LONG-TERM DEBT

12 Months Ended

Sep. 30, 2020

Debt at September 30, 2020 and 2019 consisted of the following:



		At September 30, 2020
		Outstanding Balance			Original Issuer Premium		Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior notes due 2028	(a)	$	1,000,000		$	363	$	(15,376	)	$	984,987		5.75	%
Revolver due 2025	(b)	12,858			—		(2,209		)	10,649			Variable
Finance lease - real estate	(e)	17,218			—		(30		)	17,188			Variable
Non U.S. lines of credit	(f)	—			—		(30		)	(30		)	Variable
Non U.S. term loans	(f)	31,086			—		(160		)	30,926			Variable
Other long term debt	(g)	3,260			—		(16		)	3,244			Variable
Totals		1,064,422			363		(17,821		)	1,046,964
less: Current portion		(9,922		)	—		—			(9,922		)
Long-term debt		$	1,054,500		$	363	$	(17,821	)	$	1,037,042



		At September 30, 2019
		Outstanding Balance			Original Issuer Premium		Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior notes due 2022	(a)	$	1,000,000		$	867	$	(9,175	)	$	991,692		5.25	%
Revolver due 2021	(b)	50,000			—		(1,243		)	48,757			Variable
Finance lease - real estate	(e)	4,388			—		(55		)	4,333			5.00	%
Non U.S. lines of credit	(f)	17,576			—		(45		)	17,531			Variable
Non U.S. term loans	(f)	36,977			—		(188		)	36,789			Variable
Other long term debt	(g)	5,190			—		(18		)	5,172			Variable
Totals		1,114,131			867		(10,724		)	1,104,274
less: Current portion		(10,525		)	—		—			(10,525		)
Long-term debt		$	1,103,606		$	867	$	(10,724	)	$	1,093,749

Interest expense consists of the following for 2020, 2019 and 2018.



		Year Ended September 30, 2020
		Effective Interest Rate		Cash Interest			Amort. Debt Premium		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.90	%	$	32,511		$	—	$	1,072	$	33,583
Senior notes due 2022	(a)	5.67	%	$	22,816		$	122	$	1,735	$	24,673
Revolver due 2025	(b)	Variable		5,866			—		635		6,501
Finance lease - real estate	(e)	Variable		386			—		25		411
Non U.S. lines of credit	(f)	Variable		12			—		15		27
Non U.S. term loans	(f)	Variable		975			—		55		1,030
Other long term debt	(g)	Variable		445			—		2		447
Capitalized interest				(128		)	—		—		(128		)
Totals				$	62,883		$	122	$	3,539	$	66,544



		Year Ended September 30, 2019
		Effective Interest Rate		Cash Interest			Amort. Debt Premium		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2022	(a)	5.66	%	$	52,500		$	270	$	3,803	$	56,573
Revolver due 2025	(b)	Variable		6,998			—		980		7,978
ESOP Loans	(d)	6.3	%	937			—		186		1,123
Finance lease - real estate	(e)	Variable		372			—		25		397
Non U.S. lines of credit	(f)	Variable		19			—		15		34
Non U.S. term loan	(f)	Variable		1,592			—		109		1,701
Other long term debt	(g)	Variable		640			—		5		645
Capitalized interest				(385		)	—		—		(385		)
Totals				$	62,673		$	270	$	5,123	$	68,066



		Year Ended September 30, 2018
		Effective Interest Rate		Cash Interest			Amort. Debt Premium		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2022	(a)	5.66	%	$	52,500		$	270	$	3,803	$	56,573
Revolver due 2025	(b)	Variable		3,718			—		565		4,283
Real estate mortgages	(c)	6.3	%	1,802			—		124		1,926
ESOP Loans	(d)	3.3	%	349			—		320		669
Finance lease - real estate	(e)	Variable		581			—		25		606
Non U.S. lines of credit	(f)	Variable		34			—		15		49
Non U.S. term loan	(f)	Variable		1,420			—		90		1,510
Other long term debt	(g)	Variable		494			—		7		501
Capitalized interest				(549		)	—		—		(549		)
Totals				$	60,349		$	270	$	4,949	$	65,568

Minimum payments under debt agreements for the next five years are as follows: $9,922 in 2021, $12,667 in 2022, $16,124 in 2023, $1,730 in 2024, $14,628 in 2025 and $1,009,351 thereafter.

