| DEBT |
DEBT On March 30, 2021, the Company, as borrower and certain domestic subsidiaries, as guarantors (the "Domestic Guarantors"), entered into an amended and restated credit agreement (the “Third Amended and Restated Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), the other financial institutions named as lenders therein, and Wells Fargo as administrative agent and collateral agent for the lenders, that extended the $700 million senior secured revolving credit facility (the “Revolving Facility,” together with the Term Loan Facilities, as defined below, the "Facilities") and provided a $500 million senior secured term loan facility (the “Initial Term Loan Facility”), and extended the maturity of the Facilities to March 30, 2026. In addition, the Facilities include an option to request increases in the amounts of such credit facilities by up to an additional $500 million in the aggregate. The loans under the Initial Term Loan Facility are payable in quarterly installments of $6.25 million per quarter, commencing with the quarter ending June 30, 2021.
On April 3, 2023, the Company as borrower and the Domestic Guarantors entered into a first amendment (the “First Amendment”) to the Third Amended and Restated Credit Agreement (as amended, the “Amended Credit Agreement”) with the financial institutions named as lenders therein and Wells Fargo. The First Amendment added a new term loan facility in an aggregate principal amount of $250 million (the “First Amendment Term Loan Facility,” together with the Initial Term Loan Facility, the "Term Loan Facilities") which was payable in quarterly installments equal to $3.125 million, commencing with the quarter ended June 30, 2023, and had a maturity date of March 30, 2026. The obligations of the Company and certain domestic subsidiaries under the Amended Credit Agreement are required to be guaranteed by the Domestic Guarantors and are collateralized by substantially all assets (excluding intellectual property) of the Company and the Domestic Guarantors. As of September 30, 2024 the Company had repaid all of the First Amendment Term Loan Facility and as a result there are no future payments due.
The Company's unamortized balance of debt issuance costs is $0.9 million as of September 30, 2024, which are amortized as interest expense over the life of the Facilities. Amortization of debt issuance costs included in interest expense for the three months ended September 30, 2024 and September 30, 2023 were $1.04 million and $0.43 million, respectively.
The Company's debt consisted of the following (in thousands): | | | | | | | | | | | | | September 30, 2024 | | June 30, 2024 | | Initial Term Loan Facility - short term | $ | 25,000 | | | $ | 25,000 | | | First Amendment Term Loan Facility - short-term | — | | | 12,500 | | | Debt issuance costs, net | (590) | | | (992) | | | Total Debt - short term | 24,410 | | | 36,508 | | | Initial Term Loan Facility - long term | 387,500 | | | 393,750 | | | First Amendment Term Loan Facility - long-term | — | | | 101,875 | | | Revolving Facility - long term | 140,000 | | | 175,000 | | | Debt issuance costs, net | (295) | | | (747) | | | Total Debt - long term | $ | 527,205 | | | $ | 669,878 | |
The Revolving Facility includes a sub-limit of $25.0 million for letters of credit and a sub-limit of $25.0 million for swingline loans. The Facilities are available for working capital and general corporate purposes that comply with the terms of the Amended Credit Agreement, including to finance the repurchase of the Company’s common stock or to make dividends to the holders of the Company's common stock. Under the Amended Credit Agreement, revolving loans and swingline loans may be borrowed, repaid and reborrowed until March 30, 2026, at which time all amounts borrowed must be repaid. Loans under the Facilities may be prepaid at any time without penalty.
The revolving loans and term loans under the Initial Term Loan Facility bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the Base Rate (as defined below) plus a margin of between 0.50% and 1.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter or (ii) a floating per annum rate equal to the Adjusted Term SOFR (as defined below) for a specified period, plus a margin of between 1.50% and 2.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter. Swingline loans bear interest at a floating rate per annum equal to the Base Rate plus a margin of between 0.50% and 1.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter. The loans under the First Amendment Term Loan Facility bear interest, at the Company's option, at either (i) a floating rate per annum equal to Base Rate plus a margin of between 1.00% and 1.75%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter or (ii) a floating per annum rate equal to the applicable Adjusted Term SOFR rate for a specified period, plus a margin between 2.00% and 2.75%, depending on the Company's consolidated total leverage ratio as of the most recently ended fiscal quarter. Base Rate is defined in the Amended Credit Agreement as the highest of (a) the Prime Rate (as defined in the Amended Credit Agreement), (b) the Federal Funds Rate (as defined in the Amended Credit Agreement) plus 0.50% and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or Adjusted Term SOFR, as applicable (provided that clause (c) shall not be applicable during any period in which Adjusted Term SOFR is unavailable or unascertainable). The Base Rate shall not be less than 1.00%. Adjusted Term SOFR is Term SOFR (as defined in the Amended Credit Agreement) plus 0.10% per annum; provided that Adjusted Term SOFR shall in no event be less than 0.00%.
A default interest rate shall apply on all obligations during certain events of default under the Amended Credit Agreement at a rate per annum equal to 2.00% above the applicable interest rate. The Company will pay to each lender a facility fee on a quarterly basis based on the unused amount of each lender’s commitment to make revolving loans, of between 0.20% and 0.35%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter. The Company will also pay to the applicable lenders on a quarterly basis certain fees based on the daily amount available to be drawn under each outstanding letter of credit, including aggregate letter of credit commissions of between 1.50% and 2.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter, and issuance fees of 0.125% per annum. The Company is also obligated to pay Wells Fargo, as agent, fees customary for a credit facility of this size and type.
The Amended Credit Agreement requires the Company to maintain during the term of the Facilities a maximum consolidated total leverage ratio of 3.50 to 1.00 and a minimum consolidated interest coverage ratio of 3.50 to 1.00. In addition, the Amended Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the ability of the Company and its subsidiaries to, among other things, grant liens or enter into agreements restricting their ability to grant liens on property, enter into mergers, dispose of assets, change their accounting or reporting policies, change their business and incur indebtedness, in each case subject to customary exceptions for a credit facility of this size and type. The Amended Credit Agreement includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Amended Credit Agreement.
The Facilities
As of September 30, 2024, $412.5 million was outstanding on the Initial Term Loan Facility and $140.0 million was outstanding on the Revolving Facility, leaving $560.0 million available on the Revolving Facility. The First Amendment Term Loan Facility was fully repaid during the three months ended September 30, 2024 and there is no balance outstanding as of September 30, 2024.
Term Loan Facilities
During the three months ended September 30, 2024, the Company made aggregate payments of $129.4 million under the Term Loan Facilities, of which $120.6 million was repayment of principal and $8.8 million was payment of interest.
Revolving Facility
Under the Amended Credit Agreement, during the three months ended September 30, 2024, the Company made aggregate payments of $38.2 million under the Revolving Facility, of which $35.0 million was repayment of principal and $3.2 million was payment of interest.
The following table summarizes the Company’s estimated debt and interest payment obligations as of September 30, 2024, for the remainder of fiscal 2025 and future fiscal years (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2025 (remainder) | | 2026 | | 2027 | | 2028 | | 2029 | | Thereafter | | Total | | Debt payment obligations | $ | 18,750 | | | $ | 533,750 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 552,500 | | Interest and other payments on debt payment obligations (1) | 27,550 | | | 26,636 | | | — | | | — | | | — | | | — | | | 54,186 | | | Total | $ | 46,300 | | | $ | 560,386 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 606,686 | |
(1) Interest payments are calculated based on the applicable rates and payment dates as of September 30, 2024. Although our interest rates on our debt obligations may vary, we have assumed the most recent available interest rates for all periods presented.
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