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Debt and Credit Arrangements | 9 Months Ended
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Sep. 30, 2024
Debt Disclosure [Abstract] |
Debt and Credit Arrangements | Debt and Credit Arrangements Summary of Outstanding Borrowings The following table represents the components of our borrowings:
| September 30, 2024 |  | December 31, 2023
Senior secured and senior unsecured notes: |  |  |
Principal amount, senior secured notes due 2030 | $ | 1,460.0 |  |  | $ | 1,460.0 |
Principal amount, senior unsecured notes due 2031 | 510.0 |  |  | 510.0 |
Unamortized discount | (24.4) |  |  | (26.9) |
Unamortized debt issuance costs | (29.8) |  |  | (32.9) |
Senior secured and senior unsecured notes, net of unamortized discount and debt issuance costs | 1,915.8 |  |  | 1,910.2 |
Senior secured revolving credit facilities and term loans: |  |  |
Term loans due March 2030 | 1,631.0 |  |  | 1,631.0 |
Senior secured revolving credit facility due April 2029 | 142.3 |  |  | 102.8 |
Unamortized discount | (32.5) |  |  | (35.8) |
Unamortized debt issuance costs | (33.4) |  |  | (32.5) |
Senior secured revolving credit facility and term loan, net of unamortized discount and debt issuance costs | 1,707.4 |  |  | 1,665.5 |
Convertible notes due November 2024: |  |  |
Principal amount | 258.7 |  |  | 258.7 |
Unamortized debt issuance costs | (0.2) |  |  | (0.9) |
Convertible notes due November 2024, net of unamortized debt issuance costs | 258.5 |  |  | 257.8 |
Other debt facilities | 2.9 |  |  | 1.4 |
Total debt, net of unamortized debt issuance costs | 3,884.6 |  |  | 3,834.9 |
Less: current maturities (1) | 260.7 |  |  | 258.5 |
Long-term debt | $ | 3,623.9 |  |  | $ | 3,576.4 |
_______________ (1)Our convertible notes due November 2024, net of unamortized debt issuance costs, are included in current maturities for both periods presented. Also included in current maturities for the current period is $2.2 of other debt facilities. Senior Secured and Unsecured Notes On December 22, 2022, we completed the issuance and sale of (i) $1,460.0 aggregate principal amount of 7.500% Secured Notes at an issue price of 98.661% and (ii) $510.0 aggregate principal amount of 9.500% Unsecured Notes (together with the Secured Notes, the “Notes”), at an issue price of 97.949%. The Secured Notes mature on January 1, 2030, and the Unsecured Notes mature on January 1, 2031. The effective interest rate on the Secured Notes and Unsecured Notes is 7.8% and 9.9%, respectively, after accounting for original issue discounts and debt issuance costs. The Notes were issued to finance the Howden Acquisition. Net proceeds received from the offering of each series of Notes was deposited in an escrow account and classified as restricted cash. Senior Secured Revolving Credit Facility and Term Loans Senior Secured Revolving Credit Facility Our fifth amended and restated credit agreement dated as of April 8, 2024, as amended (the “Credit Agreement”) provides for a senior secured revolving credit facility (the “SSRCF”). The SSRCF had a borrowing capacity of $1,250.0 and includes sub limits for letters of credit and swingline loans. At September 30, 2024, there were $142.3 in borrowings outstanding under the SSRCF bearing an interest rate of 6.4% (6.2% as of December 31, 2023) and $275.1 in letters of credit and bank guarantees outstanding supported by the SSRCF. As of September 30, 2024, we had unused borrowing capacity of $832.6. A portion of borrowings outstanding under the SSRCF are denominated in euros (“EUR Revolver Borrowings”). EUR Revolver Borrowings outstanding were euro 78.0 million (equivalent to $87.3) at September 30, 2024 and euro 88.5 million (equivalent to $97.8) at December 31, 2023. Significant financial covenants for the SSRCF include financial maintenance covenants that (i) require the ratio of the amount of Chart and its subsidiaries’ consolidated total net indebtedness to consolidated EBITDA to be less than the Maximum Total Net Leverage Ratio Levels and (ii) require the ratio of the amount of Chart and its subsidiaries’ consolidated EBITDA to consolidated cash interest expense to be greater than the Minimum Interest Coverage Ratio Levels. The SSRCF includes a number of other customary covenants. At September 30, 2024, we were in compliance with all covenants. Term Loans On October 2, 2023, Chart refinanced the remaining aggregate principal amounts of our term loans plus accrued interest in exchange for term loans due March 2030 in the aggregate principal amount of $1,781.0 which matures on March 18, 2030. On December 4, 2023, we voluntarily prepaid a portion of our term loans due March 2030 in the amount of $150.0, which effectively prepaid all equal quarterly installments for the life of the loan, and as of September 30, 2024, the aggregate principal amount of $1,631.0 is due at the March 18, 2030 maturity date. On July 2, 2024, we entered into amendment No. 7 to our Credit Agreement, which among other things reduces the interest rate margins applicable to the term loans due March 2030 by 75 basis points from 2.25% to 1.50% in the case of base rate loans, and from 3.25% to 2.50%, in the case of Secured Overnight Financing Rate (“SOFR”) loans and eliminates the 0.10% SOFR credit spread adjustment with respect to the term loans. As of September 30, 2024, the term loans due March 2030 bore an interest rate of 7.8% (8.7% as of December 31, 2023). The effective interest rate on the term loans due March 2030 is 9.1% after accounting for original issue discount and debt issuance costs. Significant financial covenants and customary events of default for the term loans due March 2030 are substantially identical to those in the SSRCF. 