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DEBT | 3 Months Ended
--- | ---
Sep. 30, 2020
Debt Disclosure [Abstract] |
DEBT | DEBT The Company’s debt balances consisted of the following as of September 30, 2020 and June 30, 2020, respectively:
| September 30, 2020 |  | June 30, 2020
Short-term debt | $ | 1.7 |  |  | $ | — |
2018 Coty Credit Agreement |  |  |
2018 Coty Revolving Credit Facility due April 2023 | 1,560.2 |  |  | 1,438.8 |
2018 Coty Term A Facility due April 2023 | 3,006.1 |  |  | 2,959.0 |
2018 Coty Term B Facility due April 2025 | 2,343.2 |  |  | 2,308.5 |
Senior Unsecured Notes |  |  |
2026 Dollar Notes due April 2026 | 550.0 |  |  | 550.0 |
2023 Euro Notes due April 2023 | 645.2 |  |  | 618.3 |
2026 Euro Notes due April 2026 | 293.3 |  |  | 281.1 |
Other long-term debt and capital lease obligations | 0.5 |  |  | 0.6 |
Total debt | 8,400.2 |  |  | 8,156.3 |
Less: Short-term debt and current portion of long-term debt | (195.4) |  |  | (188.3) |
Total Long-term debt | 8,204.8 |  |  | 7,968.0 |
Less: Unamortized debt issuance costs | (61.4) |  |  | (66.9) |
Less: Discount on Long-term debt | (8.6) |  |  | (9.0) |
Total Long-term debt, net | $ | 8,134.8 |  |  | $ | 7,892.1 |
Short-Term Debt The Company maintains short-term lines of credit and other short-term debt with financial institutions around the world. As of September 30, 2020, total short-term debt increased to $1.7 from $0.0 as of June 30, 2020. In addition, the Company had undrawn letters of credit of $8.5 and $6.0 and bank guarantees of $45.2 and $45.7 as of September 30, 2020 and June 30, 2020, respectively. Long-Term Debt On April 5, 2018, the Company issued senior unsecured notes in a private offering and entered into a new credit agreement (the “2018 Coty Credit Agreement”). The net proceeds of the offering of the notes, together with borrowings under the 2018 Coty Credit Agreement, were used to repay in full and refinance the indebtedness outstanding under the Company’s previously existing long-term debt agreements and to pay accrued interest, related premiums, fees and expenses in connection therewith. Offering of Senior Unsecured Notes On April 5, 2018 the Company issued, at par, $550.0 of 6.50% senior unsecured notes due 2026 (the “2026 Dollar Notes”), €550.0 of 4.00% senior unsecured notes due 2023 (the “2023 Euro Notes”) and €250.0 of 4.75% senior unsecured notes due 2026 (the “2026 Euro Notes” and, together with the 2023 Euro Notes, the “Euro Notes,” and the Euro Notes together with the 2026 Dollar Notes, the “Senior Unsecured Notes”) in a private offering. The Senior Unsecured Notes are senior unsecured debt obligations of the Company and will be pari passu in right of payment with all of the Company’s existing and future senior indebtedness (including the 2018 Coty Credit Facilities described below). The Senior Unsecured Notes are guaranteed, jointly and severally, on a senior basis by the Guarantors (as later defined under “2018 Coty Credit Agreement”). The Senior Unsecured Notes are senior unsecured obligations of the Company and are effectively junior to all existing and future secured indebtedness of the Company to the extent of the value of the collateral securing such secured indebtedness. The related guarantees are senior unsecured obligations of each Guarantor and are effectively junior to all existing and future secured indebtedness of such Guarantor to the extent of the value of the collateral securing such indebtedness. The 2026 Dollar Notes will mature on April 15, 2026. The 2026 Dollar Notes will bear interest at a rate of 6.50% per annum. Interest on the 2026 Dollar Notes is payable semi-annually in arrears on April 15 and October 15 of each year. The 2023 Euro Notes will mature on April 15, 2023 and the 2026 Euro Notes will mature on April 15, 2026. The 2023 Euro Notes will bear interest at a rate of 4.00% per annum, and the 2026 Euro Notes will bear interest at a rate of 4.75% per annum. Interest on the Euro Notes is payable semi-annually in arrears on April 15 and October 15 of each year. Upon the occurrence of certain change of control triggering events with respect to a series of Senior Unsecured Notes, the Company will be required to offer to repurchase all or part of the Senior Unsecured Notes of such series at 101% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date applicable to such Senior Unsecured Notes. The Senior Unsecured Notes contain customary covenants that place restrictions in certain circumstances on, among other things, incurrence of liens, entry into sale or leaseback transactions, sales of all or substantially all of the Company’s assets and certain merger or consolidation transactions. The Senior Unsecured Notes also provide for customary events of default. 2018 Coty Credit Agreement On April 5, 2018, the Company entered into the 2018 Coty Credit Agreement, which amended and restated the prior Coty Credit Agreement. The 2018 Coty Credit Agreement provides for (a) the incurrence by the Company of (1) a senior secured term A facility in an aggregate principal amount of (i) $1,000.0 denominated in U.S. dollars and (ii) €2,035.0 denominated in euros (the “2018 Coty Term A Facility”) and (2) a senior secured term B facility in an aggregate principal amount of (i) $1,400.0 denominated in U.S. dollars and (ii) €850.0 million denominated in euros (the “2018 Coty Term B Facility”) and (b) the incurrence by the Company and Coty B.V., a Dutch subsidiary of the Company (the “Dutch Borrower” and, together with the Company, the “Borrowers”), of a senior secured revolving facility in an aggregate principal amount of $3,250.0 denominated in U.S. dollars, specified alternative currencies or other currencies freely convertible into U.S. dollars and readily available in the London interbank market (the “2018 Coty Revolving Credit Facility”) (the 2018 Coty Term A Facility, together with the 2018 Coty Term B Facility and the 2018 Coty Revolving Credit Facility, the “2018 Coty Credit Facilities”). Initial borrowings under the 2018 Coty Term Loan B Facility were issued at a 0.250% discount. The 2018 Coty Credit Agreement provides that with respect to the 2018 Coty Revolving Credit Facility, up to $150.0 is available for letters of credit and up to $150.0 is available for swing line loans. The 2018 Coty Credit Agreement also permits, subject to certain terms and conditions, the incurrence of incremental facilities thereunder in an aggregate amount of (i) $1,700.0 plus (ii) an unlimited amount if the First Lien Net Leverage Ratio (as defined in the 2018 Coty Credit Agreement), at the time of incurrence of such incremental facilities and after giving effect thereto on a pro forma basis, is less than or equal to 3.00 to 1.00. The obligations of the Company under the 2018 Coty Credit Agreement are guaranteed by the material wholly-owned subsidiaries of the Company organized in the U.S., subject to certain exceptions (the “Guarantors”) and the obligations of the Company and the Guarantors under the 2018 Coty Credit Agreement are secured by a perfected first priority lien (subject to permitted liens) on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. The Dutch Borrower does not guarantee the obligations of the Company under the 2018 Coty Credit Agreement or grant any liens on its assets to secure any obligations under the 2018 Coty Credit Agreement. On June 27, 2019, the Company entered into an amendment (“2019 Amendment”) to the 2018 Coty Credit Agreement. The 2019 Amendment modified the 2018 Coty Credit Agreement by amending the financial covenants to (i) delay until March 31, 2022 the total net leverage ratio step down from 5.25 to 5.0 (as further described in the Covenants section below), (ii) extend the applicable window for certain cost savings add-backs in the calculation of Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) for purpose of determining the total net leverage ratio, and (iii) amend the determination of the exchange rate to be used for purposes of calculating “Total Indebtedness” (as defined in the 2018 Coty Credit Agreement) for purposes of the total net leverage ratio, and decreasing the total commitments under the revolving credit facility by $500.0 to $2,750.0. On April 29, 2020, the Company amended its existing credit agreement. The amendment (i) provides a net debt to EBITDA financial covenant "holiday" through March 31, 2021; (ii) establishes a minimum liquidity covenant through March 31, 2021 of $350.0; and (iii) effectively places certain limitations on the ability to make certain investments and restricted payments (including limiting our ability to pay dividends in cash through March 31, 2021) and on incurring additional secured indebtedness. The amendment does not modify the applicable funding costs during the period through March 31, 2021. Scheduled Amortization The Company makes quarterly payments of 1.25% and 0.25%, of the initial aggregate principal amounts of the 2018 Coty Term A Facility and the 2018 Coty Term B Facility, respectively. The remaining balance of the initial aggregate principal amounts of the 2018 Coty Term A Facility and the 2018 Coty Term B Facility will be payable on the maturity date for each facility, respectively. Interest The 2018 Coty Credit Agreement facilities will bear interest at rates equal to, at the Company’s option, either: •LIBOR of the applicable qualified currency, of which the Company can elect the applicable one, two, three, six or twelve month rate, plus the applicable margin; or •Alternate base rate (“ABR”) plus the applicable margin. In the case of the 2018 Coty Revolving Credit Facility and the 2018 Coty Term A Facility, the applicable margin means the lesser of a percentage per annum to be determined in accordance with the leverage-based pricing grid and the debt rating-based grid below:
Pricing Tier |  | Total Net Leverage Ratio: |  | LIBOR plus: |  | Alternative Base Rate Margin:
1.0 |  | Greater than or equal to 4.75:1 |  | 2.000% |  | 1.000%
2.0 |  | Less than 4.75:1 but greater than or equal to 4.00:1 |  | 1.750% |  | 0.750%
3.0 |  | Less than 4.00:1 but greater than or equal to 2.75:1 |  | 1.500% |  | 0.500%
4.0 |  | Less than 2.75:1 but greater than or equal to 2.00:1 |  | 1.250% |  | 0.250%
5.0 |  | Less than 2.00:1 but greater than or equal to 1.50:1 |  | 1.125% |  | 0.125%
