net leverage ratio. The consolidated total net leverage ratio is calculated using consolidated indebtedness less netted cash (as defined below). Consolidated indebtedness includes debt recorded on the Condensed Consolidated Balance Sheets as of the reporting date, plus letters of credit outstanding in excess of $60.0 million and other short-term debt. The Company is allowed to subtract from consolidated indebtedness an amount equal to 100.0% of the domestic and foreign unrestricted cash ("netted cash"). As of September 30, 2023, netted cash was $91.6 million.

The 2023 Credit Agreement contains certain customary negative covenants, which include limitations on liens, investments, indebtedness, dispositions, mergers and acquisitions, the making of restricted payments, changes in the nature of business, changes in fiscal year, transactions with affiliates, use of proceeds, prepayments of certain indebtedness, entry into burdensome agreements and changes to governing documents. The 2023 Credit Agreement also contains certain customary affirmative covenants and events of default, including upon a change of control.

The Company is required to pay a commitment fee on the unused portion of the revolving credit facility, which initially will be 0.25% per annum and following the delivery of financial statements for the fiscal quarter ending March 31, 2024 and for subsequent fiscal quarters, such fees will be determined by a pricing grid based on the consolidated total net leverage ratio of the Company. This unused commitment fee is payable quarterly in arrears and on the date of termination or expiration of the commitments under the revolving credit facility. The Company and the other borrowers also pay customary letter of credit issuance and other fees under the 2023 Credit Agreement.

The maturity date of the 2023 Credit Agreement is October 10, 2028. Amounts under the revolving credit facility may be borrowed, repaid and re-borrowed from time to time until the maturity date. The term loan facility is subject to quarterly amortization as set forth in the 2023 Credit Agreement. In addition, the term loan facility is subject to mandatory prepayment in connection with certain debt issuances, asset sales and casualty events, subject to certain reinvestment rights. Voluntary prepayments and commitment reductions under the 2023 Credit Agreement are permitted at any time without payment of any prepayment premiums.

2019 Credit Agreement

The Company used the proceeds from the 2023 Credit Agreement to refinance outstanding borrowings under the 2019 Credit Agreement and terminated the existing revolving credit commitments. The 2019 Credit Agreement, as amended, initially provided for a $725.0 million revolving credit facility and a $725.0 million term loan facility.

The Company had $135.0 million in outstanding borrowings under its revolving credit facility as of September 30, 2023. Total remaining availability under the revolving credit facility was $589.4 million after a $0.6 million reduction for outstanding letters of credit as of September 30, 2023.

Securitized Debt

The Company and certain of its subsidiaries are party to a securitization transaction with respect to certain accounts receivable due to the Company and certain of its subsidiaries (as amended, the "Accounts Receivable Securitization"). As of September 30, 2023, total availability under the Accounts Receivable Securitization was $28.4 million. On April 6, 2023, the Company and certain of its subsidiaries entered into a second amendment to the Accounts Receivable Securitization. The amendment, among other things, extended the maturity date of the Accounts Receivable Securitization to April 7, 2025. While subject to a $200.0 million overall limit, the availability of revolving loans varies over the course of the year based on the seasonality of the Company's accounts receivable.