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Debt | 12 Months Ended
--- | ---
Dec. 31, 2024
Debt Disclosure [Abstract] |
Debt | Debt Debt for the Company consists of the following:
(in millions) | December 31, 2024 |  | December 31, 2023 |  |
Debt: | Amount |  | Rate |  | Amount |  | Rate |  | Maturity Date
2023 Credit Agreement: |  |  |  |  |  |  |  |  |
Term A Facility | $ | 475.0 |  |  | (1) |  | $ | 500.0 |  |  | (2) |  | October 10, 2028
Term B Facility | 1,600.0 |  |  | (3) |  | — |  |  |  |  | October 24, 2031
Revolver | — |  |  |  |  | 183.0 |  |  | (2) |  | October 10, 2028
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 | — |  |  |  |  | 157.6 |  |  | (4) |  | October 8, 2026
Finance lease obligations (5) | 88.7 |  |  |  |  | 92.1 |  |  |  |  | Various
Other | 80.8 |  |  |  |  | 60.9 |  |  |  |  | Various
Total debt | 3,844.5 |  |  |  |  | 2,593.6 |  |  |  |  |
Less: Deferred financing costs and discounts | 34.6 |  |  |  |  | 21.7 |  |  |  |  |
Total debt, net | 3,809.9 |  |  |  |  | 2,571.9 |  |  |  |  |
Less: Current portion | 69.5 |  |  |  |  | 44.9 |  |  |  |  |
Total long-term debt, net | $ | 3,740.4 |  |  |  |  | $ | 2,527.0 |  |  |  |  |
(1) | Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.250% as of December 31, 2024.
(2) | Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.625% as of December 31, 2023.
(3) | Interest at SOFR index plus applicable margin of 2.500% as of December 31, 2024.
(4) | Interest at one month SOFR index plus 10 basis points of credit spread adjustment, plus 85 basis points.
(5) | Finance lease obligations are a non-cash financing activity. Refer to Note 7, "Leases."
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 ("Revolving Credit Facility"), a $500.0 million term loan facility ("Initial 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. On February 6, 2024, the Company entered into Amendment No. 1 ("Amendment No. 1") to the 2023 Credit Agreement, which provided for a $625.0 million Delayed Draw Term A Loan commitment and a $40.0 million increase in availability on the existing revolving loan. This amendment was executed in connection with the Company's financing strategy for the acquisition of Mattress Firm. On October 24, 2024, the Company entered into an Amendment No. 2 ("Amendment No. 2") and an Amendment No. 3 ("Amendment No. 3") to the 2023 Credit Agreement. Amendment No. 2 extended the termination date for $605.0 million of the Delayed Draw Term A Loan commitments until October 24, 2025, among other changes. Amendment No. 3 provided for an incremental Term B Loan in the aggregate principal amount of $1.6 billion, which will mature on October 24, 2031. The proceeds of the Term B Loan were funded into escrow, net of an original issue discount, on the closing of Amendment No. 3. On February 5, 2025, upon the consummation of the Mattress Firm acquisition, the Company borrowed $625.0 million under our Delayed Draw Term A Loan and $679.5 million under the Revolving Credit Facility. In addition, approximately $1,592.0 million of proceeds in respect of the Term B Loan were released from escrow. The proceeds of these financings were collectively used to fund a portion of the cash consideration for the acquisition, the repayment of Mattress Firm's debt and the payment of certain fees and expenses related to the acquisition. Borrowings under the Revolving Credit Facility, the Term A Loans and Term B Loan will generally bear interest, at the election of the Company's and the other subsidiary borrowers, at either (i) base rate plus the applicable margin (solely with respect to any borrowings under the Revolving Credit Facility), (ii) "Eurocurrency" rate plus the applicable margin, (iii) "RFR" Daily SOFR rate plus the applicable margin or (iv) a "Term Benchmark" Term SOFR rate plus the applicable margin. For the Revolving Credit Facility and the Term A Loans the applicable margin is determined by a pricing grid based on the consolidated total net leverage ratio of the Company. For the Term B Loan, the applicable margin is 1.50% (for base rate) and 2.50% (for "Term Benchmark" Term SOFR and "RFR" Daily SOFR). The 2023 Credit Agreement (other than with respect to the Term B Loan) 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 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 December 31, 2024, netted cash was $1,709.7 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. 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 the Company’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 maturity date of the Revolving Credit Facility and Term A Loans is October 10, 2028 and the maturity date of the Term B Loan is October 24, 2031. 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, Delayed Draw Term A Loan and Term B Loan are each 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. Additionally, the Term B Loan benefits from (i) mandatory prepayments with respect to certain cash that constitutes excess cash flow under the 2023 Credit Agreement and (ii) additional protections, including a prepayment premium in connection with certain repricing transactions that occur on or prior to April 24, 2025. Voluntary prepayments and commitment reductions under the 2023 Credit Agreement are otherwise permitted at any time without payment of any prepayment premiums. The Company had no outstanding borrowings under the revolving credit facility as of December 31, 2024. Total availability under the revolving facility was $1,189.2 million, after a $0.8 million reduction for outstanding letters of credit, as of December 31, 2024. On February 5, 2025, the Company borrowed $679.5 million on our revolving senior secured credit facility to fund the acquisition of Mattress Firm. The Company was in compliance with all applicable covenants in the 2023 Credit Agreement at December 31, 2024. 