LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS

Long-term obligations and other short-term borrowings consist of the following at June 30, 2017 and June 30, 2016:



(Dollars in millions)	Maturity	June 30, 2017		June 30, 2016
Senior Secured Credit Facilities
Term loan facility dollar-denominated	May 2021	$	1,244.2	$	1,454.2
Term loan facility euro-denominated	May 2021	352.0		345.2
Euro-denominated 4.75% Senior Notes due 2024	December 2024	424.3		—
Capital lease obligations	2020 to 2032	53.3		51.4
Other obligations	2017 to 2018	5.9		9.7
Total		2,079.7		1,860.5
Less: Current portion of long-term obligations and other short-term borrowings		24.6		27.7
Long-term obligations, less current portion		$	2,055.1	$	1,832.8

Senior Secured Credit Facilities and Second Amendment

In May 2014, Operating Company entered into the Amended and Restated Credit Agreement, dated as of May 20, 2014 (as subsequently amended, the "Credit Agreement") governing the senior secured credit facilities that provide for U.S. dollar-denominated term loans, euro-denominated term loans and a revolving credit facility. On December 9, 2016, the Company completed Amendment No. 2 (the "Second Amendment") to the Credit Agreement in order to lower interest rates on its U.S. dollar-denominated and euro-denominated term loans, dated as of May 20, 2104, governing all term loans and revolving credit facilities (as amended, the "Credit Agreement"). The new applicable rate for the U.S. dollar-denominated term loans is based on the London Interbank Offered Rate ("LIBOR") (subject to a floor of 1.00%) plus 2.75%, which is 0.50% lower than the previous rate, and the new applicable rate for the euro-denominated term loans is LIBOR (subject to a floor of 1.00%) plus 2.50%, which is 0.75% lower than the previous rate. The Second Amendment further eliminates "step" pricing based on a measure of Operating Company's total leverage ratio. The Second Amendment also includes a prepayment of 1.0% in the event of another repricing event on or before the six months anniversary of the Second Amendment. There is no change to maturities, including the May 2019 maturity of the revolving credit facility, as a result of the Second Amendment. In connection with the Amendment, Operating Company incurred $1.7 million of associated fees, which were expensed in other (income) / expense, net in the consolidated statement of operations.

As of June 30, 2017, there were $12.0 million in outstanding letters of credit that reduced the borrowing capacity under the Revolving Credit Facility.

Euro-denominated 4.75% Senior Notes due 2024

On December 9, 2016, Operating Company completed a private offering of €380.0 million aggregate principal amount of 4.75% Senior Notes due 2024 (the "Notes"). The Notes are fully and unconditionally guaranteed, jointly and severally, by all of the wholly owned U.S. subsidiaries of Operating Company that guarantee its senior secured credit facilities. The Notes were offered in the U.S. to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") and outside the U.S. only to non-U.S. investors pursuant to Regulation S under the Securities Act. The Notes will mature on December 15, 2024, bear interest at the rate of 4.75% per annum and are payable semi-annually in arrears on June 15 and December 15 of each year. The proceeds of the Notes were used to repay $200 million of outstanding borrowings on the U.S. dollar-denominated term loan, pay the $81.0 million then outstanding under the revolving credit facility, pay accrued and unpaid interest and certain fees and expenses associated with the offering, fund a previously announced pending acquisition, and provide cash for general corporate purposes. In connection with the Notes offering and subsequent payment of the U.S. dollar-denominated term loan, Operating Company incurred $6.9 million of third-party financing costs, of which $0.6 million was expensed, and a $2.0 million expense related to unamortized debt discount and deferred financing costs, both recorded in other (income) / expense, net in the Consolidated Statement of Operations.

Long-Term and Other Obligations

Other obligations consist primarily of capital leases for buildings and other loans for business and working capital needs.

Maturities of long-term obligations, including capital leases of $53.3 million, and other short-term borrowings for future fiscal years are:



(Dollars in millions)	2018		2019	2020	2021	2022	Thereafter	Total
Maturities of long-term and other obligations	$	24.6	23.4	21.4	1,557.1	3.3	469.7	$	2,099.5

Debt Issuance Costs

Debt issuance costs associated with Operating Company's term loans and Notes are presented as a reduction to the carrying value of the debt while the debt issuance costs associated with the Revolving Credit Facility are capitalized within prepaid expenses and other assets on the balance sheet. All debt issuance costs are amortized over the life of the related obligation through charges to interest expense in the Consolidated Statements of Operations. The unamortized total of debt issuance costs were approximately $11.5 million and $7.7 million as of June 30, 2017 and June 30, 2016, respectively. Amortization of debt issuance costs totaled $2.3 million and $1.8 million for the fiscal years ended June 30, 2017 and June 30, 2016, respectively.

