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LONG-TERM DEBT (Tables)

6 Months Ended

Mar. 31, 2020



		At March 31, 2020													At September 30, 2019
		Outstanding Balance			Original Issuer Premium		Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate		Outstanding Balance			Original Issuer Premium		Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior notes due 2028	(a)	$	850,000		$	—	(12,854		)	$	837,146		5.75	%	$	—		$	—	$	—		$	—		—	%
Senior notes due 2022	(a)	150,000			104		(1,098		)	149,006			5.25	%	1,000,000			867		(9,175		)	991,692			5.25	%
Revolver due 2025	(b)	183,548			—		(2,678		)	180,870			Variable		50,000			—		(1,243		)	48,757			Variable
Capital lease - real estate	(d)	12,406			—		(42		)	12,364			5.00	%	4,388			—		(55		)	4,333			5.00	%
Non US lines of credit	(e)	9,532			—		(97		)	9,435			Variable		17,576			—		(45		)	17,531			Variable
Non US term loans	(e)	33,462			—		(122		)	33,340			Variable		36,977			—		(188		)	36,789			Variable
Other long term debt	(f)	3,552			—		(17		)	3,535			Variable		5,190			—		(18		)	5,172			Variable
Totals		1,242,500			104		(16,908		)	1,225,696					1,114,131			867		(10,724		)	1,104,274
less: Current portion		(9,470		)	—		—			(9,470		)			(10,525		)	—		—			(10,525		)
Long-term debt		$	1,233,030		$	104	$	(16,908	)	$	1,216,226				$	1,103,606		$	867	$	(10,724	)	$	1,093,749

(a)

On February 19, 2020, in an unregistered offering through a private placement under Rule 144A and Regulation S, Griffon issued, at par, $850,000 of 5.75% Senior Notes due 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem 85% of the $1,000,000 of 5.25% Senior Notes due 2022 (the “2022 Senior Notes" and, collectively with the 2028 Senior Notes, the "Senior Notes"). Following the sale and issuance of the 2028 Notes transaction, $150,000 aggregate principal amount of the 2022 Notes remained outstanding. As of March 31, 2020, outstanding Senior Notes due totaled $1,000,000; interest is payable semi-annually on March 1 and September 1.

The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On April 22, 2020, Griffon exchanged substantially all of the 2028 Senior Notes for substantially identical 2028 Senior Notes registered under the Securities Act of 1933 (the "Securities Act") via an exchange offer. The remaining 2022 Senior Notes outstanding are registered under the Securities Act, having been issued pursuant to similar prior exchange offers. The fair value of the 2022 and 2028 Senior Notes approximated $139,500 and $799,000, respectively, on March 31, 2020 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $12,989 of underwriting fees and other expenses incurred related to the issuance and exchange of the 2028 Senior Notes. Furthermore, 85% of the obligations associated with the 2022 Senior Notes were discharged leaving remaining fees of $1,145. At March 31, 2020, a combined total amount of $13,952 remained to be amortized. Remaining capitalized fees for the 2022 Senior Notes and all capitalized fees for the 2028 Senior Notes will amortize over the term of each respective note. Additionally, Griffon recognized a $6,690 loss on the early extinguishment of debt on 85% of the 5.25% $1,000,000 senior notes due 2022, comprised primarily of the write-off of $5,873 of remaining deferred financing fees, $607 of tender offer net premium expense and $210 of redemption interest expense.

(b)

On January 30, 2020, Griffon amended its revolving credit facility (as amended, the "Credit Agreement") to increase the maximum borrowing availability from $350,000 to $400,000 and extend its maturity date from March 22, 2021 to March 22, 2025, except that if the 2022 Senior Notes are not repaid, refinanced or replaced prior to December 1, 2021, then the Credit Agreement will mature on December 1, 2021. The amended agreement also modified certain other provisions of the facility. The facility includes a letter of credit sub-facility with a limit of $100,000 (increased from $50,000); a multi-currency sub-facility of $200,000 (increased from $100,000); and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000 (increased from $50,000).

Borrowings under the Credit Agreement may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a LIBOR or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance. Current margins are 1.00% for base rate loans and 2.00% for LIBOR loans. The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants, and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At March 31, 2020, there were $183,548 of outstanding borrowings under the Credit Agreement; outstanding standby letters of credit were $21,390; and $195,062 was available, subject to certain loan covenants, for borrowing at that date.

(c)

In August 2016 and as amended on June 30, 2017, Griffon’s ESOP entered into a Term Loan with a bank (the "ESOP Agreement"). The Term Loan interest rate was LIBOR plus 3.00%. The Term Loan required quarterly principal payments of $569 with a balloon payment due at maturity. The Term Loan was secured by shares purchased with the proceeds of the loan and with a lien on a specific amount of Griffon assets (which ranked pari passu with the lien granted on such assets under the Credit Agreement) and was guaranteed by Griffon. On March 13, 2019, the ESOP Term Loan was refinanced with an internal loan from Griffon which was funded with cash and a draw under its Credit Agreement. The internal loan interest rate is fixed at 2.91%, matures in June 2033 and requires quarterly payments of principal, currently $635, and interest. The internal loan is secured by shares purchased with the proceeds of the loan. The amount outstanding on the internal loan at March 31, 2020 was $31,148.

