Debt and Other Financing Arrangements

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt and Other Financing Arrangements

8. Debt and Other Financing Arrangements

Long-Term Debt

A summary of the Company’s long-term debt obligations is set forth in the following table:

	September 30, 2022				December 31, 2021
	Principal		Carrying Amount (a)		Principal		Carrying Amount (a)
Credit Facilities
Revolver Borrowings
Due 2023	$	39	$	39	$	—	$	—
Term Loans
LIBOR plus 2.00% Term Loan A due 2019 through 2023(b)	1,275		1,271		1,403		1,396
LIBOR plus 3.00% Term Loan B due 2019 through 2025	1,636		1,602		1,649		1,606
Senior Unsecured Notes
$225 million of 5.375% Senior Notes due 2024	225		224		225		223
$500 million of 5.000% Senior Notes due 2026	500		496		500		496
Senior Secured Notes
$500 million of 7.875% Senior Secured Notes due 2029	500		491		500		490
$800 million of 5.125% Senior Secured Notes due 2029	800		789		800		787
Other debt, primarily foreign instruments	25		25		26		26
			4,937				5,024
Less - maturities classified as current			1,334				6
Total long-term debt			$	3,603			$	5,018

(a)Carrying amount is net of unamortized debt issuance costs and debt discounts of $63 million and $79 million at September 30, 2022 and December 31, 2021.

(b)The interest rate on Term Loan A at December 31, 2021 was LIBOR plus 1.75%.

Short-Term Debt

The Company’s short-term debt consists of the following:

	September 30, 2022		December 31, 2021
Revolver borrowings	$	39	$	—
LIBOR plus 2.00% Term Loan A	1,271		—
LIBOR plus 3.00% Term Loan B	17		—
Other debt	7		6
Maturities classified as current	1,334		6
Short-term borrowings(a)	93		51
Total short-term debt	$	1,427	$	57

(a)Includes borrowings under both committed credit facilities and uncommitted lines of credit and similar arrangements.

Credit Facilities

Financing Arrangements

The Company has a senior credit facility under the credit agreement dated October 1, 2018 (as amended, restated, supplemented or otherwise modified, the “New Credit Facility”) that provides $4.9 billion of total debt financing, consisting of a five-year $1.5 billion revolving credit facility, a five-year $1.7 billion term loan A facility (“Term Loan A”) and a seven-year $1.7 billion term loan B facility (“Term Loan B”). At September 30, 2022, the Company had $39 million outstanding borrowings on its revolving credit facility.

During the fourth quarter of 2021, the Company issued a $42 million letter of credit under its revolving credit facility and such letter of credit is included in the $69 million of total outstanding letters of credit at September 30, 2022, which reduces the available borrowings under its revolving credit facility. The letter of credit supports a 1.7 billion Mexican peso (approximately $84 million using exchange rates at September 30, 2022) surety bond issued to the Mexican tax authority. The surety bond is required in order for the Company to enter into the judicial process to appeal a tax assessment and covers the amount of the assessment plus interest. The Company does not believe it is probable it will have to pay the assessment or related interest. The Company also received a second assessment during the fourth quarter of 2021 from the Mexican tax authority of 0.6 billion Mexican peso (approximately $29 million using the exchange rate at September 30, 2022) for a separate matter, which has not required the issuance of a surety bond at this time. The Company does not believe it is probable it will have to pay this second assessment or related interest.

At September 30, 2022 and December 31, 2021, the unamortized debt issuance costs related to the revolver of $6 million and $11 million are included in “Prepayments and other current assets” and “Other assets” in the condensed consolidated balance sheets.

Credit Facility

New Credit Facility — Interest Rates

At September 30, 2022, the interest rate on borrowings under the revolving credit facility and the Term Loan A facility was LIBOR plus 2.00% and will remain at LIBOR plus 2.00% for each relevant period for which the Company’s consolidated net leverage ratio (as defined in the New Credit Facility) is less than 4.50 to 1 and greater than or equal to 3.00 to 1. The interest rate on borrowings under the revolving credit facility and the Term Loan A facility are subject to step downs in accordance with the credit agreement.

The New Credit Facility prescribes for an alternative method of determining interest rates in the event LIBOR is not available.

New Credit Facility — Other Terms and Conditions

The third amendment dated May 5, 2020 (“Third Amendment”) of the Company’s New Credit Facility provided relief from the financial maintenance covenants for the revolving credit facility and Term Loan A facility subject to the non-occurrence of certain covenant reset triggers as more fully described in its 2021 Form 10-K. There has been no covenant reset trigger, or covenant reset certificate delivered. Accordingly, the financial ratio required at September 30, 2022 under the New Credit Facility was changed to a consolidated net leverage ratio from a senior secured net leverage ratio at December 31, 2021.

Further information on interest rates, fees, and other terms and conditions of the New Credit Facility is included in the Company’s 2021 Form 10-K.

At September 30, 2022, the Company was in compliance with all the financial covenants of the New Credit Facility.

Senior Notes

Further information on the terms and conditions of the Senior Unsecured Notes and Senior Secured Notes is included in the Company’s 2021 Form 10-K.

At September 30, 2022, the Company was in compliance with all of its financial covenants under the indentures governing the Senior Unsecured Notes and Senior Secured Notes.

On June 27, 2022, Merger Sub commenced cash tender offers (collectively, the “Tender Offer”) to purchase any and all of the Company’s outstanding 5.125% Senior Secured Notes due 2029 (the “5.125% Notes”) and 7.875% Senior Secured Notes due 2029 (the “7.875% Notes” and together with the 5.125% Notes, the “Senior Secured Notes”). In connection with the Tender Offer, Merger Sub also solicited the consents of holders of each series of Senior Secured Notes to certain proposed amendments (the “Proposed Amendments”) to the respective indenture governing each series of Senior Secured Notes (collectively, the “Consent Solicitation”). The purpose of the Consent Solicitation and the Proposed Amendments is to eliminate the requirement to make a “change of control offer” for the Senior Secured Notes in connection with the Merger and make certain other customary changes for a privately-held company to the “change of control” provisions in the indentures governing the Senior Secured Notes. The Proposed Amendments require the consent of a majority of each series of Senior Secured Notes to amend the respective indenture.

On July 13, 2022, Merger Sub announced that it had received tenders and the requisite consents from each series of Senior Secured Notes. Having received the requisite consents from the holders of each series of Secured Notes to the Proposed Amendments to the indenture governing such series of Senior Secured Notes, the Company, the subsidiary guarantors party thereto, and the trustee entered into a supplemental indenture to each indenture governing the Senior Secured Notes to effect the Proposed Amendments. Each supplemental indenture provides that the Proposed Amendments will not become operative unless and until the 5.125% Notes or the 7.875% Notes, as applicable, representing at least a majority in aggregate principal amount of the respective series of Senior Secured Notes are accepted for purchase by Merger Sub pursuant to the terms of the Tender Offer and Consent Solicitation, which the Company expects will be shortly prior to the consummation of the Merger. As of the date of this report, according to information provided by Global Bondholder Services Corporation, the information and tender agent for the Tender Offer, Merger Sub has received tenders and consents from holders of more than 99% of the total outstanding principal amount of the 5.125% Notes, and tenders and consents from holders of more than 98% of the total outstanding principal amount of the 7.875% Notes. Consummation of the Tender Offer and payment for the Senior Secured Notes validly tendered pursuant to the Tender Offer are subject to the satisfaction or waiver by Merger Sub of certain conditions, including, but not limited to, the consummation of the Merger and a financing condition. Merger Sub has extended, and has announced publicly that it intends to further extend, the expiration date for the Tender Offer so that the settlement date for the Tender Offer will coincide with the closing of the Merger, which it expects to occur in the fourth quarter of 2022.

On September 7, 2022, the Company issued a notice of its intention to redeem, and on October 6, 2022 the Company rescinded that notice and issued a new notice of its intention to redeem, all of its outstanding 5.375% Senior Notes due 2024 (the “2024 Unsecured Notes”) and all of its outstanding 5.000% Senior Notes due 2026 (the “2026 Unsecured Notes” and, together with the 2024 Unsecured Notes, the “Senior Unsecured Notes”) on November 7, 2022 (such date, as it may be extended, the “redemption date”), subject to the satisfaction of certain conditions. The redemption price for the 2024 Unsecured Notes will be equal to 100.896% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the redemption date. The redemption price for the 2026 Unsecured Notes will be equal to 101.667% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the redemption date. The obligation of the Company to redeem the Senior Unsecured Notes and pay the applicable redemption price on the redemption date is conditioned on the consummation of the Merger and a financing condition, and the redemption date may be delayed until each of the Merger condition and the financing condition has been satisfied or waived by the Company. If either the Merger condition or the financing condition is not satisfied or waived, the Company may elect to rescind the notice of redemption and terminate the redemption for the Senior Unsecured Notes.

On March 3, 2021, the Company provided notice of its intention to redeem all of the outstanding 5.000% euro denominated senior secured notes due July 15, 2024 and all of the outstanding floating rate euro denominated senior secured notes due April 15, 2024 (collectively, the “Euro Secured Notes”). On March 17, 2021, using the net proceeds from the offering of 5.125% Notes, together with cash on hand, the Company satisfied and discharged each of the indentures governing the Euro Notes in accordance with their terms. As a result, the Company recorded a gain on extinguishment of debt of $8 million for the nine months ended September 30, 2021.

Other Debt

Other debt consists primarily of subsidiary debt and finance lease obligations.

Factoring Arrangements

At September 30, 2022 and December 31, 2021, the amount of accounts receivable outstanding and derecognized for factoring arrangements was $1.1 billion and $1.0 billion, of which $0.5 billion and $0.5 billion related to accounts receivable where the Company has continuing involvement. In addition, the deferred purchase price receivable was $53 million and $51 million at September 30, 2022 and December 31, 2021.

For the three months ended September 30, 2022 and 2021, proceeds from the factoring of accounts receivable qualifying as sales were $1.4 billion and $1.2 billion, of which $0.9 billion and $0.8 billion were received on accounts receivable where the Company had continuing involvement. For the nine months ended September 30, 2022 and 2021, proceeds from the factoring of accounts receivable qualifying as sales were $4.5 billion and $3.8 billion, of which $3.3 billion and $2.9 billion were received on accounts receivable where the Company had continuing involvement.

For the three months ended September 30, 2022 and 2021, the Company’s financing charges associated with the factoring of receivables were $10 million and $5 million. For the nine months ended September 30, 2022 and 2021, the Company’s financing charges associated with the factoring of receivables were $24 million and $14 million. These financing charges are included in “Interest expense” in the condensed consolidated statements of income (loss).

If the Company were not able to factor receivables under these programs, its borrowings under its revolving credit agreement might increase. These programs provide the Company with access to cash at costs that are generally favorable to alternative sources of financing and allow the Company to reduce borrowings under its revolving credit agreement.