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"). On April 6, 2021, the Company and certain of its subsidiaries entered into the first amendment to the Accounts Receivable Securitization. The amendment, among other things, extended the maturity date of the Accounts Receivable Securitization to April 6, 2023 and increased the overall limit from $120.0 million to $200.0 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. On October 8, 2024, the Company and certain of its subsidiaries entered into a new amendment to the Accounts Receivable Securitization. The amendment, among other things, extended the maturity date of the Accounts Receivable Securitization to October 8, 2026. 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. As of December 31, 2024, total availability under the Accounts Receivable Securitization was $140.9 million. The obligations of the Company and its relevant subsidiaries under the Accounts Receivable Securitization are secured by the accounts receivable and certain related rights and the facility agreements contain customary events of default. The accounts receivable continue to be owned by the Company and its subsidiaries and continue to be reflected as assets on the Company's Consolidated Balance Sheets and represent collateral up to the amount of the borrowings under this facility. 2031 Senior Notes On September 24, 2021, Somnigroup International issued $800.0 million in aggregate principal amount of 3.875% senior notes due 2031 (the "2031 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The 2031 Senior Notes are general unsecured senior obligations of Somnigroup International and are guaranteed on a senior unsecured basis by the Guarantors. The 2031 Senior Notes mature on October 15, 2031, and interest is payable semi-annually in arrears on each April 15 and October 15, beginning on April 15, 2022. Somnigroup International has the option to redeem all or a portion of the 2031 Senior Notes at any time on or after October 15, 2026. The initial redemption price is 101.938% of the principal amount, plus accrued and unpaid interest, if any. The redemption price will decline each year after 2026 until it becomes 100.0% of the principal amount beginning on October 15, 2029. In addition, Somnigroup International has the option at any time prior to October 15, 2026 to redeem some or all of the 2031 Senior Notes at 100.0% of the original principal amount plus a "make-whole" premium and accrued and unpaid interest, if any. 2029 Senior Notes On March 25, 2021, Somnigroup International issued $800.0 million in aggregate principal amount of 4.00% senior notes due 2029 (the "2029 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A of the Securities Act, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The 2029 Senior Notes are general unsecured senior obligations of Somnigroup International and are guaranteed on a senior unsecured basis by the Guarantors. The 2029 Senior Notes mature on April 15, 2029, and interest is payable semi-annually in arrears on each April 15 and October 15, beginning on October 15, 2021. Somnigroup International has the option to redeem all or a portion of the 2029 Senior Notes at any time on or after April 15, 2024. The initial redemption price is 102.0% of the principal amount, plus accrued and unpaid interest, if any. The redemption price will decline each year after 2024 until it becomes 100.0% of the principal amount beginning on April 15, 2026. Deferred Financing Costs and Original Issue Discounts The Company capitalizes costs associated with the issuance of debt and related original issue discounts ("OIDs") and amortizes these costs as additional interest expense over the lives of the debt instruments using the effective interest method. These costs are recorded as deferred financing costs as a direct reduction from the carrying amount of the corresponding debt liability in the accompanying Consolidated Balance Sheets and the related amortization is included in interest expense, net in the accompanying Consolidated Statements of Income. Upon the prepayment of the related debt, the Company accelerates the recognition of an appropriate amount of the costs. Future Obligations As of December 31, 2024, the scheduled maturities of long-term debt outstanding, excluding finance lease obligations, for each of the next five years and thereafter are as follows:
(in millions) |  |
2025 |  | $ | 52.5 |
2026 |  | 49.7 |
2027 |  | 49.7 |
2028 |  | 424.7 |
2029 |  | 24.7 |
Thereafter |  | 3,154.4 |
Total(1) |  | $ | 3,755.7 |
(1) Total future obligations excludes $28.5 million of outstanding letters of credit issued by various financial institutions, including $0.8 million associated with the 2023 Credit Facility. |  |

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