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DEBT | 3 Months Ended
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Sep. 30, 2018
Debt Disclosure [Abstract] |
DEBT | NOTE 12: DEBT Long-term debt consists of the following (in thousands):
|  | September 30, |  |  | June 30, |  |  | September 30, |
|  | 2018 |  |  | 2018 |  |  | 2017 |
Total Debt: |  |  |  |  |  |  |  |  |  |  |  |
Term B Loan |  | $ | 299,250 |  |  | $ | 300,000 |  |  | $ | - |
Revolver |  |  | - |  |  |  | - |  |  |  | 135,000 |
Total Principal Payments Due |  |  | 299,250 |  |  |  | 300,000 |  |  |  | 135,000 |
Deferred Debt Issuance Costs |  |  | (6,671 | ) |  |  | (6,927 | ) |  |  | - |
Total Amount Outstanding |  |  | 292,579 |  |  |  | 293,073 |  |  |  | 135,000 |
Less Current Portion: |  |  |  |  |  |  |  |  |  |  |  |
Term B Loan |  |  | (3,000 | ) |  |  | (3,000 | ) |  |  | - |
Noncurrent Portion |  | $ | 289,579 |  |  | $ | 290,073 |  |  | $ | 135,000 |
Scheduled future maturities of long-term debt for the next five fiscal years ending June 30 and in the aggregate are as follows (in thousands):
Fiscal Year |  | Maturity Payments |
2019 |  | $ | 2,250 |
2020 |  |  | 3,000 |
2021 |  |  | 3,000 |
2022 |  |  | 3,000 |
2023 |  |  | 3,000 |
Thereafter |  |  | 285,000 |
|  | $ | 299,250 |
Prior Credit Facility Adtalem entered into a revolving credit facility on March 31, 2015, which was set to expire on March 31, 2020 (“Prior Credit Facility”). The Prior Credit Facility provided for a multi-currency revolving credit facility in the amount of $400 million and $100 million available for letters of credit. As of September 30, 2017, Adtalem’s borrowings under the Prior Credit Facility were $135 million with a weighted average interest rate of 3.24%. Senior Secured Credit Facilities On April 13, 2018, Adtalem replaced the Prior Credit Facility with new credit facilities under a new Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for (1) a $300 million revolving facility (“Revolver”) with a maturity date of April 13, 2023 and (2) a $300 million senior secured Term B loan (“Term B Loan”) with a maturity date of April 13, 2025. We refer to the Revolver and Term B Loan collectively as the “Credit Facility.” The Revolver has availability for currencies other than U.S. dollars of up to $200 million and $100 million available for letters of credit. Subject to certain conditions set forth in the Credit Agreement, the Credit Facility may be increased by $250 million. Term B Loan For Eurocurrency Rate Loans, Term B Loan interest is equal to LIBOR or a LIBOR-equivalent rate plus 3%. For Base Rate Loans, Term B Loan interest is equal to the base rate plus 2%. The Term B Loan amortizes in equal quarterly installments of $750,000, with the balance due at maturity on April 13, 2025. As of September 30, 2018, the interest rate for borrowings under the Term B Loan facility was 5.24%, which approximated the effective interest rate. Revolver Revolver interest is equal to LIBOR or a LIBOR-equivalent rate for Eurocurrency Rate Loans or a base rate, plus an applicable rate based on Adtalem’s consolidated leverage ratio, as defined in the Credit Agreement. The applicable rate ranges from 1.75% to 2.75% for Eurocurrency Rate Loans and from 0.75% to 1.75% for Base Rate Loans. Adtalem letters of credit outstanding were $68.4 as of each of September 30, 2018 and June 30, 2018 and $68.5 million as of September 30, 2017. Of this amount, $68.4 million was posted in the second quarter of fiscal year 2017 in relation to the Federal Trade Commission Settlement. Upon the close of the sale of DeVry University (see “Note 2: Discontinued Operations and Assets Held for Sale”), Adtalem will continue to post this letter of credit on behalf of DeVry University. As of September 30, 2018, Adtalem is charged an annual fee equal to 2.25% of the undrawn face amount of the outstanding letters of credit under the Revolver, payable quarterly. The agreement also requires payment of a commitment fee equal to 0.40% of the undrawn portion of the