|3 Months Ended|
Dec. 31, 2020
|Debt Disclosure [Abstract]|
|Financing Agreements||Financing Agreements
The following table summarizes Hillenbrand’s current and long-term debt as of the dates reported in the Consolidated Balance Sheets.
(1)Includes debt issuance costs of $1.2 and $1.3 at December 31, 2020 and September 30, 2020, respectively.
(2)Includes debt issuance costs of $5.0 and $5.2 at December 31, 2020 and September 30, 2020, respectively.
(3)Includes debt issuance costs of $3.6 and $3.7 at December 31, 2020 and September 30, 2020, respectively.
(4)Includes debt issuance costs of $0.3 at September 30, 2020. This term loan was repaid in December 2020.
(5)Includes debt issuance costs of $0.2 and $0.3 at December 31, 2020 and September 30, 2020, respectively.
Financing for Milacron Acquisition
Upon completing the acquisition of Milacron on November 21, 2019, Hillenbrand incurred borrowings under its two term loans in aggregate principal amounts of $500.0 and $225.0, which are provided for under the Company’s Third Amended and Restated Credit Agreement dated August 28, 2019 and subsequently amended on October 8, 2019, January 10, 2020, and May 29, 2020 (the “Credit Agreement”). During the three months ended December 31, 2020, the Company repaid the $225.0 term loan in full with a combination of cash on hand and borrowings from its revolving credit facility.
The $500.0 term loan (the “Term Loan Facility”) matures on the fifth anniversary of the date on which it was borrowed, subject to quarterly amortization payments (equal to 5% of the original principal amount of the term loan in each of years 1 and 2, 7.5% in each of years 3 and 4, and 10% in year 5). The Term Loan Facility accrues interest, at the Company’s option, at the LIBO Rate or the Alternate Base Rate (each as defined in the Credit Agreement) plus a margin based on the Company’s leverage ratio, ranging from 1.00% to 2.375% for term loans bearing interest at the LIBO Rate and 0.0% to 1.375% for term loans bearing interest at the Alternate Base Rate. For the three months ended December 31, 2020 and 2019, the weighted average interest rates for the Term Loan Facility were 2.75% and 3.49%, respectively.
In addition to the Term Loan Facility, Hillenbrand incurred $650.0 of additional borrowings from its revolving credit facility under the Credit Agreement (the “Revolver”) at the closing of the Milacron acquisition. The additional borrowings under the Term Loan Facility, the $225.0 term loan that has since been repaid, and the Revolver, in addition to the $375.0 of senior unsecured notes issued during the quarter ended September 30, 2019, were used to pay a portion of the cash consideration in connection with the acquisition of Milacron, fees and expenses related to the acquisition, and to repay certain indebtedness of Milacron and its subsidiaries upon closing the acquisition.
With respect to the Revolver, the Company had $7.4 in outstanding letters of credit issued and $829.6 of maximum borrowing capacity under the Revolver as of December 31, 2020. $829.6 of this borrowing capacity was immediately available based on the Company’s most restrictive covenant at December 31, 2020. The weighted-average interest rates on borrowings under the Revolver were 2.52% and 3.13% for the three months ended December 31, 2020 and 2019, respectively. The weighted average facility fee was 0.30% and 0.17% three months ended December 31, 2020 and 2019, respectively.
Other credit arrangements
In the normal course of business, operating companies within the Advanced Process Solutions reportable segment provide to certain customers bank guarantees and other credit arrangements in support of performance, warranty, advance payment, and other contractual obligations. This form of trade finance is customary in the industry and, as a result, the Company maintains adequate capacity to provide the guarantees. As of December 31, 2020, the Company had credit arrangements totaling $437.8, under which $264.9 was used for this purpose. These arrangements include the Company’s Syndicated Letter of Guarantee Facility (as amended, the “L/G Facility Agreement”) and other ancillary credit facilities.
Covenants related to current financing agreements
The Credit Agreement, the L/G Facility Agreement, and the Series A Notes pursuant to the Private Shelf Agreement, dated as of December 6, 2012 (as amended, the “Shelf Agreement”), contain the following financial covenants for the current quarter: a maximum leverage ratio (as defined in the agreements) of 4.75 to 1.00 and a minimum ratio of EBITDA (as defined in the agreements) to interest expense of 3.0 to 1.00.
As of December 31, 2020, Hillenbrand was in compliance with all covenants under these agreements. Additionally, the Credit Agreement, the L/G Facility Agreement, and the Shelf Agreement provide the Company with the ability to sell assets and to incur debt at its international subsidiaries under certain conditions.
All obligations of the Company arising under the Credit Agreement, the $400.0 and $375.0 senior unsecured notes, the Series A Notes, and the L/G Facility Agreement are fully and unconditionally, and jointly and severally, guaranteed by certain of the Company’s domestic subsidiaries.
The Credit Agreement, the L/G Facility Agreement, and the Shelf Agreement each contain certain other customary covenants, representations and warranties and events of default. The indentures governing both the $400.0 and $375.0 senior unsecured notes do not limit the Company’s ability to incur additional indebtedness. They do, however, contain certain covenants that restrict the Company’s ability to incur secured debt and to engage in certain sale and leaseback transactions. The indentures also contain customary events of default. The indentures provide holders of the senior unsecured notes with remedies if the Company fails to perform specific obligations. As of December 31, 2020, Hillenbrand was in compliance with all covenants and there were no events of default.
The entire disclosure for long-term debt.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef