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Debt Obligations
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt Obligations

 

Debt obligations consist of the following as of December 31, 2021 and 2020:


 

 

As of December 31,

(in thousands)

 

2021

 

2020

Credit Facility:

 

 

 

 

Revolving credit agreement

 

$

283,400

 

 

$

270,400

 

Convertible Debt:

 

 

 

 

0.75% convertible notes, unsecured, due 2049

 

468,235

 

 

452,228

 

 

 

 

 

 

1.375% Senior Notes, due 2026

 

682,080

 

 

732,840

 

 

 

 

 

 

Other obligations

 

920

 

 

850

 

 

 

 

 

 

Total debt obligations

 

$

1,434,635

 

 

$

1,456,318

 

Unamortized debt issuance costs

 

(13,729

 )

 

(17,932

)

Carrying value of debt

 

$

1,420,906

 

 

$

1,438,386

 

Short-term debt obligations and current maturities of long-term debt obligations

 

(821

 )

 

(797

)

Long-term debt obligations

 

$

1,420,085

 

 

$

1,437,589

 


As of December 31, 2021, aggregate annual maturities of long-term debt are $0.8 million in 2022, $283.5 million due in 2023, no maturities in 2024, $468.2 million due in 2025, and $682.1 million thereafter. This maturity schedule reflects the revolving credit facility maturing in 2023 and the Convertible Notes maturing in 2025, coinciding with the terms of the initial put option by holders of the Convertible Notes. It also reflects the maturing of the 1.375% Senior Notes of  €600 million ($682.1 million) due in 2026.


Credit Facility


On October 17, 2018, the Company entered into an unsecured revolving credit agreement (the "Credit Facility") for $1.0 billion that expires on October 17, 2023. Fees and interest on borrowings are based upon the Company's corporate credit rating and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over London Inter-Bank Offered Rate ("LIBOR") or a margin over the base rate, as selected by the Company, with the applicable margin ranging from 1.125% to 2.0% (or 0.175% to 1.0% for base rate loans). The Credit Facility allows for borrowings in Australian dollars, British pounds sterling, Canadian dollars, Czech koruna, Danish krone, euro, Hungarian forints, Japanese yen, New Zealand dollars, Norwegian krone, Polish zlotys, Swedish krona, Swiss francs, and U.S. dollars. The Credit Facility contains a $200 million sublimit for the issuance of letters of credit, a $50 million sublimit for U.S. dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans.


The weighted average interest rate of the Company's borrowings under the Credit Facility was 1.2% as of December 31, 2021.

As of December 31, 2021 and 2020, the Company had stand-by letters of credit/bank guarantees outstanding under the Credit Facility of $57.3 million and $60.8 million, respectively. Stand-by letters of credit/bank guarantees reduce the Company's borrowing capacity under the Credit Facility and are generally used to secure trade credit and performance obligations. As of December 31, 2021 and 2020, the stand-by letters of credit interest charges were each 1.1% per annum. Borrowing capacity under the Credit Facility as of December 31, 2021 was $689.3 million.

The Credit Facility contains customary affirmative and negative covenants, events of default and financial covenants, including: (i) as of the end of each fiscal quarter ended on March 31, September 30 and December 31, a Consolidated Total Leverage Ratio not to be greater than 3.5 to 1.0; (ii) as of the end of each fiscal quarter ended on June 30, a Consolidated Total Leverage Ratio (as defined in the Credit Facility) not to be greater than 4.0 to 1.0; provided that, not more than two times prior to the expiration date, that a Material Acquisition has been consummated, for any period of four consecutive fiscal quarters following such Material Acquisition, the Consolidated Total Leverage Ratio will be not greater than 4.0 to 1.0 for fiscal quarters ended on March 31, September 30 and December 31 and not greater than 4.5 to 1.0 for fiscal quarters ended on June 30; provided, further, that following such four consecutive fiscal quarters for which the maximum Consolidated Total Leverage Ratio is increased, the maximum Consolidated Total Leverage Ratio shall revert to the levels set forth in clauses (i) and (ii) above for not fewer than two fiscal quarters before a subsequent Increase Notice is delivered to the syndicate of financial institutions; and (iii) a Consolidated Interest Coverage Ratio (as defined in the Credit Facility) not less than 4.0 to 1.0. Subject to meeting certain leverage ratio and liquidity requirements as contained in the unsecured credit agreement, the Company is permitted to pay dividends, repurchase common stock and repurchase subordinated debt.  On September 17, 2020, the Company and certain of its subsidiaries entered into an amendment (the "Amendment") to the Credit Facility. Under the Amendment, the Consolidated Total Leverage Ratio, as defined in the Credit Facility, was modified to reduce the amount of consolidated funded debt by the amount of cash and cash equivalents on the Company's consolidated balance sheet and the Consolidated Interest Coverage Ratio now includes a one-time option to reduce the ratio to 3.5 to 1.0 from 4.0 to 1.0 for a period of up to three consecutive quarters. The Company was in compliance with all debt covenants as of December 31, 2021.


