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Borrowings | 9 Months Ended
--- | ---
Sep. 30, 2024
Debt Disclosure [Abstract] |
Borrowings | Note 7. Borrowings Long term debt consists of the following (in thousands):
| September 30, 2024 |  | December 31, 2023
Dollar term loan | $ | 1,828,125 |  |  | $ | 1,842,188 |
Less: Discount on term loan | (5,571) |  |  | (6,441) |
Less: Debt issuance costs | (9,545) |  |  | (11,037) |
Total debt, net of discount and debt issuance costs | 1,813,009 |  |  | 1,824,710 |
Less: Current portion of long-term debt | (18,750) |  |  | (18,750) |
Long-term debt, net of current portion | $ | 1,794,259 |  |  | $ | 1,805,960 |
As of September 30, 2024, the Company had an outstanding dollar term loan (the “Term Facility”) for a carrying amount of $1,813.0 million and a fair value, based on Level 2 inputs related to fair market value, of $1,829.3 million. As of December 31, 2023, the Company had an outstanding dollar term loan for a carrying amount of $1,824.7 million and a fair value, based on Level 2 inputs related to fair market value, of $1,848.3 million. Credit Facilities The Company has a credit agreement with JPMorgan Chase Bank, N.A., as agent, for a syndicate of lenders (the “Credit Agreement”). Under the Credit Agreement, the Company borrowed $1.9 billion of dollar term loans and obtained $250.0 million of commitments under a revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”). The Term Facility matures on October 29, 2028 and is repayable in quarterly installments of 0.25% of the initial principal amount thereof, with the remaining amount due at maturity. The Revolving Facility matures on October 29, 2026. The Company may prepay all or part of the Credit Facilities at any time. Subject to certain exceptions and limitations, the Company is required to prepay the Term Facility with the net proceeds of certain occurrences, such as the incurrences of indebtedness not permitted to be incurred under the Credit Agreement, credit sale and leaseback transactions and asset sales. The agreement also requires mandatory prepayments of the Term Facility with excess cash flow as specified in the terms of the Credit Agreement. On June 11, 2024, the Company refinanced the Credit Agreement with Amendment No. 2 (the “Amendment”), with JPMorgan Chase Bank, N.A., as agent, for a syndicate of lenders. The Amendment reduced the applicable margin from 2.75% to 2.25% and eliminated the previous credit spread adjustment effective June 11, 2024. The Amendment is predominantly accounted for as a modification. The loss on any extinguished debt within the syndicate was immaterial. The Company incurred transaction fees of approximately $1.4 million during the second quarter of 2024, which were recorded as a component of Other (expense) income, net on the Condensed Consolidated Statements of Operations. Other than the foregoing, the material terms of the Credit Agreement remain unchanged. Effective June 11, 2024, the borrowings under the Term Facility bear interest, at the Company’s option, either at (i) Term SOFR 1 plus the applicable margin of 2.25% or (ii) the base rate plus 1.25%. The base rate is defined as the highest of (a) the Federal Funds Rate plus one half of 1%, (b) the rate of interest in effect for such day as published by the Wall Street Journal as the “prime rate,” and (c) Term SOFR Rate for a one-month interest period plus 1.00%; provided that the base rate shall not be less than 1.00% per annum. Term SOFR is subject to a “floor” of 0% per annum. The Term Facility was issued with 0.125% of original issue discount. Effective June 11, 2024, the Revolving Facility accrues interest at a per annum rate based on either, at the Company’s election, (i) Term SOFR plus the applicable margin for Term SOFR loans ranging between 2.00% and 2.50% based on the Company’s total net first lien leverage ratio or (ii) the base rate plus an applicable margin ranging between 1.00% and 1.50% based on the Company’s total net first lien leverage ratio. No amounts were outstanding under the Revolving Facility as of September 30, 2024 and December 31, 2023. There were $1.4 million and $1.6 million of utilized letters of credit under the Revolving Facility at September 30, 2024 and December 31, 2023, respectively. The Company guarantees the obligations under the Credit Agreement. All obligations under the Credit Agreement are secured by a perfected lien or security interest in substantially all of the Company’s and the guarantors’ tangible and intangible assets. The Credit Agreement also provides for a borrowing facility of $15.0 million, which is available on a same day basis and a letter of credit facility of $30.0 million. The Credit Agreement also includes an uncommitted incremental facility subject to compliance with certain leverage tests and borrowing limits. Accrued interest is payable (i) quarterly in arrears with respect to base rate loans, (ii) at the end of each interest rate period (or at each three- month interval in the case of loans with interest periods greater than 3 months) with respect to Term SOFR loans, (iii) the date of any repayment or prepayment, and (iv) at maturity (whether by acceleration or otherwise). The Company is also obligated to pay other customary closing fees, arrangement fees, administrative fees, commitment fees, and letter of credit fees. Under the Credit Agreement, a commitment fee is payable on the daily unutilized amount under the Revolving Facility at a per annum rate ranging from 0.25% to 0.35% depending on the Company’s total net first lien leverage ratio. The Credit Agreement requires that, as of the last day of any fiscal quarter if on such date the aggregate principal amount of all (a) revolving loans, (b) swingline loans, and (c) letter of credit obligations (in excess of $15 million) exceed 35% of the revolving loan commitments, the total net first lien leverage ratio cannot exceed 6.25 to 1.00. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate equal to 2.00% above the then-applicable interest rate will apply during the existence of an event of default under the Credit Agreement. The Company was in compliance with all covenants under the Credit Agreement as of September 30, 2024. The Credit Agreement, among other things, limits the ability of the Company and its restricted subsidiaries to incur or guarantee additional indebtedness; pay dividends or make distributions or redeem or repurchase capital stock; prepay, redeem or repurchase certain subordinated debt; make certain loans or investments; create liens; merge or consolidate with another company or transfer or sell assets; enter into restrictions affecting the ability of certain restricted subsidiaries to make distributions, loans or advances to the Company or its restricted subsidiaries; and engage in transactions with affiliates. These covenants are subject to a number of important limitations and exceptions, which are described in the Credit Agreement. Future minimum principal payments Future minimum principal payments on the Term Facility as of September 30, 2024 are as follows (in thousands):
Remaining 2024 | 4,688 |
2025 | 18,750 |
2026 | 18,750 |
2027 | 18,750 |
2028 | 1,767,187 |
Total | $ | 1,828,125 |

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