Debt and Other Obligations

12 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt and Other Obligations

Note I. Debt and Other Obligations

Long-term Obligations

The Company’s long-term obligations, the fiscal year in which they mature and their respective interest rates are summarized below:

	September 30
	2021			2020
	(In millions)
Variable Rate Debt:
Revolving Credit Facility, expires fiscal 2026	$	—		$	—
Revolving Credit Facility - Euro, expires fiscal 2024		134			148
Total variable rate debt		134			148
Fixed Rate Debt:
3.7% Notes due fiscal 2022		350			350
3.4% Notes due fiscal 2026		250			250
4.0% Notes due fiscal 2029		300			300
Medium Term Notes:
Notes due fiscal 2022, 8.34% — 8.47%		15			15
Notes due fiscal 2028, 6.57% — 7.28%		8			8
Total Medium Term Notes		23			23
Chinese Renminbi Debt, due fiscal 2022, 4.35%		4			4
Total fixed rate debt		927			927
Finance lease obligations (Note S)		33			31
Unamortized debt issuance costs and debt discount		(4	)		(5	)
Total debt		1,090			1,101
Less current portion of long-term debt		(373	)		(7	)
Total long-term debt	$	717		$	1,094

Revolving Credit Facility, expiring fiscal 2026— In August 2021, the Company entered into a revolving credit agreement (the “U.S. Credit Agreement”) with a loan commitment not to exceed $1 billion. The amount available for borrowing under the U.S. Credit Agreement was $929 million as of September 30, 2021, and the weighted average interest rate on the outstanding balance during the year was 1.24%. The U.S. Credit Agreement, which matures on August 6, 2026, subject to two one-year options to extend the maturity, exercisable on or prior to August 6, 2022 and August 6, 2023, supports the Company’s commercial paper program. Borrowings may be used for working capital, letters of credit and other general corporate purposes. The U.S. Credit Agreement contains affirmative and negative covenants, the financial debt covenants described below, and annual sustainability performance targets related to the Company’s reduction in its nitrogen oxide and sulfur dioxide emissions intensity, the achievement of which may adjust pricing under the U.S. Credit Agreement.

Revolving Credit Facility-Euro, expiring fiscal 2024—In May 2019, several subsidiaries entered into a revolving credit agreement with a loan commitment not to exceed 300 million Euros. The amount available for borrowing under this revolving credit agreement was $216 million as of September 30, 2021, and the weighted average interest rate on the outstanding balance during the year was 1.20%. The revolving credit agreement, which matures on the earlier of (i) May 22, 2024 and (ii) the date of maturity, termination or expiration of the corporate revolving credit facility, may be used for repatriation of earnings of Cabot’s foreign subsidiaries to the U.S., the repayment of indebtedness of the Company’s foreign subsidiaries owing to the Company or any of its subsidiaries, and for working capital and general corporate purposes. The obligations of the subsidiaries under the revolving credit agreement are guaranteed by the Company. The Company paid debt issuance costs of $1 million upon entering the agreement, which are being amortized over the life of the revolver.

Effective October 19, 2021, the same subsidiaries amended and restated the 2019 revolving credit agreement (the “Euro Credit Agreement”) to align with the customary LIBOR replacement language and the financial leverage test covenant recently adopted in the U.S. Credit Agreement. The amount of the loan commitment, maturity date, acceptable use of funds, and guarantee by the Company are unchanged from the prior agreement.

Revolving Credit Facility-Canada, expiring fiscal 2021— During the second quarter of fiscal 2021, the Company’s Canadian subsidiary terminated its $100 million unsecured revolving credit agreement, which had a maturity date of September 24, 2021. The Canadian Credit Agreement provided liquidity for working capital and general corporate purposes for certain of Cabot’s Canadian subsidiaries. The Company had no borrowings under this agreement during either fiscal 2021 or 2020.

Debt Covenants— As of September 30, 2021, Cabot was in compliance with the financial debt covenants under the Credit Agreements, which, with limited exceptions, generally require the Company to comply on a quarterly basis with a leverage test. The U.S. Credit Agreement requires a leverage ratio of net debt, with the ability to offset such debt by the lesser of (i) unrestricted cash and cash equivalents and (ii) $150 million, to consolidated EBITDA not to exceed 3.50 to 1.00. The Euro Credit Agreement Facility required a leverage ratio of total debt to consolidated EBITDA not to exceed 3.50 to 1.00. Effective October 19, 2021, the Company amended the agreement to reflect a leverage test using net debt, consistent with the U.S. Credit Agreement.

Chinese Renminbi Debt—The Company’s consolidated Chinese subsidiaries had $4 million of unsecured long-term debt outstanding with a noncontrolling shareholder of a consolidated subsidiary as of both September 30, 2021 and 2020.

3.7% Notes due fiscal 2022—In July 2012, Cabot issued $350 million in registered notes with a coupon of 3.7% that mature on July 15, 2022. These notes are unsecured and pay interest on January 15 and July 15. The net proceeds of this offering were $347 million after deducting discounts and issuance costs. The discount of less than $1 million was recorded at issuance and is being amortized over the life of the notes. The Company plans to refinance the notes during the first half of calendar 2022.

3.4% Notes due fiscal 2026—In September 2016, Cabot issued $250 million in registered notes with a coupon of 3.4% that mature on September 15, 2026. These notes are unsecured and pay interest on March 15 and September 15. The net proceeds of this offering were $248 million after deducting discounts and issuance costs. The discount of less than $1 million was recorded at issuance and is being amortized over the life of the notes.

4.0% Notes due fiscal 2029—In June 2019, Cabot issued $300 million in registered, unsecured, notes with a coupon of 4.0% that mature on July 1, 2029. Interest is payable under the notes semi-annually on January 1 and July 1 commencing in January 2020. The net proceeds of this offering were $296 million after deducting discounts and issuance costs of $1 million and $3 million, respectively, which were paid at issuance and are being amortized over the life of the notes.

Medium Term Notes—At both September 30, 2021 and 2020, there were $23 million, of unsecured medium term notes outstanding issued to numerous lenders with various fixed interest rates and maturity dates. The weighted average maturity of the total outstanding medium term notes is 3 years with a weighted average interest rate of 7.96%.

Finance Lease obligations—See Note S for a discussion of the Company’s leases.

Future Years Payment Schedule

The aggregate principal amounts of long-term debt, excluding finance lease liabilities presented separately in Note S, due in each of the five years from fiscal 2022 through 2026 and thereafter are as follows:

Years Ending September 30	Principal Payments on Long-Term Debt
	(In millions)
2022	$	369
2023		—
2024		134
2025		—
2026		250
Thereafter		308
Total	$	1,061

Standby letters of credit—At September 30, 2021, the Company had provided standby letters of credit that were outstanding and not drawn totaling $5 million, which expire through fiscal 2022.

Short-term Borrowings

Commercial Paper—The Company has a commercial paper program and the maximum aggregate balance of commercial paper notes outstanding and the amounts borrowed under the revolving credit facility may not exceed the borrowing capacity of $1 billion under the revolving credit facility. The proceeds from the issuance of the commercial paper have been used for general corporate purposes, which may include working capital, refinancing existing indebtedness, capital expenditures, share repurchases, and acquisitions. The revolving credit facility is available to repay the outstanding commercial paper, if necessary.

There was an outstanding balance of commercial paper of $71 million as of September 30, 2021 with a weighted average interest rate of 0.15% and an outstanding balance of $14 million as of September 30, 2020 with a weighted average interest rate of 0.28%.