2024 Convertible Notes On November 6, 2017, we issued 1.00% Convertible Senior Subordinated Notes due November 2024 (the “2024 Notes”) in the aggregate principal amount of $258.8, pursuant to an Indenture, dated as of such date (the “Indenture”) and First Supplemental Indenture dated December 31, 2020. The 2024 Notes bear interest at an annual rate of 1.00%, payable on May 15 and November 15 of each year, beginning on May 15, 2018, and will mature on November 15, 2024 unless earlier converted or repurchased. The effective interest rate on the 2024 Notes is 1.4% after accounting for debt issuance costs. The initial conversion rate for the 2024 Notes is 17.0285 shares of common stock (subject to adjustment as provided for in the Indenture) per $1,000 principal amount of the 2024 Notes, which is equal to an initial conversion price of approximately $58.725 per share, representing a conversion premium of approximately 35% above the closing price of our common stock of $43.50 per share on October 31, 2017. For purposes of calculating earnings per share, if the average market price of our common stock exceeds the applicable conversion price during the periods reported, shares contingently issuable under the 2024 Notes will have a dilutive effect with respect to our common stock. Since our closing common stock price of $124.14 at the end of the period exceeded the conversion price of $58.725, the if-converted value exceeded the principal amount of the 2024 Notes by $288.2 at September 30, 2024. As described below, we entered into convertible note hedge transactions, which are expected to reduce the potential dilution with respect to our common stock upon conversion of the 2024 Notes. As of October 1, 2024 and until the close of business on the second scheduled trading day immediately preceding November 15, 2024, holders may convert their 2024 Notes at their option. The $258.7 principal amount of the 2024 Notes is due in November 2024 and was classified as a current liability in the condensed consolidated balance sheets at September 30, 2024 and December 31, 2023. There have been no significant conversions as of the date of this filing. We expect to fund the maturing 2024 Notes with cash on hand and available borrowings under our credit facilities. We expect to pay cash up to the $258.7 aggregate principal amount of the 2024 Notes and settle any excess conversion value in shares of Chart common stock. Convertible Note Hedge and Warrant Transactions Associated with the 2024 Notes In connection with the pricing of the 2024 Notes, we entered into privately negotiated convertible note hedge transactions (the “Note Hedge Transactions”) with certain parties, including affiliates of the initial purchasers of the 2024 Notes (the “Option Counterparties”) which relate to 4.41 shares of our common stock and represents the number of shares of our common stock underlying the 2024 Notes. These Note Hedge Transactions are expected to reduce the potential dilution upon any future conversion of the 2024 Notes to the extent that the market price per share of our common stock exceeds the conversion price of $58.725 per share. We also entered into separate, privately negotiated warrant transactions (the “Warrant Transactions”) with the Option Counterparties to acquire up to 4.41 shares of our common stock. The strike price of the Warrant Transactions will initially be $71.775 per share (subject to adjustment), which is approximately 65% above the last reported sale price of our common stock on October 31, 2017. The Warrant Transactions could have a dilutive effect to our shareholders to the extent that the market price per share of our common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants. The Note Hedge Transactions and Warrant Transactions effectively increased the conversion price of the 2024 Notes. Other Debt Facilities In various markets where we do business, we have local credit facilities to meet local working capital demands, fund letters of credit and bank guarantees, and support other short-term cash requirements. The facilities generally have variable interest rates and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. As of September 30, 2024 we had additional capacity of U.S. dollar equivalent $85.2. Certain of our other debt facilities allow us to request bank guarantees and letters of credit. None of these facilities allow revolving credit borrowings. We have letters of credit and bank guarantees outside of our Credit Agreement that totaled U.S. dollar equivalent $160.6 and $134.3 as of September 30, 2024 and December 31, 2023, respectively. Fair Value Disclosures The following table summarizes the carrying values and fair values of our actively quoted debt instruments (1):
| September 30, 2024 |  | December 31, 2023
| Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Term loans due March 2030 | $ | 1,565.1 |  |  | $ | 1,618.8 |  |  | $ | 1,562.7 |  |  | $ | 1,631.0 |
Senior secured notes due 2030 | 1,424.2 |  |  | 1,540.5 |  |  | 1,420.2 |  |  | 1,533.0 |
Senior unsecured notes due 2031 | 491.6 |  |  | 556.0 |  |  | 490.0 |  |  | 555.9 |
Convertible notes due November 2024 | 258.5 |  |  | 541.3 |  |  | 257.8 |  |  | 605.4 |
_______________ (1)The debt instruments noted above are actively quoted instruments and, accordingly, their fair values were determined using Level 1 inputs. The carrying amounts of borrowings outstanding on our senior secured revolving credit facility approximate fair value, as interest rates are variable and reflective of market rates (categorized as Level 2 of the fair value hierarchy).

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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