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Long-term Debt and Short-term Borrowings
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Long-term Debt and Short-term Borrowings

3. Long-term Debt and Short-term Borrowings

 

Notes payable and long-term debt, listed in order of the priority of security interests in assets of the Company, consisted of the following as of December 31, 2023 and 2022:

 

(in millions)

 

December 31,
2023

 

 

December 31,
2022

 

Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of 5.93% at December 31, 2023 and 3.90% at December 31, 2022)

 

$

218.2

 

 

$

227.4

 

USD Senior Secured Term Loan A, due March 2026 (floating interest rate of 7.50% at December 31, 2023 and 6.40% at December 31, 2022)

 

 

78.0

 

 

 

84.4

 

Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of 6.42% at December 31, 2023 and 5.30% at December 31, 2022)

 

 

32.5

 

 

 

34.9

 

U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 7.40% at December 31, 2023 and 6.36% at December 31, 2022)

 

 

7.3

 

 

 

58.6

 

Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 6.42% at December 31, 2023 and 5.18% at December 31, 2022)

 

 

14.3

 

 

 

14.2

 

Senior Unsecured Notes, due March 2029 (fixed interest rate of 4.25%)

 

 

575.0

 

 

 

575.0

 

Other borrowings

 

 

0.3

 

 

 

10.4

 

Total debt

 

 

925.6

 

 

 

1,004.9

 

Less:

 

 

 

 

 

 

Current portion

 

 

36.7

 

 

 

60.0

 

Debt issuance costs, unamortized

 

 

6.7

 

 

 

8.4

 

Long-term debt, net

 

$

882.2

 

 

$

936.5

 

 

The Company is party to a Third Amended and Restated Credit Agreement (the "Credit Agreement"), dated as of January 27, 2017, among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other agents and various lenders party thereto. The Credit Agreement, as amended, provides for a senior secured credit facility, which consists of a €300.0 million (US$320.8 million based on January 27, 2017, exchange rates) term loan facility, an A$80.0 million (US$60.4 million based on January 27, 2017, exchange rates) term loan facility, a US$100.0 million term loan facility, and a US$600.0 million multi-currency revolving credit facility (the "Revolving Facility").

 

From July 2018 to November 2022, the Company entered into six amendments (the "Amendments") to the Credit Agreement. The following are the key changes, among other things, to the Credit Agreement as a result of the Amendments:

•
replaced the minimum fixed coverage ratio of 1.25:1.00 with a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 3.00:1.00;
•
increase the maximum Consolidated Leverage Ratio financial covenant from current levels for each of the five fiscal quarters beginning December 31, 2022, and ending December 31, 2023, as follows:

 

Quarter Ended

 

Maximum Consolidated Leverage Ratio

December 2022

 

4.50:1.00

March 2023

 

5.00:1.00

June 2023

 

5.00:1.00

September 2023

 

4.75:1.00

December 2023

 

4.25:1.00

 

•
modify the maximum Consolidated Leverage Ratio financial covenant for all first and second fiscal quarters after December 31, 2023, from the current level of 4.00x to 4.50x, while maintaining the current level of 4.00x for all third and fourth fiscal quarters;
•
limit the maximum Consolidated Leverage Ratio to 5.00:1.00 at any time, thereby capping any material acquisition step ups for the fiscal quarters ending March 31, 2023, June 30, 2023 and September 30, 2023;
•
increase the Company’s flexibility under the restricted payments baskets; and
•
change the U.S. dollar reference rate from LIBOR-based pricing to SOFR-based pricing, with no changes to existing margins.

 

The current maturity of the Credit Agreement, as amended, is March 31, 2026 and the current pricing is as follows:

 

 

Consolidated Leverage Ratio

 

Applicable Rate on Euro/AUD/CDN Dollar Loans

 

Applicable Rate on Base Rate Loans

 

Undrawn Fee

> 4.50 to 1.00

 

2.50 %

 

1.50 %

 

0.500 %

≤ 4.50 to 1.00 and > 4.00 to 1.00

 

2.25 %

 

1.25 %

 

0.375 %

≤ 4.00 to 1.00 and > 3.50 to 1.00

 

2.00 %

 

1.00 %

 

0.350 %

≤ 3.50 to 1.00 and > 3.00 to 1.00

 

1.75 %

 

0.75 %

 

0.300 %

≤ 3.00 to 1.00 and > 2.00 to 1.00

 

1.50 %

 

0.50 %

 

0.250 %

≤ 2.00 to 1.00

 

1.25 %

 

0.25 %

 

0.200 %

 

As of December 31, 2023, the applicable rate on Euro, Australian and Canadian dollar loans was 2.00 percent and the applicable rate on Base Rate loans was 1.00 percent. Undrawn amounts under the Revolving Facility are subject to a commitment fee rate of 0.20 percent to 0.50 percent per annum, depending on the Company's Consolidated Leverage Ratio. As of December 31, 2023, the commitment fee rate was 0.35 percent.

