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Debt and Other Financing Activities
 6 Months Ended
Mar. 31, 2022
Debt Disclosure [Abstract]  
Debt and Other Financing Activities

NOTE H – DEBT AND OTHER FINANCING ACTIVITIES

The following table summarizes Ashland’s current and long-term debt as of the dates reported in the Condensed Consolidated Balance Sheets.

 

(In millions)

 

March 31, 2022

 

 

September 30, 2021

 

3.375% Senior Notes, due 2031

 

$

450

 

 

$

450

 

2.00% Senior Notes, due 2028 (Euro 500 million principal)

 

 

558

 

 

 

580

 

6.875% notes, due 2043

 

 

282

 

 

 

282

 

Term loan A

 

 

—

 

 

 

250

 

Accounts receivable securitizations

 

 

—

 

 

 

117

 

6.50% junior subordinated notes, due 2029

 

 

59

 

 

 

57

 

Revolving credit facility

 

 

—

 

 

 

225

 

Other (a)

 

 

(13

)

 

 

9

 

Total debt

 

 

1,336

 

 

 

1,970

 

Short-term debt (includes current portion of long-term debt)

 

 

—

 

 

 

(374

)

Long-term debt (less current portion)

 

$

1,336

 

 

$

1,596

 

 

 

 

 

 

 

 
(a)
Includes $16 million and $17 million of debt issuance cost discounts as of March 31, 2022 and September 30, 2021, respectively. Additionally, at September 30, 2021, Other included a European short-term loan facility with an outstanding balance of $23 million.

As of March 31, 2022, Ashland had no long-term debt (excluding debt issuance costs) maturing within the next 5 years.

Accounts Receivable Facilities and Off-Balance Sheet Arrangements

U.S. Accounts Receivable Sales Program

Ashland continues to maintain its U.S. Accounts Receivable Sales Program entered into during fiscal 2021. Ashland accounts for the receivables transferred to buyers as sales. Ashland recognizes any gains or losses based on the excess of proceeds received net of buyer’s discounts and fees compared to the carrying value of the assets. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statement of Condensed Consolidated Cash Flows. Losses on sale of assets, including related transaction expenses are recorded within the Net interest and other expense (income) caption of the Statement of Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting guarantee liability when warranted. When applicable, Ashland discloses the amount of the receivable that serves as over-collateralization as a restricted asset.

Ashland recognized a loss of less than $1 million within its Statement of Consolidated Comprehensive Income (Loss) for the three and six months ended March 31, 2022 within the net interest and other expense (income) caption associated with sales under the program. Ashland has recorded $97 million in sales at March 31, 2022 against the buyer’s limit, which was $125 million at March 31, 2022 compared to $113 million of sales at September 30, 2021 against the buyer's limit, which was $125 million at September 30, 2021. Ashland transferred $122 million and $167 million in receivables to the special purpose entity as of March 31, 2022 and September 30, 2021, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of March 31, 2022 and September 30, 2021 of less than $1 million. As of March 31, 2022, the year-to-date gross cash proceeds received for receivables transferred and derecognized was $177 million, of which $193 million was collected, which includes collections from the sales in prior year transferred to the buyer. The difference of $16 million for receivables transferred and derecognized versus collected represents the impact of a net reduction in sales volume during the current year.

 

Foreign Accounts Receivable Securitization Facility

Ashland continues to maintain its Foreign 2018 Accounts Receivable Securitization Facility. Ashland accounts for the Foreign 2018 Accounts Receivable Securitization Facility as secured borrowings, and the receivables sold pursuant to the facility are included in the Consolidated Balance Sheets as accounts receivable. Ashland repaid all outstanding borrowings under the facility during the three and six months ended March 31, 2022 for a total of $113 million. At March 31, 2022 and September 30, 2021, the outstanding amount of accounts receivable transferred by Ashland was $142 million and $152 million, respectively, and there were zero and $117 million, respectively, of borrowings (denominated in multiple currencies) under the facility.

Debt Repayments

2020 Credit Agreement

During the three and six months ended March 31, 2022, Ashland prepaid its Term loan A principal balance of $250 million.

Other Debt

During the three and six months ended March 31, 2022, Ashland repaid the outstanding balance on its European short-term loan facility for $23 million.

Available borrowing capacity and liquidity

The borrowing capacity remaining under the 2020 Credit Agreement which included the $600 million Revolving Credit Facility was $581 million due to an outstanding balance of zero, as well as a reduction of $19 million for letters of credit outstanding as of March 31, 2022. Ashland's total borrowing capacity at March 31, 2022 was $692 million, which included $111 million of available capacity from the foreign 2018 Accounts Receivable Securitization Facility.

Additionally, Ashland had no available liquidity under its current U.S. Accounts Receivable Sales Program as of March 31, 2022 as total program amounts are currently drawn.

Covenants related to current Ashland debt agreements

Ashland's debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of March 31, 2022, Ashland is in compliance with all debt agreement covenant restrictions.

The maximum consolidated net leverage ratio permitted under Ashland's current credit agreement (the 2020 Credit Agreement) is 4.0. At March 31, 2022, Ashland’s calculation of the consolidated net leverage ratio was 0.7.

The minimum required consolidated interest coverage ratio under the 2020 Credit Agreement during its entire duration is 3.0. At March 31, 2022, Ashland’s calculation of the interest coverage ratio was 9.0.