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Long-Term Debt and Bank Facility Borrowings
 12 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Long-Term Debt and Bank Facility Borrowings

13) Long-Term Debt and Bank Facility Borrowings

 

The Company's debt is as follows

 

September 30,

 

(in thousands):

 

2023

 

 

2022

 

 

 

Carrying

 

 

 

 

 

Carrying

 

 

 

 

 

 

Amount

 

 

Fair Value (a)

 

 

Amount

 

 

Fair Value (a)

 

Revolving Credit Facility Borrowings

 

$

240

 

 

$

240

 

 

$

20,276

 

 

$

20,276

 

Senior Secured Term Loan (b)

 

 

147,827

 

 

 

148,500

 

 

 

164,084

 

 

 

165,000

 

Total debt

 

$

148,067

 

 

$

148,740

 

 

$

184,360

 

 

$

185,276

 

Total short-term portion of debt

 

$

20,740

 

 

$

20,740

 

 

$

32,651

 

 

$

32,651

 

Total long-term portion of debt

 

$

127,327

 

 

$

128,000

 

 

$

151,709

 

 

$

152,625

 

 

(a)
The face amount of the Company’s variable rate long-term debt approximates fair value.
(b)
Carrying amounts are net of unamortized debt issuance costs of $0.7 million as of September 30, 2023 and $0.9 million as of September 30, 2022.

On July 6, 2022, the Company refinanced its five-year term loan and the revolving credit facility with the execution of the sixth amended and restated revolving credit facility agreement (the “credit agreement”) with a bank syndicate comprised of ten participants, which enables the Company to borrow up to $400 million ($550 million during the heating season of December through April of each year) on a revolving credit facility for working capital purposes (subject to certain borrowing base limitations and coverage ratios), provides for a $165 million five-year senior secured term loan (“Term Loan”), allows for the issuance of up to $25 million in letters of credit, and has a maturity date of July 6, 2027.

The Company can increase the revolving credit facility size by $200 million without the consent of the bank group. However, the bank group is not obligated to fund the $200 million increase. If the bank group elects not to fund the increase, the Company can add additional lenders to the group, with the consent of the Agent, which shall not be unreasonably withheld. Obligations under the credit agreement are guaranteed by the Company and its subsidiaries and are secured by liens on substantially all of the Company’s assets including accounts receivable, inventory, general intangibles, real property, fixtures and equipment.

All amounts outstanding under the credit agreement become due and payable on the facility termination date of July 6, 2027. The Term Loan is repayable in quarterly payments of $4.1 million, plus an annual payment equal to 25% of the annual Excess Cash Flow as defined in the credit agreement (an amount not to exceed $8.5 million annually), less certain voluntary prepayments made during the year, with final payment at maturity. As of September 30, 2023, the Company expects to make approximately $4.0 million of additional term loan repayments due to Excess Cash Flow for the fiscal year ended September 30, 2023. The amount is included in the caption current maturities of long-term debt on our consolidated balance sheet. In fiscal 2022, the Company did not have to make an Excess Cash Flow payment.

The interest rate on the revolving credit facility and the term loan is based on a margin over Adjusted Term Secured Overnight Financing Rate ("SOFR") or a base rate. At September 30, 2023, the effective interest rate on the term loan and revolving credit facility borrowings was approximately 6.6% and 6.3%, respectively. At September 30, 2022, the effective interest rate on the term loan and revolving credit facility borrowings was approximately 4.7% and 2.6%, respectively.

The Commitment Fee on the unused portion of the revolving credit facility is 0.30% from December through April, and 0.20% from May through November.

The credit agreement requires the Company to meet certain financial covenants, including a fixed charge coverage ratio (as defined in the credit agreement) of not less than 1.1 as long as the Term Loan is outstanding or revolving credit facility availability is less than 12.5% of the facility size. In addition, as long as the Term Loan is outstanding, a senior secured leverage ratio cannot be more than 3.0 as calculated as of the quarters ending June or September, and no more than 5.5 as calculated as of the quarters ending December or March.

On September 26, 2023, the Company signed a first amendment (the “Amendment”) to its Sixth Amended and Restated Credit Agreement with a group of banks, which provides temporary relief from certain financial covenants under the Credit Agreement that must be satisfied in order for the Company to make distributions and unit repurchases or, if

availability under the Credit Agreement drops below a minimum threshold due to, among other things, the Company making acquisitions. In particular, the Amendment reduces the minimum fixed charge coverage ratio for distributions and unit repurchases during the period commencing October 31, 2023 and ending February 27, 2024 (the “Relief Period”) from 1.15-to-1.00 down to 1.00-to-1.00. The Amendment also reduces the minimum fixed charge coverage ratio that must be maintained by the Company if availability under the under the Credit Agreement drops below 12.5% of the facility size during the Relief Period from 1.10-to-1.00 down to 1.00-to-1.00.

Certain restrictions are also imposed by the credit agreement, including restrictions on the Company’s ability to incur additional indebtedness, to pay distributions to unitholders, to pay certain inter-company dividends or distributions, make investments, grant liens, sell assets, make acquisitions and engage in certain other activities.

At September 30, 2023, $148.5 million of the term loan was outstanding, $0.2 million was outstanding under the revolving credit facility, $0.1 million hedge positions were secured under the credit agreement and $3.2 million of letters of credit were issued and outstanding. At September 30, 2022, $165.0 million of the term loan was outstanding, $20.3 million was outstanding under the revolving credit facility, we did not have to provide collateral for our hedge positions under the credit agreement and $5.1 million of letters of credit were issued and outstanding.

At September 30, 2023, availability was $202.1 million, the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio, and the restricted net assets totaled approximately $253.7 million. Restricted net assets are assets in the Company’s subsidiaries, the distribution or transfer of which to Star Group, L.P. are subject to limitations under its credit agreement. At September 30, 2022, availability was $189.4 million, the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio, and the restricted net assets totaled approximately $248.0 million.

As of September 30, 2023, the maturities (including working capital borrowings and expected repayments due to Excess Cash Flow) during fiscal years ending September 30, considering the terms of our credit agreement, are set forth in the following table (in thousands):

 

2024

 

$

20,740

 

2025

 

$

16,500

 

2026

 

$

16,500

 

2027

 

$

95,000

 

Thereafter

 

$

—