Debt

9 Months Ended

Mar. 31, 2021

DEBT

Senior Secured Credit Facility— Debt consisted of the following:


(in thousands)	March 31, 2021		June 30, 2020

Term Loans	$	471,912	$	325,000
Unamortized debt issuance costs on Term Loans	(4,387)		(5,819)
Unamortized debt discount on Term Loans	(6,910)		(7,367)
Total debt	$	460,615	$	311,814

On November 5, 2019, the Company entered into a credit agreement with UMB Bank N.A. (“UMB”) as a lender and revolving agent and Morgan Stanley Capital Administrators, Inc. (“Morgan Stanley”) as a lender and the administrative agent for a syndicate of lenders party to the agreement (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility provides for (1) a secured revolving loan facility with UMB in an aggregate principal amount of up to $75.0 million (the “Revolving Credit Facility”) and (2) a senior secured term loan facility in an aggregate principal amount of $425.0 million (the "2019 Term Loan"). The proceeds of the 2019 Term Loan were used (i) to finance a distribution in November 2019 to all holders of the Company’s common and preferred stock as well as holders of stock options in an aggregate amount of $275.0 million (the “Distribution”), (ii) to fund cash to the balance sheet in an aggregate amount of $68.0 million, equal to the first two years of interest-only payments due in respect of the 2019 Term Loan, (iii) to pay the debt issuance costs incurred for the Senior Secured Credit Facility, and (iv) for general corporate purposes. Upon the completion of the Company's initial public offering on May 26, 2020 (the "IPO"), the Company paid down $100.0 million of the 2019 Term Loan.

On February 24, 2021, the Company entered into the First Amendment to the Senior Secured Credit Facility (the “First Amendment”) with certain of its existing lenders (excluding "non-consenting lenders" that decided not to participate in the First Amendment) and Morgan Stanley as administrative agent. The First Amendment amends the existing Senior Secured Credit Facility to, among other things, (i) provide for (x) an additional $231.0 million senior secured term loan (the "2021 Term Loan", together with the 2019 Term Loan, the "Term Loans") and (y) a $145.0 million senior secured delayed draw term loan facility (the “DDTL Facility”), which may be drawn from time to time, subject to certain conditions, during the first twelve months following the date of the First Amendment, (ii) reduce the Company’s interest rate on the Term Loans, (iii) make certain changes to the covenants in the Senior Secured Credit Facility governing the Company’s operating flexibility and (iv) to eliminate the restricted cash balance reserved for interest noted above. The proceeds of the 2021 Term Loan were used (i) to pay back $84.1 million of the 2019 Term Loan to the non-consenting lenders, (ii) to finance permitted acquisitions and investments, (iii) to pay the debt issuance costs incurred for the First Amendment, and (iv) for general corporate purposes. As of March 31, 2021, after giving effect to the First Amendment, the aggregate principal amount of Term Loans outstanding was $471.9 million, the borrowing capacity under the DDTL Facility was $145.0 million, and the borrowing capacity under the Revolving Credit Facility was $75.0 million.

The Revolving Credit Facility accrues interest on amounts drawn at a rate per annum equal to either (a) LIBOR plus 4.0% or (b) a base rate plus 3.0%, at the Company’s option. The Term Loans and any loans under the DDTL Facility bear interest on the outstanding principal amount thereof at a rate per annum equal to either (a) LIBOR (subject to a floor of 0.75%) plus 5.00% or (b) a base rate plus 4.00%, at the Company’s option. The Company’s risk management strategy includes entering into interest rate swap agreements from time to time to protect against unfavorable interest rate changes relating to forecasted debt transactions. Refer to Note 6 to the condensed consolidated financial statements for further details.

The Term Loans are repayable beginning from March 31, 2022, in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Term Loans, with the balance payable on the maturity date of November 5, 2024. The Revolving Credit Facility and the DDTL Facility also have a maturity date of November 5, 2024.

The First Amendment contains customary affirmative and negative covenants and events of default. In addition, the First Amendment contains a financial covenant, requiring the Company and certain of its subsidiaries to maintain a minimum asset coverage ratio. As of March 31, 2021, the Company was in compliance with all of the required covenants. The obligations of the Company under the First Amendment are guaranteed by certain of the Company’s subsidiaries, and secured by a security interest in all assets of the Company, subject to certain exceptions detailed in the First Amendment and related ancillary documentation.

The Company had incurred $8.0 million in debt issuance costs related to the Senior Secured Credit Facility of which $1.2 million was allocated to the Revolving Credit Facility and was recorded in other assets in the condensed consolidated balance sheet, and $6.8 million was allocated to the 2019 Term Loan and was recorded as a reduction to the carrying amount of the 2019 Term Loan in debt in the condensed consolidated balance sheet. Additionally, the Company paid $8.5 million to the lenders of the 2019 Term Loan as an original issue discount (“OID”), which also was recorded as a reduction to the carrying amount of the 2019 Term Loan in debt in the condensed consolidated balance sheets. The debt issuance costs and OID incurred were being amortized through interest expense on a straight-line basis over the five-year life of the Senior Secured Credit Facility.

To consummate the transaction, the Company incurred $0.7 million in debt issuance costs related to the First Amendment and paid $2.3 million to the remaining lenders of the 2021 Term Loan as an OID, both of which were recorded as a reduction to the carrying amount of the Term Loans.

In accordance with ASC 470-50-40 "Debt Modification and Extinguishments," the First Amendment was accounted for as a modification of debt for the lenders that remained in the syndicate, while the non-consenting lenders were accounted for as an extinguishment of debt. Therefore, the new debt issuance costs were allocated on a pro-rata basis and treated as follows:

•Revolving Credit Facility—The remaining unamortized balance of debt issuance costs of $0.9 million and the new debt issuance costs incurred related to the First Amendment of $0.2 million will be deferred and amortized through interest expense on a straight-line basis over the remaining term of the agreement.

The Company is required to pay UMB an unused commitment fee of 0.15%, in respect of the unutilized commitments under the Revolving Credit Facility.

•DDTL Facility—As there were no upfront commitment fees for the DDTL Facility, the Company did not allocate any debt issuance costs to the DDTL Facility.

The Company is required to pay a ticking fee on the DDTL Facility commitments based on the average daily balance of the unused amount of the aggregate DDTL Facility commitments during the preceding fiscal quarter, multiplied by 1% per annum.

•Term Loans—For the extinguished debt related to the non-consenting lenders, the Company recognized a $3.3 million loss on debt extinguishment in the condensed consolidated statements of comprehensive income for the three and nine months ended March 31, 2021, consisting of unamortized debt issuance costs of $1.1 million and unamortized OID of $1.4 million and a 1% breakage fee associated with the payoff of the non-consenting lenders of $0.8 million.

The remaining unamortized balance of debt issuance costs and OID related to the 2019 Term Loan of $3.8 million and $4.8 million, respectively, and the new debt issuance costs incurred and the OID related to the First Amendment of $0.7 million and $2.3 million, respectively, will be deferred and amortized through interest expense on a straight-line basis over the remaining term of the agreement.

Total amortization of debt issuance costs was $0.8 million during both the three months ended March 31, 2021 and 2020, and $2.5 million and $1.4 million during the nine months ended March 31, 2021 and 2020,

respectively, which was included in interest expense, net in the Company’s condensed consolidated statements of comprehensive income.