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v3.26.1

Debt | 3 Months Ended
--- | ---
Mar. 31, 2026
Debt Disclosure [Abstract] |
Debt | 4. Debt Long-term debt consisted of the following:
(in thousands) | March 31, |  |  | December 31, |
| 2026 |  |  | 2025 |
Term Loan Facility | $ | 1,028,116 |  |  | $ | 1,092,745 |
9.0% Senior Secured Notes due 2030 |  | 561,444 |  |  |  | — |
6.5% Senior Secured Notes due 2028 |  | 2,007 |  |  |  | 595,087 |
Total long-term debt |  | 1,591,567 |  |  |  | 1,687,832 |
Less: current portion |  | 25,865 |  |  |  | 13,250 |
Less: unamortized debt discount |  | 34,887 |  |  |  | — |
Less: debt issuance costs |  | 10,025 |  |  |  | 13,971 |
Long-term debt, net | $ | 1,520,790 |  |  | $ | 1,660,611 |
Refinancing On March 11, 2026, Advantage Sales & Marketing Inc., the Company’s indirect wholly owned subsidiary, completed a refinancing transaction designed to extend maturities, enhance liquidity, and simplify its capital structure. The transaction was executed through a series of interrelated financing actions, including (i) an exchange offer and consent solicitation with respect to the Company’s outstanding senior secured notes, (ii) a refinancing and amendment of the Company’s term loan facility, and (iii) amendments to the Company’s asset‑based revolving credit facility. As part of the refinancing, holders of approximately 99% of its outstanding 6.50% senior secured notes due 2028 (the “2028 Notes”) with outstanding principal balance of $561.4 million accepted the offer to exchange their 2028 Notes for new 9.0% senior secured notes due 2030 (the “2030 Notes”) and $43.9 million in cash consideration, along with a related consent solicitation to amend the indenture governing the 2028 No tes, was completed. In connection with the exchange and consent solicitation, substantially all of the covenants, events of default, guarantees, and the collateral securing the 2028 Notes were eliminated or released, and 99% of the 2028 Notes were effectively replaced by the 2030 Notes with extended maturities and revised terms, which are further described below. Concurrently with the notes exchange, the Company refinanced its existing term loan facility by (i) entering into a new senior secured first lien term loan facility at an extended maturity (“the 2030 Term Loan Facility”) in an aggregate principal amount of $1.035 billion and (ii) making a cash prepayment of $80.9 million on the prior term loan balance, and amended its existing senior secured asset-based revolving credit facility (the “2030 ABL”). The 2030 Notes The 2030 Notes bear interest at 9.0% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2026, and mature on November 15, 2030, and include a payment-in-kind fee that was recorded as a debt discount. The debt discount is being amortized to interest expense over the term of the debt using the effective interest method. The Company’s obligations under the 2030 Notes are guaranteed by Karman Intermediate Corp. and each of the Company’s direct and indirect wholly owned material U.S. subsidiaries and Canadian subsidiaries (the “Guarantors”), and are secured by a lien on substantially all of the Company’s and the Guarantors’ assets (subject to certain permitted exceptions). The 2030 Notes have a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility) and a second‑priority lien on the current asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility and second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens. The 2030 Notes may be redeemed, in whole at any time or in part from time to time, at 100% of the principal amount thereof, plus accrued and unpaid interest. Holders of the 2030 Notes have the right to require the Company to repurchase their notes upon the occurrence of certain changes of control, subject to specified exceptions, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest. If the Company or any of its restricted subsidiaries sells assets, under certain circumstances the Company must offer to use the net proceeds to purchase the 2030 Notes at 100% of the principal amount thereof, plus accrued and unpaid interest. If the Company generates excess cash flow, the Company must use 75% of such excess cash flow, subject to reduction as set forth in the applicable indenture, to make an offer to repurchase the 2030 Notes together with other applicable parity lien indebtedness at 100% of the principal amount thereof, plus accrued and unpaid interest. The 2030 Term Loan Facility Borrowings under the Company’s 2030 Term Loan Facility amortize in equal quarterly installments in an amount equal to 2.50% per annum of the principal amount. Borrowings will bear interest at a floating rate, which can be either adjusted SOFR plus an applicable margin or, at the Company’s option, a base rate plus an applicable margin. The applicable margins for the 2030 Term Loan Facility is 6.00%, with respect to SOFR borrowings and 5.00%, with respect to base rate borrowings. The Company may voluntarily prepay loans or reduce commitments under this facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty. The Company will be required to prepay its 2030 Term Loan Facility with 100% of the net cash proceeds of certain asset sales subject to certain reinvestment rights, 100% of the net cash proceeds of certain debt issuances and 75% of excess cash flow (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios). The Company’s obligations under the 2030 Term Loan Facility are guaranteed by the Guarantors, and are secured by a lien on substantially all of the Company’s and the Guarantors’ assets (subject to certain permitted exceptions). The 2030 Term Loan Facility has a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Notes) and a second‑priority lien on the current asset collateral (second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens. The 2030 Term Loan Facility matures in April 2030, subject to potential extensions in accordance with its terms. The 2030 Term Loan Facility includes a payment-in-kind fee that was recorded as debt discount and is being amortized to interest expense over the term of the 2030 Term Loan Facility using the effective interest method. The 