Borrowings and Credit Arrangements

9 Months Ended

Jun. 26, 2021

The Company’s borrowings consisted of the following:


	June 26, 2021		September 26, 2020
Current debt obligations, net of debt discount and deferred issuance costs:
Term Loan	$	74.8	$	74.9
Revolver	—		250.0
Securitization Program	320.0		—

Other	65.8		—
Total current debt obligations	$	460.6	$	324.9
Long-term debt obligations, net of debt discount and issuance costs:
Term Loan	1,325.5		1,379.9

2025 Senior Notes	—		939.4
2028 Senior Notes	395.2		394.6
2029 Senior Notes	934.0		—

Total long-term debt obligations	$	2,654.7	$	2,713.9
Total debt obligations	$	3,115.3	$	3,038.8

2018 Amended and Restated Credit Agreement

On December 17, 2018, the Company and certain of its subsidiaries refinanced its term loan and revolving credit facility by entering into an Amended and Restated Credit and Guaranty Agreement as of December 17, 2018 (the "2018 Credit Agreement") with Bank of America, N.A. in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and certain other lenders. The 2018 Credit Agreement amended and restated the Company's prior credit and guaranty agreement dated as of October 3, 2017 (the "2017 Credit Agreement"). As of June 26, 2021, the principal amount outstanding of the term loan under the 2018 Credit Agreement (the "Term Loan") was $1.4 billion. The Term Loan bears interest at an annual rate equal to the Eurocurrency Rate (i.e., the LIBOR rate) plus an Applicable Rate, which was 1.00% as of June 26, 2021.

The Company also has a $1.5 billion revolving credit facility (the "Revolver") under the 2018 Credit Agreement. The borrowings of the Revolver bear interest at a rate equal to the LIBOR Daily Floating Rate plus an Applicable Rate, which was 1.00% as of June 26, 2021. In response to the market uncertainties created by the COVID-19 pandemic in March 2020, the Company borrowed $750.0 million under the Revolver, $250.0 million of which, at the time, was used to pay off amounts outstanding under the asset securitization agreement, in order to have sufficient cash on hand. During the first quarter of fiscal 2021, the Company paid off the remaining outstanding balance of $250.0 million. As of June 26, 2021, the full amount of the Revolver was available to borrow by the Company.

Interest expense, weighted average interest rates, and the interest rate at the end of period under the Credit Agreements were as follows:


	Three Months Ended						Nine Months Ended
	June 26, 2021			June 27, 2020			June 26, 2021			June 27, 2020
Interest expense	$	5.1		$	11.4		$	17.0		$	38.0
Weighted average interest rate	1.10		%	1.68		%	1.15		%	2.52		%
Interest rate at end of period	1.09		%	1.55		%	1.09		%	1.55		%

The 2018 Credit Agreement contains two financial covenants; a total leverage ratio and an interest coverage ratio, both of which are measured as of the last day of each fiscal quarter. These terms, and calculations thereof, are defined in further detail in the 2018 Credit Agreement. As of June 26, 2021, the Company was in compliance with these covenants.

Senior Notes

On September 28, 2020, the Company completed a private placement of $950 million aggregate principal amount of its 3.250% Senior Notes due 2029 (the "2029 Senior Notes") at an offering price of 100% of the aggregate principal amount of the 2029 Senior Notes. The Company used the net proceeds of the 2029 Senior Notes offering and cash on hand to redeem in full its 4.375% Senior Notes due 2025 (the "2025 Senior Notes") in the aggregate principal amount of $950.0 million on October 15, 2020 at an aggregate redemption price of $970.8 million, which included a premium payment $20.8 million.