(d)

Two Griffon subsidiaries have finance leases outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases mature in 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0% and 2.9%, respectively. The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon. The Ocala, Florida lease contains one five-year renewal option. At March 31, 2020, $12,364 was outstanding, net of issuance costs.

(e)

In November 2012, Garant G.P. (“Garant”) entered into a CAD 15,000 ($10,628 as of March 31, 2020) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.29% LIBOR USD and 2.30% Bankers Acceptance Rate CDN as of March 31, 2020). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity. At March 31, 2020, there were no borrowings under the revolving credit facility with CAD 15,000 ($10,628 as of March 31, 2020) available for borrowing.

In July 2016 and as amended in March 2019, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") entered into an AUD 29,625 term loan, AUD 20,000 revolver and AUD 10,000 receivable purchase facility agreement. The term loan requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment of AUD 13,375 due upon maturity in March 2022, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 1.90% per annum (2.39% at March 31, 2020). As of March 31, 2020, the term loan had an outstanding balance of AUD 23,375 ($14,378 as of March 31, 2020). The revolving facility and receivable purchase facility mature in March 2022, but are renewable upon mutual agreement with the lender. The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.8% and 1.25%, respectively, per annum (2.20% and 1.65%, respectively, at March 31, 2020). At March 31, 2020, there were no borrowings under the revolver and the receivable purchase facilities had an outstanding balance of AUD 10,000 ($6,151 as of March 31, 2020). The revolver, receivable purchase facility and the term loan are all secured by substantially all of the assets of Griffon Australia and its subsidiaries. Griffon Australia is required to maintain a certain minimum equity level and is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

In July 2018, the AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 350 and GBP 83 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,000 and GBP 2,333, respectively. The Term Loan and Mortgage Loans accrue interest at the GBP LIBOR Rate plus 2.25% and 1.8%, respectively (2.49% and 2.04% at March 31, 2020, respectively). The revolving facility matures in June 2020, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 1.5% (1.60% as of March 31, 2020). As of March 31, 2020, the revolver had an outstanding balance of GBP 2,728 ($3,381 as of March 31, 2020) while the term and mortgage loan balances amounted to GBP 15,398 ($19,084 as of March 31, 2020). The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. An invoice discounting arrangement was canceled and replaced by the above loan facilities.


(f)	Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.

At March 31, 2020, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

Summary of Interest Expense Incurred



		Three Months Ended March 31, 2020												Three Months Ended March 31, 2019
		Effective Interest Rate ⁽¹⁾		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense			Effective Interest Rate⁽¹⁾		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	6.0	%	$	5,566		$	—	$	135	$	5,701		n/a		$	—	$	—	$	—	$	—
Senior notes due 2022	(a)	5.7	%	8,040			45		628		8,713			5.7	%	13,125		66		951		14,142
Revolver due 2025	(b)	Variable		1,819			—		165		1,984			Variable		1,631		—		400		2,031
ESOP Loans	(c)	n/a		—			—		—		—			7.2	%	449		—		155		604
Capital lease - real estate	(d)	6.1	%	52			—		7		59			5.6	%	101		—		6		107
Non US lines of credit	(e)	Variable		3			—		8		11			Variable		4		—		4		8
Non US term loans	(e)	Variable		292			—		7		299			Variable		449		—		26		475
Other long term debt	(f)	Variable		132			—		—		132			Variable		147		—		3		150
Capitalized interest				(28		)	—		—		(28		)			—		—		—		—
Totals				$	15,876		$	45	$	950	$	16,871				$	15,906	$	66	$	1,545	$	17,517

(1) n/a = not applicable



		Six Months Ended March 31, 2020												Six Months Ended March 31, 2019
		Effective Interest Rate (1)		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense			Effective Interest Rate ⁽¹⁾		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	6.0	%	$	5,566		$	—	$	135	$	5,701		—	%	$	—	$	—	$	—	$	—
Senior notes due 2022	(a)	5.6	%	21,165			112		1,579		22,856			5.7	%	26,250		134		1,902		28,286
Revolver due 2021	(b)	Variable		3,201			—		397		3,598			Variable		2,564		—		541		3,105
ESOP Loans	(c)	n/a		—			—		—		—			6.6	%	937		—		186		1,123
Capital lease - real estate	(d)	6.0	%	113			—		13		126			5.5	%	216		—		12		228
Non US lines of credit	(e)	Variable		7			—		12		19			Variable		11		—		8		19
Non US term loans	(e)	Variable		564			—		19		583			Variable		897		—		53		950
Other long term debt	(f)	Variable		292			—		—		292			Variable		329		—		6		335
Capitalized interest				(93		)	—		—		(93		)			—		—		—		—
Totals				$	30,815		$	112	$	2,155	$	33,082				$	31,204	$	134	$	2,708	$	34,046

(a)

(b)

(c)

(d)

(e)


(f)	Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.

At March 31, 2020, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.