XML 20 R11.htm IDEA: XBRL DOCUMENT v3.23.3
Debt
9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
Term Loan and Revolving Facility
On September 20, 2023, pursuant to an amended and restated credit agreement (the “Credit Agreement”), the Company refinanced its previously existing term loan resulting in total borrowing of $1,500.0 million (as so amended and restated, the “Term Loan”) and an accompanying $100.0 million revolving loan (the “Revolving Facility”). The Term Loan was issued at a price equal to 99.75% of its face value and bears interest at an annual rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.5%, with a 0.75% SOFR floor. The maturity date of the Term Loan is in September 2030. Interest is paid monthly on the last business day of the month. The Revolving Facility bears interest at the same rate (but without a SOFR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5% per year on the undrawn amount, which will be reduced to 0.375% if the Company has a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1, and a maturity date in September 2028. Principal payments, payable quarterly, beginning with the quarter ending March 31, 2024, will be $15.0 million per annum (equal to one percent of the full principal amount of the Term Loan), with the remaining principal due upon maturity.
The Company paid $3.8 million of original issuance costs to refinance the Term Loan in September 2023, which were deferred and will be amortized over the extended term. Lenders making up approximately $16.8 million of the Term Loan did not participate in the refinancing. Those portions of the Term Loan were replaced by new or existing lenders. This resulted in an immaterial loss on extinguishment of debt during the three months ended September 30, 2023, as the Company wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in exchange of principal. The Company deferred an additional $1.2 million of third-party fees associated with the refinancing of the Term Loan and the Revolving Facility.
As of September 30, 2023 and December 31, 2022, the Company reported an aggregate of $1,500.0 million and $1,504.6 million in borrowings under the Term Loan, respectively. These amounts do not include $18.1 million and $17.4 million of net unamortized deferred financing costs as of September 30, 2023 and December 31, 2022, respectively. The net principal balance in borrowings in the accompanying consolidated balance sheets as of September 30, 2023 and December 31, 2022 amounted to $1,481.9 million and $1,487.2 million, respectively. As of September 30, 2023 and December 31, 2022, based upon recent trading prices (Level 2 - market approach), the fair value of the Company’s borrowings under the Term Loan was $1,499.1 million and $1,494.3 million, respectively.
The Credit Agreement restricts the Company’s ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, based on achievement and maintenance of specified leverage ratios. The Credit Agreement also contains an annual mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement) in the event the Company’s net leverage ratio rises above 3.5 to 1. As of December 31, 2022, the Company was below the specified leverage ratio, and a mandatory prepayment sweep was therefore, not required. The Credit Agreement permits repayment, prepayment, and repricing transactions, subject, in the case of the Term Loan, to a 1% penalty in the event the Term Loan is prepaid or repriced within the first six months from the refinancing date.
The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan. With respect to the Revolving Facility, the Credit Agreement requires the Company to maintain a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default. The Company was in compliance with all covenants as of September 30, 2023.
Interest on Debt
Total interest incurred includes amortization of deferred financing fees and capitalized interest. The Company incurred third-party financing costs of $15.9 million in connection with the refinancing of the Term Loan in September 2023, of which $14.7 million was expensed. The amounts expensed are included within interest expense on the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2023. There were no such costs incurred during the three and nine months ended September 30, 2022. The following table presents the interest and amortization of deferred financing fees related to the Term Loan:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)(In thousands)
Total interest incurred$37,277 $19,844 $80,584 $51,076 
Amortization of deferred financing fees$1,087 $1,211 $3,327 $3,593 
Capitalized interest$1,121 $725 $3,847 $1,589 
As of September 30, 2023 and December 31, 2022, accrued interest on the Term Loan was $0.7 million and $0.3 million, respectively.