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Debt
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Debt

Note 7. Debt

The fair value of the Company’s debt obligation approximated its book value as of December 31, 2024 and 2023 and consisted of the following (in thousands):

 

December 31,

 

 

2024

 

 

2023

 

First Lien Credit Agreement

 

$

2,185,000

 

 

$

564,724

 

Less: Current portion of long-term debt

 

 

(21,850

)

 

 

—

 

Total long-term debt

 

$

2,163,150

 

 

$

564,724

 

Less: Deferred financing costs

 

 

(41,861

)

 

 

(6,268

)

Long-term debt, net

 

$

2,121,289

 

 

$

558,456

 

First Advantage Holdings, LLC, an indirect wholly-owned subsidiary of the Company, was a party to a First Lien Credit Agreement (as amended, “Credit Agreement”), which provided for a term loan of $766.6 million due January 31, 2027 (“First Lien Credit Facility”), carrying an interest rate of 2.75% to 3.00%, based on the first lien ratio, plus the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (“SOFR”)(subsequent to an amendment in June 2023 to transition the reference rate from LIBOR (the London Interbank Offer Rate)), with the addition of an applicable margin, and a $100.0 million revolving credit facility due July 31, 2026 (“Revolver”).

In connection with the acquisition of Sterling, on October 31, 2024, the Company refinanced its existing First Lien Credit Agreement and all related Sterling debt (the “2024 First Lien Credit Agreement”). The 2024 First Lien Credit Agreement provides for a term loan of $2.185 billion due October 31, 2031, carrying an interest rate of 3.00% to 3.25%, based on the first lien ratio, plus SOFR (“Amended First Lien Credit Facility”) and a $250.0 million revolving credit facility due October 31, 2029 (“Amended Revolver”). The effective interest rate on the Amended First Lien Credit Facility, which is calculated as the contractual interest rates adjusted for the debt issuance costs is 8.20%.

As a result of the refinancing, the Company incurred $0.4 million of loss on extinguishment of debt, related to the write-off of certain unamortized deferred financing costs.

Borrowings under the 2024 First Lien Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, either (a) a base rate or (b) SOFR, which is subject to a floor of 0.00% per annum. The applicable margins under the 2024 First Lien Credit Agreement are subject to stepdowns based on our first lien net leverage ratio. In addition, the borrower, First Advantage Holdings, LLC is required to pay a commitment fee on any unutilized commitments under the revolving credit facility. The commitment fee rate ranges between 0.25% and 0.50% per annum based on our first lien net leverage ratio. The borrower is also required to pay customary letter of credit fees. The Amended First Lien Credit Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount. The Amended Revolver has no amortization.

The 2024 First Lien Credit Agreement requires the borrower to prepay outstanding term loans, subject to certain exceptions, with certain proceeds from non-ordinary course asset sales, issuance of debt not permitted by the credit agreement to be incurred and annual excess cash flows. In addition, any voluntary prepayment of term loans in connection with certain repricing transactions on or prior to April 30, 2025 are subject to a 1.00% prepayment premium. Otherwise, the borrower may voluntarily repay outstanding loans without premium or penalty, other than customary “breakage” costs.

The 2024 First Lien Credit Agreement is unconditionally guaranteed by Fastball Parent, Inc., a wholly-owned subsidiary of the Company and the direct parent of the borrower, and material wholly owned domestic restricted subsidiaries of Fastball Parent, Inc. The 2024 First Lien Credit Agreement is collateralized by substantially all assets and capital stock owned by direct and indirect domestic subsidiaries and are governed by certain restrictive covenants including limitations on indebtedness, liens, and other corporate actions such as investments and acquisitions. In the event the Company’s outstanding indebtedness under the Amended Revolver exceeds 40.0% of the aggregate principal amount of the revolving commitments then in effect, it is required to maintain a consolidated first lien leverage ratio no greater than 7.75 to 1.00. As of December 31, 2024, there were no outstanding borrowings under the Amended Revolver and $2,185.0 million outstanding under the Amended First Lien Credit Facility. As the Company had no outstanding amounts under the Amended Revolver, it was not subject to the consolidated first lien leverage ratio covenant. The Company was compliant with all covenants under the agreement as of December 31, 2024.

Scheduled maturities of the Company’s debt as of December 31, 2024, are as follows (in thousands):

Years Ending December 31,

 

 

 

2025

 

$

21,850

 

2026

 

 

21,850

 

2027

 

 

21,850

 

2028

 

 

21,850

 

2029

 

 

21,850

 

Thereafter

 

 

2,075,750

 

 

$

2,185,000