Uncommitted Line of Credit


On September 4, 2019, the Company entered into an Uncommitted Loan Agreement with Bank of America which provided Euronet up to $100.0 million under an uncommitted line of credit. Interest on borrowings was equal to LIBOR plus 0.65% and the agreement was set to expire September 4, 2020. During the three months ended June 30, 2020, the Company and Bank of America mutually agreed to terminate the Uncommitted Loan Agreement.


Convertible Debt


On March 18, 2019, the Company completed the sale of $525.0 million of Convertible Senior Notes ("Convertible Notes"). The Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, and are convertible into shares of Euronet Common Stock at a conversion price of approximately $188.73 per share if certain conditions are met (relating to the closing price of Euronet Common Stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, the Company recorded $12.8 million in debt issuance costs, which are being amortized through March 1, 2025.

The Company may not redeem the Convertible Notes prior to September 20, 2022. The Company may redeem for cash all or any portion of the Convertible Notes, at its option, (i) on or after September 20, 2022 if the closing sale price of the Company's Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) on or after March 20, 2025 and prior to the maturity date, regardless of the foregoing sale price condition, in each case at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes. In addition, if a fundamental change, as defined in the Indenture, occurs prior to the maturity date, holders may require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.  As of December 31, 2021 the conversion threshold was not met.


In accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt is allocated between debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. ASC 470-20-35-13 requires the debt discount to be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The allocation resulted in an increase to additional paid-in capital of $99.7 million for the Convertible Notes.

 

The Company used $94.2 million of the net proceeds from the issuance of the Convertible Notes to repurchase $49.0 million aggregate principal amount of the Company's 1.5% Convertible Senior Notes due 2044 (the "Retired Convertible Notes") from a limited number of holders in privately negotiated transactions.



On March 18, 2019, the Company provided a notice of redemption to the trustee of the indenture governing the Retired Convertible Notes (the "Existing Indenture"), pursuant to which the Company would redeem all of the remaining principal amount outstanding of the Retired Convertible Notes on May 28, 2019 (the "Redemption Date") for cash at a redemption price equal to 100% of the principal amount of the Retired Convertible Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date. The issuance of the Convertible Notes and the conversion of the Retired Convertible Notes, resulted in a $25.6 million recognition and a $34.2 million reversal of deferred tax liabilities within the additional paid-in capital as of December 31, 2019, respectively.


Prior to the Redemption Date, approximately $352.4 million principal amount of the Retired Convertible Notes were submitted for conversion. The Company elected to settle the conversion of such Retired Convertible Notes through a combination of cash and stock. The Company paid cash equal to $1,000 for each $1,000 principal amount of Retired Convertible Notes submitted for conversion and satisfied the remainder of the conversion obligation by issuing shares of the Company's Common Stock valued at $147.24 per share. As a result, the Company paid cash of $352.4 million and issued approximately 2.5 million shares of its Common Stock. In accordance with ASC 470, the Company recognized a loss of $9.8 million on the conversion and redemption for the year ended December 31, 2019, representing the difference between the fair value of the Retired Convertible Notes converted and the carrying value of the bonds at the time of conversion. The Company is using the remainder of the net proceeds from the issuance of the Convertible Notes to finance the further growth of the business.


Contractual interest expense for the Retired Convertible Notes was $1.5 million for the year ended December 31, 2019 and accretion expense was $4.6 million for the year ended December 31, 2019.

Contractual interest expense for the Convertible Notes was $3.9 million, $3.9 million, and $3.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. Accretion expense was $16.0 million, $15.3 million and $11.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. The effective interest rate was 4.4% for the year ended December 31, 2021. As of December 31, 2021, the unamortized discount was $56.8 million and will be amortized through March 2025.


1.375% Senior Notes due 2026


On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that mature on May 2026 (the "Senior Notes"). The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of December 31, 2021, the Company has outstanding €600 million ($682.1 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest. As of December 31, 2021, the Company had $5.4 million of unamortized debt issuance costs related to the Senior Notes.

 

Other obligations


Certain of the Company's subsidiaries have available lines of credit and overdraft credit facilities that generally provide for short-term borrowings that are used from time to time for working capital purposes. As of December 31, 2021 and 2020, borrowings under these arrangements were $0.9 million and $0.9 million, respectively. As of December 31, 2021, there was $0.8 million due in 2022 under these other obligation arrangements.