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Subsequent Event - 2024 Credit Agreement

12 Months Ended

Jun. 30, 2024

Subsequent Event - 2024 Credit Agreement

Subsequent Event - 2024 Credit Agreement

17. Subsequent Event – 2024 Credit Agreement

In July 2024, we entered into the 2024 Credit Agreement with a group of lenders. Initial borrowings were used to refinance all our outstanding debt, to pay fees and expenses of the transaction, and for ongoing working capital requirements and general corporate purposes. Borrowings under the Delayed Draw Term A-1 and A-2 Loans will be used to finance the purchase price of the Proposed Acquisition upon completion of the acquisition (the “Closing Date”).

Under the 2024 Credit Agreement, there are (i) Initial Term A-1 Loans in an initial aggregate principal amount of $162,000 (the “Initial Term A-1 Loans”), (ii) Delayed Draw Term A-1 Loans in an initial aggregate principal amount of $189,000 (the “Delayed Draw Term A-1 Loans” and, together with the Initial Term A-1 Loans, the “Term A-1 Loans”) (iii) Initial Term A-2 Loans in an initial aggregate principal amount of $138,000 (the “Initial Term A-2 Loans”), (iv) Delayed Draw Term A-2 Loans in an initial aggregate principal amount of $161,000 (the “Delayed Draw Term A-2 Loans” and, together with the Initial Term A-2 Loans, the “Term A-2 Loans”), and (v) Revolving Credit Commitments in an initial aggregate principal amount of $310,000 (the “Revolving Credit Commitments” and, together with the Term A-1 Loans and Term A-2 Loans, the “2024 Credit Facilities”). The 2024 Credit Facilities mature in July 2029 in the case of the Term A-1 Loans and the Revolving Credit Commitments and in July 2031 in the case of the Term A-2 Loans.

Borrowings under the 2024 Credit Facilities bear interest at rates based on the ratio of the Company and its subsidiaries’ net consolidated indebtedness to the Company and its subsidiaries’ consolidated EBITDA (the “Net Leverage Ratio”). The interest rates per annum for loans under the 2024 Credit Facilities are based on a fluctuating rate of interest as selected by the Company plus an applicable rate as set forth in the table below:


		Revolving Credit and Term A-1 Loans					Term A-2 Loans
Net Leverage Ratio		Base rate		SOFR			Base rate		SOFR
≥ 4.00:1.00		1.75	%	2.75	%		2.25	%	3.25	%
≥ 3.50:1.00 and < 4.00:1.00		1.50	%	2.50	%		2.00	%	3.00	%
≥ 2.25:1.00 and < 3.50:1.00		1.25	%	2.25	%		1.75	%	2.75	%
< 2.25:1.00		1.00	%	2.00	%		1.50	%	2.50	%

The Company may receive patronage from the lenders providing the Term A-2 Loans, to the extent eligible under such lender’s patronage program, as determined by such lender in its sole discretion.

Pursuant to the terms of the 2024 Credit Agreement, the 2024 Credit Facilities are subject to various covenants that, among other things and subject to the permitted exceptions described therein, restrict us and our subsidiaries with respect to: (i) incurring additional debt; (ii) making certain restricted payments or making optional redemptions of other indebtedness; (iii) making investments or acquiring assets; (iv) disposing of assets (other than in the ordinary course of business); (v) creating any liens on our assets; (vi) entering into transactions with affiliates; (vii) entering into merger or consolidation transactions; and (viii) creating guarantee obligations; provided, however, that we are permitted to pay distributions to stockholders out of available cash subject to certain annual limitations and a quarterly maximum Net Leverage Ratio of 4.0x and so long as no default or event of default under the 2024 Credit Facilities shall have occurred and be continuing at the time such distribution is declared. Indebtedness under the 2024 Credit Facilities is collateralized

by a first priority lien on substantially all assets of Phibro and certain of our domestic subsidiaries. The 2024 Credit Agreement contains an acceleration clause should an event of default (as defined) occur.

The 2024 Credit Agreement requires, among other things, compliance with financial covenants that permit: (i) a maximum Net Leverage Ratio and (ii) a minimum interest coverage ratio, each calculated on a trailing four-quarter basis, as follows:


Period	maximum Net Leverage Ratio		minimum interest coverage ratio
Prior to the Closing Date	4.00:1.00		3.00:1.00
First fiscal quarter ending after the Closing Date through the eighteen-month anniversary of the Closing Date	4.75:1.00		2.50:1.00
Eighteen-month anniversary of the Closing Date to the thirty-month anniversary of the Closing Date	4.50:1.00		2.75:1.00
Thirty-month anniversary of Closing Date to the forty-two month anniversary of the Closing Date	4.25:1.00		3.00:1.00
After the forty-two month anniversary of the Closing Date	4.00:1.00		3.00:1.00

We are a party to an interest rate swap agreement on $300,000 of notional principal that effectively converts the floating portion of our interest obligation on that amount of debt to a fixed rate of 0.61% through June 2025. We have designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “Note 14 — Derivatives.”