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Borrowings

6 Months Ended

Dec. 31, 2020

8. Borrowings

Revolving Credit Facility

We have a revolving credit facility with an aggregate committed amount of up to $535 million which matures in April 2024. The credit facility includes a $300 million sub-limit for letters of credit. Under certain circumstances, we have the ability to increase the facility by the greater of $250 million or such amount as would not cause our secured leverage ratio to exceed a specified level. Borrowings under this facility bear interest at LIBOR plus a margin of 1.0% as of December 31, 2020 (which margin can range from 1.0% to 1.75% based on our consolidated net leverage ratio as defined in the credit facility). The LIBOR index is expected to be discontinued by the end of calendar year 2021. The terms of our credit facility allow for replacement if that occurs. Letters of credit reduce the amount available to borrow under the credit facility by their face value amount. The unused portion of the facility bears a commitment fee of 0.10% as of December 31, 2020 (which fee can range from 0.10% to 0.25% based on our consolidated net leverage ratio as defined in the credit facility). Our borrowings under the credit agreement are guaranteed by certain of our U.S.-based subsidiaries and are secured by substantially all of our assets and substantially all the assets of certain of our subsidiaries. The credit facility contains various representations and warranties, affirmative, negative and financial covenants and events of default. As of December 31, 2020, there was $18.0 million of borrowings outstanding under the revolving credit facility and $71.2 million outstanding under the letters of credit sub facility. The amount available to borrow under the credit facility as of December 31, 2020 was $445.8 million. Loan amounts under the revolving credit facility may be borrowed, repaid and re-borrowed during the term. The principal amount of each revolving loan is due and payable in full on the maturity date. We have the right to repay each revolving loan in whole or in part from time to time without penalty. It is our practice to routinely borrow and repay several times per year under this revolving facility and therefore, borrowings under the credit facility are included in current liabilities. As of December 31, 2020, we were in compliance with all covenants under this credit facility.

1.25% Convertible Senior Notes Due 2022

In February 2017, we issued $287.5 million of the Notes in a private offering. The Notes are governed by an indenture dated February 22, 2017. The maturity for the payment of principal is September 1, 2022. The Notes bear interest at the rate of 1.25% and are payable in cash semiannually in arrears on each March 1 and September 1.

Pursuant to ASC 470-20, we allocated the $287.5 million gross proceeds of the Notes between liability and equity components. The initial $242.4 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day the Notes were issued. The initial $45.1 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the Notes. Issuance costs of $7.7 million were allocated between debt ($6.5 million) and equity ($1.2 million) components with the portion allocated to the debt presented as an offset against long -term debt in the consolidated balance sheet and being amortized as interest expense over the life of the Notes using the effective interest method. The total interest expense recognized for the three and six months ended December 31, 2020 related to the Notes was $3.3 million and $6.6 million, respectively, which consisted of $0.9 million and $1.8 million of contractual interest expense, $2.1 million and $4.2 million of debt discount amortization and $0.3 million and $0.6 million of amortization of debt issuance costs. For the three and six months ended December 31, 2019, the total interest expense was $3.2 million and $6.4 million, respectively, which consisted of $0.9 million and $1.8 million of contractual interest expense, $2.0 million and $4.0 million of debt discount amortization and $0.3 million and $0.6 million of amortization of debt issuance costs. As of June 30, 2020 and December 31, 2020, the respective unamortized debt discounts were $19.1 million and $14.8 million, which are being amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.5%. The unamortized debt issuance cost of $2.5 million and $2.0 million as of June 30, 2020 and December 31, 2020, respectively, is amortized on a straight-line basis, which approximates the effective interest method, over the life of the Notes.

Other Borrowings

Several of our foreign subsidiaries maintain bank lines-of-credit, denominated in local currencies and U.S. dollars, primarily for the issuance of letters-of-credit. As of December 31, 2020, $62.0 million was outstanding under these letter-of-credit facilities. As of December 31, 2020, the total amount available under these credit facilities was $12.7 million.

Long-term debt consisted of the following (in thousands):


		June 30,			December 31,
		2020			2020
1.25% convertible notes due September 1, 2022:
Principal amount		$	287,500		$	287,500
Unamortized discount			(19,075)			(14,832)
Unamortized debt issuance costs			(2,547)			(1,959)
			265,878			270,709
Other long-term debt			2,120			1,905
			267,998			272,614
Less current portion of long-term debt			(926)			(947)
Long-term portion of debt		$	267,072		$	271,667