 

As of December 31, 2023, there was $21.6 million in borrowings outstanding under the Revolving Facility ($7.3 million reported in "Current portion of long-term debt" and $14.3 million reported in "Long-term debt, net"), and the amount available for borrowings was $565.7 million (allowing for $12.7 million of letters of credit outstanding on that date).

 

Amortization

 

The outstanding principal amounts under the Term Loan Facility are payable in quarterly installments in an amount representing, on an annual basis, 1.875 percent of the initial aggregate principal amount of such loan facility and increasing to 2.50 percent in June 2025.

 

Dividends and Share Repurchases

 

Under the Credit Agreement, as amended, the Company may pay dividends and/or repurchase shares in an aggregate amount not to exceed the sum of: (i) the greater of $40.0 million and 1 percent of the Company’s Consolidated Total Assets (as defined in the Credit Agreement, as amended) during any fiscal year; plus (ii) an additional amount not to exceed $75.0 million during any fiscal year (provided the Company’s Consolidated Leverage Ratio after giving pro forma effect to the restricted payment would not be greater than A) 4.25x for the fiscal quarters ending December 31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023, and B) 0.25x inside the applicable Consolidated Leverage Ratio financial covenant thereafter); plus (iii) an additional amount so long as the Consolidated Leverage Ratio after giving pro forma effect to the restricted payment would be less than or equal to 3.25x; plus (iv) any Net Equity Proceeds (as defined in the Credit Agreement, as amended).

 

Financial Covenants

 

As of December 31, 2023, our Consolidated Leverage Ratio was approximately 3.42 to 1.00 versus our maximum covenant of 4.25 to 1.00. Our Interest Coverage Ratio was approximately 5.18 to 1.00 versus the minimum financial covenant of 3.00 to 1.00.

 

Other Covenants and Restrictions

 

The Credit Agreement, as amended, contains customary affirmative and negative covenants as well as events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults, certain bankruptcy or insolvency events, certain ERISA-related events, changes in control or ownership and invalidity of any loan document. The Credit Agreement, as amended, also establishes limitations on the aggregate amount of Permitted Acquisitions and Investments (each as defined in the Credit Agreement, as amended) that the Company and its subsidiaries may make during the term of the Credit Agreement, as amended.

 

Incremental Facilities

 

The Credit Agreement, as amended, permits the Company to seek increases in the size of the Revolving Facility and the Term Loan Facility prior to maturity by up to $500.0 million in the aggregate, subject to lender commitment and the conditions set forth in the Credit Agreement, as amended.

 

Senior Unsecured Notes due March 2029 (the "Senior Unsecured Notes")

 

The Senior Unsecured Notes indenture contains covenants that could limit the ability of the Company and its restricted subsidiaries to, among other things: (i) incur additional indebtedness or issue disqualified stock or, in the case of the Company’s restricted subsidiaries, preferred stock; (ii) create liens; (iii) pay dividends, make certain investments or make other restricted payments; (iv) sell certain assets or merge with or into other companies; (v) enter into transactions with affiliates; and (vi) allow any restricted subsidiary to pay dividends, loans, or assets to the Company or other restricted subsidiaries. These covenants are subject to a number of important limitations and exceptions. The Senior Unsecured Notes indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and accrued but unpaid interest on all the then outstanding Senior Unsecured Notes to be immediately due and payable.

 

Compliance with Loan Covenants

 

As of and for the periods ended December 31, 2023, and December 31, 2022, the Company was in compliance with all applicable loan covenants under its senior secured credit facilities and the Senior Unsecured Notes.

 

Guarantees and Security

 

Generally, obligations under the Credit Agreement, as amended, are guaranteed by certain of the Company's existing and future subsidiaries, and are secured by substantially all of the Company's and certain guarantor subsidiaries' assets, subject to certain exclusions and limitations.

 

The Senior Unsecured Notes are irrevocably and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and future domestic subsidiaries other than certain excluded subsidiaries. The Senior Unsecured Notes and the related guarantees rank equally in right of payment with all of the existing and future senior debt of the Company and the guarantors, senior in right of payment to all of the existing and future subordinated debt of the Company and the guarantors, and effectively subordinated to all of the existing and future secured indebtedness of the Company and the guarantors to the extent of the value of the assets securing such indebtedness. The Senior Unsecured Notes and the guarantees are and will be structurally subordinated to all existing and future liabilities, including trade payables, of each of the Company's subsidiaries that do not guarantee the notes.