Debt

3 Months Ended

Mar. 31, 2022

Debt [Abstract]

Debt [Text Block]

Note 14 – Debt

Debt as of March 31, 2022 and December 31, 2021 includes the following:

As of March 31, 2022

As of December 31, 2021

Interest

Outstanding 

Interest

Outstanding 

Rate

Balance

Rate

Balance

Credit Facilities:

Revolver

1.68%

$

254,453

1.62%

$

211,955

U.S. Term Loan

1.71%

528,750

1.65%

540,000

EURO Term Loan

1.50%

132,037

1.50%

137,616

Industrial development bonds

5.26%

10,000

5.26%

10,000

Bank lines of credit and other debt obligations

Various

1,659

Various

1,777

Total debt

$

926,899

$

901,348

Less: debt issuance costs

(7,227)

(8,001)

Less: short-term and current portion of long-term debts

(61,385)

(56,935)

Total long-term debt

$

858,287

$

836,412

Credit facilities

The Company’s primary credit facility (as amended, the “Credit Facility”) is comprised of a $

400.0

 million multicurrency

revolver (the “Revolver”), a $

600.0

 million term loan (the “U.S. Term Loan”), each with the Company as borrower, and a $

150.0

million (as of August 1, 2019) Euro equivalent term loan (the “EURO Term Loan” and together with the “U.S. Term Loan”, the

“Term Loans”) with Quaker Chemical B.V., a Dutch subsidiary of the Company as borrower, each with a five year term maturing in

August 2024

. Subject to the consent of the administrative agent and certain other conditions, the Company may designate additional

borrowers. The maximum amount available under the Credit Facility can be increased by up to $

300.0

 million at the Company’s

request if there are lenders who agree to accept additional commitments and the Company has satisfied certain other conditions. 

Borrowings under the Credit Facility bear interest at a base rate or LIBOR plus an applicable margin based upon the Company’s

consolidated net leverage ratio. On December 10, 2021, the Company entered into the Second Amendment with Bank of America

N.A., to include among other things, an update to provide for use of a non-USD currency LIBOR successor rate. The variable interest

rate incurred on the outstanding borrowings under the Credit Facility during the three months ended March 31, 2022 was

approximately

1.6

%. As of March 31, 2022, the interest rate of the outstanding borrowings under the Credit Facility was

approximately

1.7

%. In addition to paying interest on outstanding principal under the Credit Facility, the Company is required to pay

a commitment fee ranging from

0.2

% to

0.3

% depending on the Company’s consolidated net leverage ratio to the lenders under the

Revolver in respect of the unutilized commitments thereunder. The Company has unused capacity under the Revolver of

approximately $

142

 million, net of bank letters of credit of approximately $

4

 million, as of March 31, 2022. 

The Credit Facility is subject to certain financial and other covenants. 

The Company’s initial consolidated net debt to

consolidated adjusted EBITDA ratio could not exceed 4.25 to 1, with step downs in the permitted ratio over the term of the Credit

Facility. As of March 31, 2021, the consolidated net debt to adjusted EBITDA may not exceed 3.75 to 1. The Company’s

consolidated adjusted EBITDA to interest expense ratio cannot be less than 3.0 to 1 over the term of the agreement. The Credit

Facility also prohibits the payment of cash dividends if the Company is in default or if the amount of the dividend paid annually

exceeds the greater of $50.0 million and 20% of consolidated adjusted EBITDA unless the ratio of consolidated net debt to

consolidated adjusted EBITDA is less than 2.0 to 1, in which case there is no such limitation on amount.

As of March 31, 2022 and

December 31, 2021, the Company was in compliance with all of the Credit Facility covenants

. The Term Loans have quarterly

principal amortization during their

five year

 terms, with

5.0

% amortization of the principal balance due in years 1 and 2,

7.5

% in year

3, and

10.0

% in years 4 and 5, with the remaining principal amount due at maturity. During the three months ended March 31, 2022,

the Company made quarterly amortization payments related to the Term Loans totaling $

14.1

 million. The Credit Facility is

guaranteed by certain of the Company’s domestic subsidiaries and is secured by first priority liens on substantially all of the assets of

the Company and the domestic subsidiary guarantors, subject to certain customary exclusions. The obligations of the Dutch borrower

are guaranteed only by certain foreign subsidiaries on an unsecured basis.

The Credit Facility required the Company to fix its variable interest rates on at least

20

% of its total Term Loans. In order to

satisfy this requirement as well as to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility,

in November 2019, the Company entered into $

170.0

 million notional amounts of three year interest rate swaps at a base rate of

1.64

%

plus an applicable margin as provided in the Credit Facility, based on the Company’s consolidated net leverage ratio. At the time the

Company entered into the swaps, and as of March 31, 2022, the aggregate interest rate on the swaps, including the fixed base rate plus

an applicable margin, was

3.1

%. See Note 17 of Notes to Condensed Consolidated Financial Statements.

The Company capitalized $

23.7

 million of certain third-party debt issuance costs in connection with executing the Credit Facility. 

Approximately $

15.5

 million of the capitalized costs were attributed to the Term Loans and recorded as a direct reduction of long-

term debt on the Company’s Consolidated Balance Sheet. Approximately $

8.3

 million of the capitalized costs were attributed to the

Revolver and recorded within other assets on the Company’s Consolidated Balance Sheet. These capitalized costs are being

amortized into interest expense over the

five year

 term of the Credit Facility. As of March 31, 2022 and December 31, 2021, the

Company had $

7.2

 million and $

8.0

 million, respectively, of debt issuance costs recorded as a reduction of long-term debt. As of

March 31, 2022 and December 31, 2021, the Company had $

3.9

 million and $

4.3

 million, respectively, of debt issuance costs recorded

within other assets.

Industrial development bonds

As of March 31, 2022 and December 31, 2021, the Company had fixed rate, industrial development authority bonds totaling

$

10.0

 million in principal amount due in

2028

. These bonds have similar covenants to the Credit Facility noted above.

Bank lines of credit and other debt obligations

The Company has certain unsecured bank lines of credit and discounting facilities in certain foreign subsidiaries, which are not

collateralized. The Company’s other debt obligations primarily consist of certain domestic and foreign low interest rate or interest-

free municipality-related loans, local credit facilities of certain foreign subsidiaries and capital lease obligations. Total unused

capacity under these arrangements as of March 31, 2022 was approximately $

30

 million.

In addition to the bank letters of credit described in the “Credit facilities” subsection above, the Company’s only other off-balance

sheet arrangements include certain financial and other guarantees. The Company’s total bank letters of credit and guarantees

outstanding as of March 31, 2022 were approximately $

6

 million.

The Company incurred the following debt related expenses included within Interest expense, net, in the Condensed Consolidated

Statements of Income:

Three Months Ended

March 31, 

2022

2021

Interest expense

$

4,746

$

4,650

Amortization of debt issuance costs

1,187

1,187

Total

$

5,933

$

5,837

Based on the variable interest rates associated with the Credit Facility, as of March 31, 2022 and December 31, 2021, the amounts

at which the Company’s total debt were recorded are not materially different from their fair market value.