Long-Term Debt

9 Months Ended

Apr. 30, 2021

The components of long-term debt are as follows:


	April 30, 2021		July 31, 2020
Term loan	$	1,549,621	$	1,597,091
Asset-based credit facility	110,000		—
Unsecured notes	30,205		29,620
Other debt	76,358		84,500
Gross long-term debt	1,766,184		1,711,211
Debt issuance costs, net of amortization	(35,498)		(44,563)
Total long-term debt, net of debt issuance costs	1,730,686		1,666,648
Less: current portion of long-term debt	(12,559)		(13,817)
Total long-term debt, net, less current portion	$	1,718,127	$	1,652,831

On February 1, 2019, the Company entered into a seven-year term loan (“term loan”) agreement, which consists of both a United States Dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a $750,000 revolving asset-based credit facility (“ABL”). Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL matures on February 1, 2024.

As of April 30, 2021, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate totaling 3.125%. The interest rate on $532,025 of that balance, however, was fixed at 5.466% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. As of July 31, 2020, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate of 3.938%, but the interest rate on $673,400 of that balance was fixed at 6.216% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. The total interest rate on the April 30, 2021 outstanding Euro term loan tranche balance of $607,721 was 3.00%, and the total interest rate on the July 31, 2020 outstanding Euro term loan tranche of $655,191 was 4.00%.

As of April 30, 2021, the total interest rate on the outstanding ABL borrowings of $110,000 was 1.375%. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without penalty or premium.

The Company must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuances and receipt of annual cash flows in excess of certain amounts. No such specified events occurred during the three or nine months ended April 30, 2021 or 2020.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The ABL carries interest at an annual base rate plus 0.25% to 0.75%, or LIBOR plus 1.25% to 1.75%, based on adjusted excess availability as defined in the ABL agreement. This agreement also includes a 0.25% unused facility fee.

The unused availability under the ABL is generally available to the Company for general operating purposes and, based on April 30, 2021 eligible accounts receivable and inventory balances, net of amounts drawn, totaled approximately $610,000.

The unsecured notes of 25,000 Euro ($30,205) relate to long-term debt of our European segment. There are two series, 20,000 Euro ($24,164) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($6,041) with an interest rate of 2.534% maturing March 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and interest rates ranging from 1.40% to 3.43%.

Total contractual gross debt maturities are as follows:


For the remainder of the fiscal year ending July 31, 2021	$	4,202
For the fiscal year ending July 31, 2022	12,264
For the fiscal year ending July 31, 2023	12,390
For the fiscal year ending July 31, 2024	122,519
For the fiscal year ending July 31, 2025	36,557
For the fiscal year ending July 31, 2026 and thereafter	1,578,252
	$	1,766,184

For the three and nine months ended April 30, 2021, interest expense on the term loan, ABL and other debt facilities was $18,361 and $59,612, respectively. For the three and nine months ended April 30, 2020, interest expense on the term loan, ABL and other debt facilities was $22,825 and $71,037, respectively.

On March 25, 2021, the Company repriced its term loan debt, which resulted in reductions of the interest rate spread included in the overall interest rates on the Company’s U.S. term loan tranche and the Euro term loan tranche of 0.75% and 1.00%, respectively. This term loan debt repricing was evaluated on a creditor-by-creditor basis to determine whether modification or extinguishment accounting was required under the provisions of ASC 470-50. Extinguishment accounting was applied to a small percentage of the creditors that were deemed to have a substantial difference in terms based on an analysis of the present values of cash flows before and after the repricing. As a result, the Company recorded a debt extinguishment charge of $4,688 in the three months ended April 30, 2021. This charge was recognized through accelerated amortization of unamortized debt issuance costs that is classified as interest expense in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income. For the majority of the creditors, the debt repricing was accounted for as a modification.

In 2019, the Company incurred fees ("2019 fees") to secure the term loan and ABL, and those amounts are being amortized ratably over the respective seven and five-year terms of those agreements. The Company also incurred and capitalized an insignificant amount of creditor fees related to the March 25, 2021 repricing of its term loan noted above, to be amortized over the remaining life of the term loan. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are classified as interest expense, of $7,365 and $12,825 for the three and nine months ended April 30, 2021, respectively, which included $4,688 of accelerated amortization of the 2019 fees recorded in the three months ended April 30, 2021 as a result of the debt repricing. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are classified as interest expense, of $2,679 and $8,050 for the three and nine months ended April 30, 2020, respectively. The unamortized balance of the ABL facility fees was $7,705 at April 30, 2021 and $9,807 as of July 31, 2020 and is included in Other long-term assets in the Condensed Consolidated Balance Sheets.

The fair value of the Company’s term-loan debt at April 30, 2021 and July 31, 2020 was $1,551,141 and $1,565,866, respectively. The carrying value of the Company’s term-loan debt, excluding debt issuance costs, was $1,549,621 and $1,597,091 at April 30, 2021 and July 31, 2020, respectively. The fair value of the Company's debt is primarily estimated using Level 2 inputs as defined by ASC 820, primarily based on quoted market prices for the term loan debt. The fair value of other debt held by the Company approximates fair value.