(a)

On June 22, 2020, in an unregistered offering through a private placement, Griffon completed the add-on offering of $150,000 principal amount of its 5.75% senior notes due 2028, at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75% senior notes due 2028, at of par, completed on February 19, 2020 (collectively, the "Senior Notes"). Proceeds from the Senior Notes were used to redeem the $1,000,000 of 5.25% senior notes due 2022 (the "2022 Senior Notes"). As of September 30, 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 and August 3, 2020, Griffon exchanged substantially all of the Senior Notes for substantially identical Senior Notes registered under the Securities Act of 1933, as amended (the "Securities Act"), via an exchange offer. The fair value of the 2028 Senior Notes approximated $1,040,000 on September 30, 2020 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $16,448 of underwriting fees and other expenses incurred related to the issuance and exchange of the Senior Notes, which will amortize over the term of such notes, and, at September 30, 2020, $15,376 remained to be amortized. Furthermore, all of the obligations associated with the 2022 Senior Notes were discharged. Additionally, Griffon recognized a $7,925 loss on the early extinguishment of debt of the 5.25% $1,000,000 2022 Senior Notes, comprised primarily of the write-off of $6,725 of remaining deferred financing fees, $607 of tender offer net premium expense and $593 of redemption interest expense.

(b)

On January 30, 2020, Griffon amended its Credit Agreement to increase the maximum borrowing availability from $350,000 to $400,000, extend its maturity from March 22, 2021 to March 22, 2025 and modify 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); and a multi-currency sub-facility of $100,000. The Credit Agreement provides for same day borrowings of base rate loans.

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 0.75% for base rate loans and 1.75% 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 September 30, 2020, under the Credit Agreement, there were $12,858 in outstanding borrowings; outstanding standby letters of credit were $16,867; and $370,275 was available, subject to certain loan covenants, for borrowing at that date.

(c)

In September 2015 and March 2016, Griffon entered into mortgage loans in the amount of $32,280 and $8,000, respectively, that were due to mature in September 2025 and April 2018, respectively. The mortgage loans were secured and collateralized by four properties occupied by Griffon's subsidiaries and were guaranteed by Griffon. The loans had an interest at a rate of LIBOR plus 1.50%. The loans were paid off during 2018.

(d)

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 September 30, 2020 was $29,878.

(e)

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 5.6%, respectively. The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon. The Ocala, Florida lease contains two five-year renewal options. As of September 30, 2020, $17,188 was outstanding, net of issuance costs. Refer to Note 22 - Leases for further details.

(f)

In November 2012, Garant G.P. (“Garant”), a Griffon subsidiary, entered into a CAD 15,000 ($11,210 as of September 30, 2020) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.44% LIBOR USD and 1.55% Bankers Acceptance Rate CDN as of September 30, 2020). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity. As of September 30, 2020, there were no borrowings under the revolving credit facility with CAD 15,000 ($11,210 as of September 30, 2020) available for borrowing.

In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries ("Griffon Australia") entered into an AUD 29,625 term loan, AUD 20,000 revolver and AUD 10,000 receivable purchase facility agreement; the agreement was amended in March 2019. As amended, the term loan requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment of AUD 9,625 due upon maturity in March 2022, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 1.95% per annum (2.09% at September 30, 2020). During the year ended September 30, 2020, the term loan balance was reduced by AUD 5,000 from AUD 23,375 to AUD 18,375 with proceeds from an AUD 5,000 increase in the commitment of the receivables purchase line from AUD 10,000 to AUD 15,000. As of September 30, 2020, the term loan had an outstanding balance of AUD 15,875 ($11,287 as of September 30, 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 1.9% and 1.35%, respectively, per annum (2.04% and 1.49%, respectively, at September 30, 2020). At September 30, 2020, there were no balances outstanding under the revolver and the receivable purchase facility. The revolver, receivable purchase facility and 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 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. The term loan and mortgage loan accrue interest at the GBP LIBOR Rate plus 2.25% and 1.8%, respectively (2.30% and 1.85% at September 30, 2020, respectively). The revolving facility matures in May 2021, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 1.5% (1.85% as of September 30, 2020). As of September 30, 2020, the revolver had no outstanding balance while the term and mortgage

loan balances amounted to GBP 15,398 ($19,799 as of September 30, 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.

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

At September 30, 2020, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.