Guarantees and Security

Senior Secured Credit Facilities

All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the following assets of Operating Company and each guarantor, subject to certain exceptions:


•	a pledge of 100% of the capital stock of Operating Company and 100% of the equity interests directly held by Operating Company and each guarantor in any wholly owned material subsidiary of the borrower or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such non-U.S. subsidiary); and


•	a security interest in, and mortgages on, substantially all tangible and intangible assets of Operating Company and of each guarantor, subject to certain limited exceptions.

The Notes

All obligations under the Notes are general, unsecured and subordinated to all existing and future secured indebtedness of the guarantors to the extent of the value of the asset securing such indebtedness. The Notes are guaranteed by all of Operating Company's wholly owned U.S. subsidiaries that guarantee the senior secured credit facilities. The Notes are not guaranteed by either PTS Intermediate Holdings LLC or Catalent.

Debt Covenants

Senior Secured Credit Facilities

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, Operating Company’s (and Operating Company’s restricted subsidiaries’) ability to incur additional indebtedness or issue certain preferred shares; create liens on assets; engage in mergers and consolidations; sell assets; pay dividends and distributions or repurchase capital stock; repay subordinated indebtedness; engage in certain transactions with affiliates; make investments, loans or advances; make certain acquisitions; enter into sale and leaseback transactions; amend material agreements governing Operating Company's subordinated indebtedness and change Operating Company's lines of business.

The Credit Agreement also contains change of control provisions and certain customary affirmative covenants and events of default. The revolving credit facility requires compliance with a net leverage covenant when there is a 30% or more draw outstanding at a period end. As of June 30, 2017, the Company was in compliance with all material covenants related to its long-term obligations.

Subject to certain exceptions, the Credit Agreement permits Operating Company and its restricted subsidiaries to incur certain additional indebtedness, including secured indebtedness. None of Operating Company’s non-U.S. subsidiaries nor its dormant Rico subsidiary is a guarantor of the loans.

Under the Credit Agreement, Operating Company’s ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is tied to ratios based on Adjusted EBITDA (which is defined as "Consolidated EBITDA" in the Credit Agreement). Adjusted EBITDA is based on the definitions in the Credit Agreement is not defined under U.S. GAAP, and is subject to important limitations.

The Notes

The indenture governing the Notes (the "Indenture") contains covenants that, among other things, limit the ability of Operating Company and its restricted subsidiaries to incur or guarantee more debt or issue certain preferred shares, pay dividends on, repurchase or make distributions in respect of their capital stock or make other restricted payments, make certain investments, sell certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets, enter into certain transactions with their affiliates, and designate their subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions, limitations and qualifications as set forth in the Indenture. The Indenture also contains customary events of default including, but not limited to, nonpayment, breach of covenants, and payment or acceleration defaults in certain other indebtedness of Operating Company or certain of its subsidiaries. Upon an event of default, either the holders of at least 30% in principal amount of the then-outstanding Notes or the Trustee under the Indenture may declare the Notes immediately due and payable, or in certain circumstances, the Notes will automatically become due and immediately payable. As of June 30, 2017, Operating Company was in compliance with all material covenants under the Notes.

Fair Value of Debt Measurements

The estimated fair value of the senior secured credit facilities, which is considered a Level 2 fair value estimate, is based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities and considers collateral, if any. The estimated fair value of the Notes, a Level 1 fair value estimate, is based on the quoted market prices of the instrument. The carrying amounts and the estimated fair values of financial instruments as of June 30, 2017 and June 30, 2016 are as follows:



		June 30, 2017				June 30, 2016
(Dollars in millions)	Fair Value Measurement	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Euro-denominated 4.75% Senior Notes	Level 1	$	424.3	$	454.0	$	—	$	—
Senior Secured Credit Facilities & Other	Level 2	1,655.4		1,653.1		1,860.5		1,868.8
Total		$	2,079.7	$	2,107.1	$	1,860.5	$	1,868.8