6.0 |  | Less than 1.50:1 |  | 1.000% |  | —%
Pricing Tier |  | Debt Ratings S&P/Moody’s: |  | LIBOR plus: |  | Alternative Base Rate Margin:
5.0 |  | Less than BB+/Ba1 |  | 2.000% |  | 1.000%
4.0 |  | BB+/Ba1 |  | 1.750% |  | 0.750%
3.0 |  | BBB-/Baa3 |  | 1.500% |  | 0.500%
2.0 |  | BBB/Baa2 |  | 1.250% |  | 0.250%
1.0 |  | BBB+/Baa1 or higher |  | 1.125% |  | 0.125%
In the case of the U.S. dollar portion of the 2018 Coty Term B Facility, the applicable margin means 2.25% per annum, in the case of LIBOR loans, and 1.25% per annum, in the case of ABR loans. In the case of the Euro portion of the 2018 Coty Term B Facility, the applicable margin means 2.50% per annum, in the case of EURIBOR loans. In no event will LIBOR be deemed to be less than 0.00% per annum. Fair Value of Debt
| September 30, 2020 |  | June 30, 2020
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
2018 Coty Credit Agreement | $ | 6,909.5 |  |  | $ | 6,334.3 |  |  | $ | 6,706.3 |  |  | $ | 5,962.3 |
Senior Unsecured Notes | 1,488.5 |  |  | 1,206.6 |  |  | 1,449.4 |  |  | 1,270.3 |
The Company uses the market approach to value the 2018 Coty Credit Agreement and the Senior Unsecured Notes. The Company obtains fair values from independent pricing services to determine the fair value of these debt instruments. Based on the assumptions used to value these liabilities at fair value, these debt instruments are categorized a Level 2 in the fair value hierarchy. Debt Maturities Schedule Aggregate maturities of the Company’s long-term debt, including the current portion of long-term debt and excluding capital lease obligations as of September 30, 2020, are presented below:
Fiscal Year Ending June 30, |
2021, remaining | $ | 145.0 |
2022 | 193.3 |
2023 | 4,939.0 |
2024 | 24.0 |
2025 | 2,253.4 |
Thereafter | 843.3 |
Total | $ | 8,398.0 |
Covenants The 2018 Coty Credit Agreement contains affirmative and negative covenants. The negative covenants include, among other things, limitations on debt, liens, dispositions, investments, fundamental changes, restricted payments and affiliate transactions. With certain exceptions as described below, the 2018 Coty Credit Agreement, as amended, includes a financial covenant that requires us to maintain a Total Net Leverage Ratio (as defined below), equal to or less than the ratios shown below for each respective test period.
Quarterly Test Period Ending |  |  | Total Net Leverage Ratio (as amended April 29, 2020) (a)
September 30, 2020 through March 31, 2021 |  |  | N/A (not tested)(b)
June 30, 2021 through December 31, 2021 |  |  | 5.25 to 1.00
March 31, 2022 |  |  | 5.00 to 1.00
June 30, 2022 |  |  | 4.75 to 1.00
September 30, 2022 |  |  | 4.50 to 1.00
December 31, 2022 |  |  | 4.25 to 1.00
March 31, 2023 through June 30, 2023 |  |  | 4.00 to 1.00
(a) Total Net Leverage Ratio means, as of any date of determination, the ratio of: (a) (i) Total Indebtedness minus (ii) unrestricted and Cash Equivalents of the Parent Borrower and its Restricted Subsidiaries as determined in accordance with GAAP to (b) Adjusted EBITDA for the most recently ended Test Period (each of the defined terms, including Adjusted EBITDA, used within the definition of Total Net Leverage Ratio have the meanings ascribed to them within the 2018 Coty Credit Agreement, as amended). Adjusted EBITDA, as defined in the 2018 Coty Credit Agreement, as amended, includes certain add backs related to cost savings, unusual events such as COVID-19, operating expense reductions and future unrealized synergies subject to certain limits and conditions as specified in the 2018 Coty Credit Agreement, as amended. (b) The 2018 Coty Credit Agreement, as amended, establishes a quarterly minimum liquidity covenant for this period of $350.0. As of September 30, 2020, the current immediate liquidity was $1,721.7. In the four fiscal quarters following the closing of any Material Acquisition (as defined in the 2018 Coty Credit Agreement, as amended), including the fiscal quarter in which such Material Acquisition occurs, the maximum Total Net Leverage Ratio shall be the lesser of (i) 5.95 to 1.00 and (ii) 1.00 higher than the otherwise applicable maximum Total Net Leverage Ratio for such quarter (as set forth in the table above). Immediately after any such four fiscal quarter period, there shall be at least two consecutive fiscal quarters during which our Total Net Leverage Ratio is no greater than the maximum Total Net Leverage Ratio that would otherwise have been required in the absence of such Material Acquisition, regardless of whether any additional Material Acquisitions are consummated during such period. On January 6, 2020, the Company entered into a purchase agreement for the King Kylie Transaction, which constituted a Material Acquisition. As such, per the 2018 Coty Credit Agreement, as amended, the maximum Total Net Leverage Ratio for the quarter ended September 30, 2020 is 5.95. As of September 30, 2020, the Company was in compliance with all covenants contained within the 2018 Coty Credit Agreement, as amended.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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