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Indebtedness | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
Indebtedness | INDEBTEDNESS On November 24, 2020, the Company entered into a credit agreement with a consortium of lenders providing for a $350.0 million senior unsecured revolving credit facility (the “Revolving Facility”), under which revolving borrowings became available at the completion of the separation and distribution transaction, and under which all borrowings and commitments will mature or terminate on November 24, 2025. The Company expects that the Revolving Facility will be used to provide for working capital and capital expenditures, to finance future permitted acquisitions, and for other general corporate purposes. The Company had $50.0 million of outstanding borrowings under the Revolving Facility as of December 31, 2020. The Company incurred $2.2 million of lender and legal fees related to the Revolving Facility, which were recorded within prepaid expenses and other assets in the consolidated balance sheets and will be deferred and amortized through the maturity date. In conjunction with the separation and distribution, the Company repaid in full the outstanding principal and accrued interest amounts due under its previous debt agreements, including (i) $225.4 million paid on November 30, 2020 for outstanding principal and accrued interest due under the revolving credit and term loan facility scheduled to mature in January 2025; and (ii) $61.3 million paid on November 27, 2020 to repay outstanding principal, accrued interest, and an early prepayment fee for the senior unsecured notes scheduled to mature in April 2021. The Company recorded a $4.1 million loss on extinguishment of the debt within (loss) earnings from discontinued operations in the consolidated statements of earnings. We have classified the historical debt balances related to our prior revolving credit and term loan agreement, senior unsecured notes, and finance leases that were directly related to the operations of The Aaron's Company, Inc. within liabilities of discontinued operations on the consolidated balance sheets, as repayment of the prior debt facilities was required under the terms of the loan agreements in the event of a fundamental change to the Company and the legal obligor of these agreements was a legal entity of The Aaron's Company. Revolving Facility The Company is a guarantor of the Revolving Facility with Progressive Finance Holdings, LLC, a wholly-owned subsidiary of the Company, as borrower. The Revolving Facility includes (i) a $20.0 million sublimit for the issuance of letters of credit on customary terms, and (ii) a $25.0 million sublimit for swingline loans on customary terms. We will have the right from time to time to request to increase the size of the Revolving Facility or add certain incremental revolving or term loan facilities (the “Incremental Facilities”) in minimum amounts to be agreed upon. The aggregate principal amount of all such Incremental Facilities may not exceed $300.0 million. Borrowings under the Revolving Facility bear interest at a rate per annum equal to, at our option, (i) the LIBO rate plus a margin within the range of 1.5% to 2.5% for revolving loans, based on total leverage, or (ii) the base rate plus the applicable margin, which will be 1.00% lower than the applicable margin for LIBO rate loans. The interest rate of the Revolving Facility at December 31, 2020 was 1.94%. The Company pays a commitment fee on unused balances, which ranges from 0.20% to 0.35% as determined by the Company's ratio of total net debt to EBITDA. As of December 31, 2020, the amount available under the Revolving Facility was $300.0 million. Financial Covenants The Revolving Facility discussed above contains financial covenants, which include requirements that the Company maintain ratios of (i) total net debt to EBITDA of no more than 2.50:1.00 and (ii) consolidated interest coverage of no less than 3.00:1.00. The Company will be in default under the Revolving Facility agreement if it fails to comply with these covenants, and all borrowings outstanding could become due immediately. Under the Revolving Facility, the Company may pay cash dividends in any year so long as, after giving pro forma effect to the dividend payment, the Company maintains compliance with its financial covenants and no event of default has occurred or would result from the payment. At December 31, 2020, the Company was in compliance with all financial covenants related to its outstanding debt. Below is a summary of future principal maturities due under the Revolving Facility as of December 31, 2020. For purposes of the below table, we have assumed that the $50.0 million of outstanding borrowings at December 31, 2020 will remain outstanding until November 24, 2025, the maturity date of the Revolving Facility. However, all borrowings under the Revolving Facility may be repaid at any time by the Company without penalty.
(In Thousands) |
2021 | $ | — |
2022 | — |
2023 | — |
2024 | — |
2025 | 50,000 |
Thereafter | — |
Total | $ | 50,000 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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