2030 Asset-based Revolving Credit Facility The Company's 2030 ABL provides for revolving loans and letters of credit in the aggregate amount of up to $500.0 million, subject to borrowing base capacity. Letters of credit are limited to the lesser of (i) $150.0 million and (ii) the aggregate unused amount of commitments then in effect under the revolving credit facility. Loans under the revolving credit facility may be denominated in either U.S. dollars or Canadian dollars. The revolving credit facility matures on January 30, 2030, subject to a customary springing maturity tied to the maturity of the 2030 Term Loan Facility and the 2030 Notes. Borrowings under the 2030 ABL bear interest at variable rates based on the CME Group Benchmark Administration Limited Term Secured Overnight Financing Rate (“SOFR”) or a base rate, plus applicable margins, at the Company's option. The applicable margins for the 2030 ABL are 1.75%, 2.00% or 2.25%, with respect to SOFR borrowings and 0.75%, 1.00% or 1.25%, with respect to base rate borrowings, in each case depending on average excess availability under the revolving credit facility. The Company’s obligations under the ABL are guaranteed by the Guarantors and are secured by liens on substantially all assets of the Company and the Guarantors, subject to certain permitted exceptions. These obligations have a first‑priority lien on current asset collateral and a second‑priority lien on fixed asset collateral, which is junior to the liens securing the 2030 Notes and the 2030 Term Loan Facility discussed below, in each case subject to permitted liens. As of March 31, 2026, the Company had the ability to borrow up to $385.8 million under the 2030 ABL after giving effect to borrowing base limitations and outstanding letters of credit. As of December 31, 2025, the Company had the ability to borrow up to $438.0 million under the previous revolving credit facility after giving effect to borrowing base limitations and outstanding letters of credit. Debt Covenants The 2030 Notes, the 2030 ABL and the 2030 Term Loan Facility each contain customary affirmative and negative covenants applicable to the Guarantors, the Company and its subsidiaries. Collectively, these covenants restrict the ability of such parties to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock, or make other restricted payments; (iii) prepay, redeem, repurchase or modify the terms of certain junior or other indebtedness; (iv) issue certain preferred stock or similar equity securities; (v) make loans, advances, acquisitions or other investments; (vi) sell or otherwise dispose of or transfer assets; (vii) incur liens or other security interests on assets; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the ability of subsidiaries to pay dividends; (x) change the Company's line of business; and (xi) merge or consolidate with, or sell all or substantially all of their assets to, another entity. Substantially all of the foregoing covenants under the 2030 Notes will be suspended, and the guarantees provided by the Guarantors released, for so long as the 2030 Notes maintain certain investment grade ratings, subject to customary exceptions. The 2030 ABL additionally requires the Company to maintain a fixed charge coverage ratio (as defined in the related credit agreement) of not less than 1.00 to 1.00 as of the end of each fiscal quarter during any period in which excess availability is less than the greater of (a) $25 million and (b) 10% of the lesser of the borrowing base and the maximum borrowing capacity. The fixed charge coverage ratio will continue to be tested at the end of each fiscal quarter until excess availability exceeds the foregoing threshold. The agreements governing the 2030 Notes, the 2030 Term Loan Facility and the 2030 ABL contain additional affirmative and negative covenants, including related definitions, thresholds, limitations and exceptions, that vary between the facilities. The 2028 Notes, 2030 Notes, and the 2030 Term Loan Facility rank pari passu in right of payment, subject to the applicable intercreditor arrangements and collateral priorities. As of March 31, 2026, the Company was in compliance with all applicable covenants. The Company determined that all components of the Refinancing were considered to be modifications. Fees paid to creditors in connection with the Refinancing, including payment-in-kind fees associated with the 2030 Notes and the 2030 Term Loan Facility, were recorded as adjustments to the carrying amounts of the related debt instruments and are being amortized as interest expense over the remaining terms of the modified arrangements. Third-party fees of $20.4 million associated with the 2030 Notes and the 2030 Term Loan Facility were expensed as incurred and recognized in Other expense in the condensed consolidated statements of comprehensive loss. Deferred financing costs of $13.7 million associated with the revolving credit facility were capitalized and are included in Prepaid expenses and other current assets and Other assets in the condensed consolidated balance sheets and are being amortized over the term of the revolving credit facility. The Company recognized $1.2 million of expense in Interest expense in the condensed consolidated statement of operations and comprehensive loss, related to the write-off of unamortized debt issuance costs associated with the portion of debt principal repaid in connection with the Refinancing. The remaining unamortized fees and discount associated with the modified debt instruments, including amounts associated with the Company’s prior debt arrangements that continue to be attributed to the modified instruments, are being amortized as interest expense over the remaining terms of the modified arrangements Debt Maturities Future minimum principal payments on long-term debt as of March 31, 2026 are as follows:
(in thousands) |  |
Remainder of 2026 | $ | 19,399 |
2027 |  | 25,865 |
2028 |  | 27,872 |
2029 |  | 25,865 |
2030 and thereafter |  | 1,492,566 |
Total future minimum principal payments | $ | 1,591,567 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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