DEBT

12 Months Ended

Dec. 31, 2018

NOTE 8 – DEBT

Long-term debt consisted of the following at December 31:

In millions
	2018		2017
$1.2 billion senior credit facility, due in 2022	$	583.3	$	471.7
$950 million term loan, due in 2022		902.5		950.0
$125 million private placement notes, due in 2019		125.0		125.0
$225 million private placement notes, due in 2020		225.0		225.0
$150 million private placement notes, due in 2021		150.0		150.0
$125 million private placement notes, due in 2022		125.0		125.0
$200 million private placement notes, due in 2022		200.0		200.0
$100 million private placement notes, due in 2023		100.0		100.0
$150 million private placement notes, due in 2023		150.0		150.0
Promissory notes and deferred consideration, weighted average maturity of 2.74 and 2.9 years for 2018 and 2017		120.9		155.9
Foreign bank debt, weighted average maturity of 1.9 years for 2018 and 1.7 years for 2017		76.7		85.2
Obligations under capital leases		20.3		9.4
Total debt		2,778.7		2,747.2
Less: current portion of total debt		104.3		119.5
Less: unamortized debt issuance costs		10.5		12.4
Long-term portion of total debt	$	2,663.9	$	2,615.3

Our senior credit facility, term loan, and the private placement notes all require us to comply with the same financial, reporting and other covenants and restrictions, including a restriction on dividend payments. At December 31, 2018, we were in compliance with all of our financial debt covenants. Our senior credit facility, term loan, and private placement notes rank pari passu to each other and all other unsecured debt obligations.

The weighted average interest rates on long-term debt, excluding capital leases, as of December 31, 2018 and 2017 were as follows:

	2018			2017
$1.2 billion senior credit facility, due in 2022		3.77	%		2.55	%
$1.0 billion term loan, due in 2022		4.07	%		2.83	%
$125 million private placement notes, due in 2019		3.43	%		2.68	%
$225 million private placement notes, due in 2020		5.22	%		4.47	%
$150 million private placement notes, due in 2021		3.64	%		2.89	%
$125 million private placement notes, due in 2022		4.01	%		3.26	%
$200 million private placement notes, due in 2022		3.47	%		2.72	%
$100 million private placement notes, due in 2023		3.54	%		2.79	%
$150 million private placement notes, due in 2023		3.93	%		3.18	%
Promissory notes and deferred consideration		1.79	%		1.49	%
Foreign bank debt		5.81	%		6.11	%

During the second quarter of 2018, in accordance with the amended terms (see below), the Company triggered an increase of 0.5% in the interest rates charged on the private placement notes. During the third quarter of 2018, in accordance with the amended terms (see below), the Company triggered an increase of 0.25% applicable to the interest rate charged on the senior credit facility. During the fourth quarter of 2018 in accordance with the amended terms (see below), the Company triggered an increase of 0.25% applied to the interest rates charged on the private placement notes.

Amounts committed to outstanding letters of credit and the unused portion of our senior credit facility as of December 31, 2018 and 2017 were as follows:

In millions
	2018		2017
Outstanding letters of credit under Senior Credit Facility	$	63.1	$	130.8
Unused portion of the Revolving Credit Facility		553.6		597.5

The Company entered into a Credit Agreement (the “Credit Agreement”) dated as of November 17, 2017 that amended, restated and consolidated the Company’s existing revolver agreement dated as of June 4, 2014 and the Company’s existing term loan credit agreement dated as of August 15, 2015. The Credit Agreement provided for a term loan facility of $950.0 million and a revolving credit facility of $1.2 billion. The proceeds from this Credit Agreement were used on the closing date to refinance the loans and other credit extensions made under the existing revolver and term loan credit facilities. The Company applied the provisions of ASC 470-50, “Modifications and Extinguishments” and accounted for the refinance as a modification.

The obligations under the Credit Agreement are unsecured. The Credit Agreement contained a financial covenant to maintain a Consolidated Leverage Ratio of 3.75 to 1.00 at the end of any fiscal quarter, which could have been increased to 4.00 to 1.00 for up to two consecutive quarters in any fiscal quarter ending on or before September 30, 2018, at the Company’s option, if following the settlement payment with respect to the small quantity (“SQ”) customer class action lawsuit (see Note 19 – Legal Proceedings), and if the Consolidated Leverage Ratio, on a pro forma basis, is greater than 3.50 to 1.00. The Company exercised this option during the third quarter of 2018. The Credit Agreement matures on November 17, 2022.

The Company entered into amendments to the Credit Agreement and the various note purchase agreements associated with the private placement notes, during the year ended December 31, 2018, as follows:

•

An amendment, dated March 23, 2018, which changed the definition of EBITDA (as defined in the credit agreements), to allow for certain add-backs, up to a maximum of $200.0 million on a trailing twelve month basis, related to cash charges associated with Business Transformation, operational optimization and litigation matters, to the calculation of EBITDA for debt covenant compliance purposes.

The amendment also provided, under certain circumstances, for the adjustment to the interest rates charged on the senior credit facility and term loan and the private placement notes.

•

An amendment, dated November 15, 2018 that applies only to the Credit Agreement, which amended the covenant with respect to permitted acquisitions and dispositions.

•

An amendment, dated December 19, 2018, which increases the allowable Consolidated Leverage Ratio to 4.00 to 1.00 and continues to allow the $200.0 million of add backs for any quarter ending before December 31, 2019. The add back is extended through the first quarter of 2020 to allow up to a maximum of $90.0 million of aggregate expenses incurred through December 31, 2019 to be added back. In addition, the amendment requires that the Consolidated Leverage Ratio not be greater than 3.75 to 1.00 for any fiscal quarter ending after December 31, 2019.

In addition to the above, the interest rate charged on the private placement notes is subject to adjustment as follows:

If at the end of any fiscal quarter the Unadjusted Consolidated Leverage Ratio (prior to taking into effect the add-backs discussed above) exceeds 3.75 to 1.00 the per annum interest rate applicable to each series of notes shall increase by 0.50% (the “Adjusted Leverage Elevated Interest Rate”)

If at the end of any fiscal quarter ending on or before March 31, 2020, the unadjusted Consolidated Leverage Ratio exceeds 3.75 to 1.00 the per-annum interest rate applicable to each series of notes shall be increased as follows (the “Unadjusted Leverage Elevated Interest Rate”):

if the Company has a rating of BBB+ or better by S&P (or an equivalent rating by another rating agency) then the Unadjusted Leverage Elevated Interest Rate will be an additional 0.50%,

ii.

if the Company has a rating of BBB by S&P (or an equivalent rating by another rating agency) then the Unadjusted Leverage Elevated Interest Rate will be an additional 0.75%,

iii.

if the Company has a rating of BBB- by S&P (or an equivalent rating by another rating agency) then the Unadjusted Leverage Elevated Interest Rate will be an additional 1.25%,

iv.

if the Company has a rating of BB+ or worse by S&P (or an equivalent rating by another rating agency) then the Unadjusted Leverage Elevated Interest Rate will be an additional 2.00%

The Adjusted Leverage Elevated Interest Rate and Unadjusted Leverage Elevated Interest rate are not cumulative with each other and only the greater of the two increases will apply at any given time.

The Company accounted for each of these refinancings as modifications and as a result recognized, during the year ended December 31, 2018, $2.8 million of debt modification charges to interest expense.

The Company has the ability and intends to use some of the availability under the revolving credit facility to refinance the $125 million private placement notes due in 2019, and accordingly has presented the balance of these notes within the long-term portion of total debt as of December 31, 2018. The amount is however presented as part of payments due in 2019 in the table below.

Payments due on long-term debt, excluding capital lease obligations, during each of the five years subsequent to December 31, 2018 are as follows:

In millions
2019	$	225.2
2020		342.2
2021		251.3
2022		1,678.6
2023		254.8
Thereafter		6.3
Total	$	2,758.4

Minimum future lease payments under capital leases are as follows:

In millions
2019	$	5.4
2020		5.6
2021		2.6
2022		2.3
2023		2.1
Thereafter		5.9
Total minimum lease payments		23.9
Less: amounts representing interest		(3.6	)
Present value of net minimum lease payments		20.3
Less: current portion included in current portion of long-term debt		(4.1	)
Long-term obligations under capital leases	$	16.2