Revolver as of September 30, 2018. The amount undrawn under the Revolver, which includes the impact of the outstanding letters of credit, was $231.6 million as of September 30, 2018. The letter of credit fees and commitment fees are adjustable quarterly, based upon Adtalem’s achievement of certain financial ratios. Debt Issuance Costs Adtalem incurred $9.9 million in fees that were capitalized in relation to the Credit Agreement entered into on April 13, 2018, $7.1 million of which was related to the Term B Loan facility and $2.7 million of which was related to the Revolver facility. The deferred debt issuance costs related to the Term B Loan are presented as a direct deduction from the face amount of the debt, while the deferred debt issuance costs related to the Revolver are classified as Other Assets, Net on the Consolidated Balance Sheets. The following table summarizes the total deferred debt issuance costs for the Term B Loan and Revolver, which will be amortized over seven years and five years, respectively (in thousands):
|  | Term B Loan |  |  | Revolver |  |  | Total |
Deferred Debt Issuance Costs at June 30, 2018 |  | $ | 6,927 |  |  | $ | 2,606 |  |  | $ | 9,533 |
Amortization of Deferred Debt Issuance Costs |  |  | (256 | ) |  |  | (136 | ) |  |  | (392 | )
Deferred Debt Issuance Costs at September 30, 2018 |  | $ | 6,671 |  |  | $ | 2,470 |  |  | $ | 9,141 |
Covenants and Guarantees The Credit Agreement contains customary covenants, including restrictions on our restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interest on assets, make acquisitions, loans, advances or investments, or sell or otherwise transfer assets. The Credit Agreement contains covenants that, among other things, require maintenance of certain financial ratios, as defined in the agreement. Maintenance of these financial ratios could place restrictions on Adtalem’s ability to pay dividends. These financial ratios include a consolidated fixed charge coverage ratio, a consolidated leverage ratio and a U.S. Department of Education financial responsibility ratio based upon a composite score of an equity ratio, a primary reserve ratio and a net income ratio. Failure to maintain any of these ratios or to comply with other covenants contained in the agreement would constitute an event of default and could result in termination of the agreement and require payment of all outstanding borrowings and replacement of outstanding letters of credit. Adtalem was in compliance with the debt covenants as of September 30, 2018. The stock of all U.S. and certain foreign subsidiaries of Adtalem is pledged as collateral for borrowings under the Credit Agreement. The Term B Loan requires mandatory prepayments equal to a percentage of Excess Cash Flow, which is defined within the Credit Agreement, subject to incremental step-downs, depending on the Consolidated Leverage Ratio. Beginning in fiscal year 2019, the Excess Cash Flow payment will be due in the first quarter of each year, and is based on the Excess Cash Flow and Leverage Ratio for the prior year. No payment is due as of September 30, 2018. Our borrowings under the Credit Facility are guaranteed by us and all of our domestic subsidiaries (subject to certain exceptions) and secured by a first lien on our assets and the assets of our guarantor subsidiaries (excluding real estate), including capital stock of the subsidiaries. Deferred Acquisition Obligations Adtalem also has liabilities recorded for deferred purchase price agreements with sellers related to the purchases of Faculdade Diferencial Integral (“Facid”), Faculdade Ideal (“Faci”), Damasio, Grupo Ibmec, Faculdade de Imperatriz (“Facimp”) and SJT. This financing is in the form of holdbacks of a portion of the purchase price of these acquisitions or installment payments. Payments are made under these agreements based on payment schedules or the resolution of any pre-acquisition contingencies.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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