2025 Senior Notes

Immediately prior to redemption in full of the 2025 Senior Notes on October 15, 2020, the total aggregate principal balance of 2025 Senior Notes was $950.0 million. As the Company planned to use the proceeds from the 2029 Senior Notes offering to redeem the 2025 Senior Notes, the Company evaluated the accounting for this transaction under ASC 470, Debt, to determine modification versus extinguishment accounting on a creditor-by-creditor basis. Certain 2025 Senior Note holders either did not participate in this refinancing transaction or reduced their holdings, and these transactions were accounted for as extinguishments. As a result, the Company recorded a debt extinguishment loss in the first quarter of fiscal 2021 of $21.6 million. For the remaining 2025 Senior Notes holders who participated in the refinancing, these transactions were accounted for as modifications because on a creditor-by-creditor basis the present value of the cash flows between the debt instruments before and after the transaction was less than 10%. The Company recorded a portion of the transaction expenses of $5.8 million to interest expense pursuant to ASC 470, subtopic 50-40. The remaining debt issuance costs of $7.9 million and debt discount of $6.4 million related to the modified debt will be amortized over the new term of the 2029 Senior Notes using the effective interest method.

2028 Senior Notes

As of June 26, 2021, the Company had 4.625% Senior Notes due 2028 (the "2028 Senior Notes") outstanding in the aggregate principal balance of $400 million. The 2028 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries and mature on February 1, 2028.

2029 Senior Notes

As of June 26, 2021, the Company had 2029 Senior Notes outstanding in the aggregate principal balance of $950 million. The 2029 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries. The 2029 Senior Notes mature on February 15, 2029 and bear interest at the rate of 3.250% per year, payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2021.

The Company may redeem the 2029 Senior Notes at any time prior to September 28, 2023 at a price equal to 100% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium set forth in the indenture. The Company may also redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes with the net cash proceeds of certain equity offerings at any time and from time to time before September 28, 2023, at a redemption price equal to 103.250% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date. The Company also has the option to redeem the 2029 Senior Notes on or after: September 28, 2023 through September 27, 2024 at 101.625% of par; September 28, 2024 through September 27, 2025 at 100.813% of par; and September 28, 2025 and thereafter at 100% of par. In addition, if the Company undergoes a change of control coupled with a decline in ratings, as provided in the indenture, the Company will be required to make an offer to purchase each holder’s 2029 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

The Company evaluated the 2029 Senior Notes for derivatives pursuant to ASC 815, Derivatives and Hedging, and did not identify any embedded derivatives that require bifurcation. All features were deemed to be clearly and closely related to the host instrument.

Interest expense for the 2029 Senior Notes, 2028 Senior Notes and 2025 Senior Notes was as follows:


			Three Months Ended				Nine Months Ended
			June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
	Interest Rate		Interest Expense		Interest Expense		Interest Expense		Interest Expense
2025 Senior Notes	4.375	%	$	—	$	10.9	$	—	$	32.7
2028 Senior Notes	4.625	%	4.8		4.8		14.4		14.4
2029 Senior Notes	3.250	%	8.2		—		24.5		—
Total			$	13.0	$	15.7	$	38.9	$	47.1

Accounts Receivable Securitization Program

In response to the market uncertainties created by the COVID-19 pandemic, on March 26, 2020, the Company paid-off the total amount outstanding of $250.0 million previously borrowed under the Accounts Receivable Securitization Program (the "Securitization Program"). On April 13, 2020, the Company amended the Credit and Security agreement with the lenders, temporarily suspending the ability to borrow and the need to comply with covenants for up to a year. On June 11, 2021, the Company amended and restated the Credit and Security agreement to restart the Securitization Program and increase the maximum borrowing amount to $320.0 million. Loans outstanding under the Securitization Program bear interest at LIBOR plus an applicable margin for defined tranches. As of June 26, 2021, there was $320.0 million outstanding under this program. The weighted average interest rate under the Securitization Program was 0.78% as of June 26, 2021.

Other

Other represents debt acquired in the Mobidiag acquisition, which is primarily with the European Investment Bank ("EIB"). Multiple tranches were withdrawn under the agreement and were primarily used to fund research and development projects and expansion efforts. The debt agreement contains change-in-control provisions allowing the EIB to call the debt at any time after a change-in-control, which occurred as a result of Hologic acquiring Mobidiag. Accordingly, the Company has classified the debt as current. The tranches withdrawn under this agreement have interest rates ranging from 6.0% to 7.0%. The debt agreement includes additional payments to the EIB based on revenues generated by products developed under the funding as well as prepayment penalties.