XML 25 R20.htm IDEA: XBRL DOCUMENT
v3.23.4

Debt | 6 Months Ended
--- | ---
Nov. 30, 2023
Debt Disclosure [Abstract] |
Debt | 10. DEBT The Company’s debt and finance lease consists of the following:
|  | November 30, 2023 |  |  | May 31, 2023 |
Term Loan |  | $ | 550,000 |  |  | $ | 550,000 |
Senior Notes |  |  | 350,000 |  |  |  | 350,000 |
Finance Lease |  |  | 2,569 |  |  |  | — |
Total debt and finance lease |  |  | 902,569 |  |  |  | 900,000 |
Less: Current portion |  |  | (2,569 | ) |  |  | — |
Total non-current debt |  |  | 900,000 |  |  |  | 900,000 |
Less: Unamortized debt issuance costs |  |  | (13,085 | ) |  |  | (14,561 | )
Total non-current debt, net |  | $ | 886,915 |  |  | $ | 885,439 |
The Company had a financing agreement with a bank providing for a $15,000 unsecured revolving line of credit, which originally expired on November 30, 2023, but was replaced by the five-year senior secured revolving facility as part of the Credit Facilities described below. There were no advances against the line of credit in fiscal 2023 before it was extinguished. Interest on any borrowings under that agreement was at LIBOR plus 100 basis points. Financial covenants included maintaining specified levels of tangible net worth, debt service coverage, and funded debt to EBITDA, each of which the Company was in compliance with during the period the line of credit was available. Credit Facilities In June 2022, Neogen Food Safety Corporation entered into a credit agreement consisting of a five-year senior secured term loan facility (“term loan facility”) in the amount of $650,000 and a five-year senior secured revolving facility (“revolving facility”) in the amount of $150,000 (collectively, the “Credit Facilities”) to fund the 3M Food Safety transaction. The term loan facility was drawn on August 31, 2022, to fund the closing of the 3M Food Safety transaction on September 1, 2022 while the revolving facility rema ined undrawn and continues to be undrawn as of November 30, 2023. The Credit Facilities bear interest based on the term SOFR plus an applicable margin between a range of 150 to 225 basis points determined for each interest period and paid monthly. During the six months ended November 30, 2023, the interest rates ranged from 7.42% to 7.67% per annum. The term loan facility matures on June 30, 2027 and the revolving facility matures at the earlier of June 30, 2027 and the termination of the revolving commitments. In November 2022, the Company entered into an interest rate swap agreement, whereby interest on $250,000 of the total $550,000 principal balance is paid at a fixed rate. See Note 13. "Derivatives" for further detail on the swap agreement. The term loan facility contains an optional prepayment feature at the discretion of the Company. The Company determined that the prepayment feature did not meet the definition of an embedded derivative and does not require bifurcation from the host liability and, accordingly, has accounted for the entire instrument at amortized cost. In accordance with the prepayment feature, the Company paid $100,000 of the term loan facility’s principal in fiscal year 2023. The Company can draw any amount under the revolving facility up to the $150,000 limit, with the amount to be repaid on the termination date of the revolving commitments. Debt issuance costs of $2,361 were incurred related to the revolving facility. These costs are being amortized as interest expense in the condensed consolidated statements of operations over the contractual life of the revolving facility using the straight-line method. Amortization of the deferred debt issuance costs for the revolving facility was $122 and $244, respectively, during the three and six months ended November 30, 2023. Amortization of the deferred debt issuance costs for the revolving facility was $122 for the three and six months ended November 30, 2022. As of November 30, 2023 and May 31, 2023 the Company had $1,751 and $1,995, respectively, of unamortized debt issuance costs. The Company must pay an annual commitment fee ranging from 0.20% and 0.35% on the unused portion of the Revolving Credit Facility, paid quarterly. As of November 30, 2023, the commitment fee was 0.30%, with $111 and $245, respectively, recorded as interest expense in the condensed consolidated statements of operations during the three and six months ended November 30, 2023. During the three and six months ended November 30, 2022, $133 and $225, respectively, relating to the commitment fee was recorded as interest expense in the consolidated statements of operations. There was no accrued interest payable on the term loan as of November 30, 2023. The Company incurred $10,232 in total debt issuance costs on the term loan which is recorded as an offset to the term loan facility and amortized over the contractual life of the loan to interest expense using the straight-line method. The amortization of deferred debt issuance costs of $529 and $1,059 and interest expense of $10,267 and $20,868 (excluding swap credit of $764 and $1,452) for the term loan was included in the condensed consolidated statements of operations during the three and six months ended November 30, 2023, respectively. The amortization of deferred debt issuance costs of $529 and interest expense of $8,327 was included in the consolidated statements of operations during the three and six months ended November 30, 2022. As of November 30, 2023 and May 31, 2023 the Company had $7,585 and $8,644, respectively, of unamortized debt issuance costs. Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of November 30, 2023, the Company was in compliance with its debt covenants. Senior Notes In July 2022, Neogen Food Safety Corporation closed on an offering of $350,000 aggregate principal amount of 8.625% senior notes due in 2030 (the “Notes”) in a private placement at par. The Notes were initially issued by Neogen Food Safety Corporation to 3M and were transferred and delivered by 3M to the selling securityholder in the offering, in satisfaction of certain of 3M’s existing debt. Upon closing of the 3M Food Safety transaction on September 1, 2022, the Notes became guaranteed on a senior unsecured basis by the Company and certain wholly-owned domestic subsidiaries of the Company. The Company determined that the redemption features of the Notes did not meet the definition of a derivative and thus does not require bifurcation from the host liability and accordingly has accounted for the entire instrument at amortized cost. Total accrued interest on the Notes was $10,985 as of November 30, 2023 and May 31, 2023 based on the stated interest rate of 8.625% and included in current liabilities on the condensed consolidated balance sheets. The Company incurred total debt issuance costs of $6,683, which are recorded as an offset to the Notes and amortized over the contractual life of the Notes to interest expense using the straight-line method. During the three and six months ended November 30, 2023, the Company recorded $7,756 and $15,511 of interest expense for the Notes in the condensed consolidated statements of operations, of which $209 and $417 related to the amortization of deferred debt issuance costs, respectively. During the three and six months ended November 30, 2022, the Company recorded $10,985 of interest expense in the consolidated statements of operations, of which $348 related to the amortization of deferred debt issuance costs. As of November 30, 2023 and May 31, 2023 the Company had $5,500 and $5,917, respectively, of unamortized debt issuance costs. Finance Lease The finance lease as of November 30, 2023 is a building lease that is classified within property and equipment and the current portion of debt on the condensed consolidated balance sheets. The Company intends to elect the purchase option within the lease agreement prior to the end of the lease term. Maturity of Term Loan and Senior Notes There are no required principal payments through fiscal year 2026, due to $100,000 in prepayments made in fiscal 2023.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration