Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

DEBT

The Company’s borrowings consist of the following:

				As of
(in thousands)	Maturities	Stated Interest Rate	Effective Interest Rate	June 30, 2022		December 31, 2021
Unsecured notes (1)	2026	5.75%	5.75%	$	397,186	$	396,830
Revolving credit facility	2027	1.61% - 4.38%	2.00%	150,804		209,643
Truist Bank commercial note (2)	2031	1.85% - 2.72%	2.16%	24,013		24,504
Truist Bank commercial note	2032	2.10% - 2.97%	2.41%	21,563		22,500
Pinnacle Bank term loan	2024	4.15%	4.19%	8,996		9,558
Other indebtedness	2025 - 2030	0.00% - 16.00%		3,590		4,466
Total Debt				606,152		667,501
Less: current portion				(94,578)		(141,749)
Total Long-Term Debt				$	511,574	$	525,752

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(1)     The carrying value is net of $2.8 million and $3.2 million of unamortized debt issuance costs as of June 30, 2022 and December 31, 2021, respectively.

(2)     The carrying value is net of $0.1 million of unamortized debt issuance costs as of June 30, 2022 and December 31, 2021.

At June 30, 2022 and December 31, 2021, the fair value of the Company’s 5.75% unsecured notes, based on quoted market prices (Level 2 fair value assessment), totaled $394.5 million and $417.5 million, respectively.

On May 3, 2022, the Company amended the revolving credit facility to, among other things, (i) extend the maturity of the facility to May 30, 2027, (ii) eliminate borrowings under separate U.S. Dollar and multicurrency tranches, (iii) update certain interest rate benchmarks including replacing USD London Interbank Offered Rate (LIBOR) with SOFR for borrowings denominated in U.S. dollars, (iv) incorporate a sub-facility for the issuance of letters of credit, and (v) allow for applicable margin for borrowings to be determined and adjusted quarterly based on the Company’s Total Net Leverage Ratio. The outstanding balance on the Company’s $300 million unsecured revolving credit facility was $150.8 million as of June 30, 2022, consisting of U.S. dollar borrowings of $90 million with interest payable at SOFR plus 1.375%, and British Pound (GBP) borrowings of £50 million with interest payable at Daily Sterling Overnight Index Average (SONIA) plus 1.375%.

The fair value of the Company’s other debt, which is based on Level 2 inputs, approximates its carrying value as of June 30, 2022 and December 31, 2021. The Company is in compliance with all financial covenants of the revolving credit facility, commercial notes, and Pinnacle Bank term loan as of June 30, 2022.

During the three months ended June 30, 2022 and 2021, the Company had average borrowings outstanding of approximately $638.3 million and $525.5 million, respectively, at average annual interest rates of approximately 4.7% and 4.9%, respectively. During the three months ended June 30, 2022 and 2021, the Company incurred net interest expense of $15.3 million and $5.5 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company had average borrowings outstanding of approximately $648.8 million and $520.0 million, respectively, at average annual interest rates of approximately 4.5% and 5.0%, respectively. During the six months ended June 30, 2022 and 2021, the Company incurred net interest expense of $26.0 million and $13.0 million, respectively.

During the three and six months ended June 30, 2022, the Company recorded interest expense of $8.0 million and $11.4 million, respectively, to adjust the fair value of the mandatorily redeemable noncontrolling interest. During the three and six months ended June 30, 2021, the Company recorded interest income of $1.0 million and net interest expense of $0.1 million, respectively, to adjust the fair value of the mandatorily redeemable noncontrolling interest. The fair value of the mandatorily redeemable noncontrolling interest was based on the fair value of the underlying subsidiaries owned by GHC One, after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned subsidiaries is determined by reference to either a discounted cash flow or EBITDA multiple, which approximates fair value (Level 3 fair value assessment).