Quarterly report pursuant to Section 13 or 15(d)

Financing Agreements

v2.4.1.9
Financing Agreements
3 Months Ended
Dec. 31, 2014
Debt Disclosure [Abstract]  
Financing agreements
Financing Agreements
 
December 31,
2014
 
September 30,
2014
$700 revolving credit facility, maturing December 19, 2019
$
190.3

 
$
229.6

$200 term loan, final maturity December 19, 2019
177.8

 
180.0

$150 senior unsecured notes, due July 15, 2020, net of discount
149.0

 
148.9

$100 unsecured Series A Notes, due December 15, 2024
100.0

 

Total debt
617.1

 
558.5

Less: current portion
9.0

 
15.0

Total long-term debt
$
608.1

 
$
543.5


 
On December 15, 2014, we issued $100.0 in 4.60% Series A unsecured notes (“Series A Notes”) pursuant to the Private Shelf Agreement, dated as of December 6, 2012 (the “Shelf Agreement”), among the Company, Prudential Investment Management, Inc. (“Prudential”) and each Prudential Affiliate (as defined therein) that becomes a purchaser thereunder. The Series A Notes are unsecured, mature on December 15, 2024, and bear interest at 4.60% payable semi-annually in arrears. The Company may at any time upon providing notice, prepay all or part of the Series A Notes at 100% of the principal amount prepaid plus a Make-Whole Amount (as defined therein). Consistent with our revolving credit facility, term loan, senior unsecured notes, and LG facility, the Series A Notes are fully and unconditionally guaranteed by certain of the Company’s domestic subsidiaries (the “Guarantors”). Deferred financing costs of $0.4 related to the Series A Notes are being amortized to interest expense over the term of the Series A Notes.

On December 15, 2014, we entered into an amendment (the “First Amendment”) to the Shelf Agreement and on December 19, 2014, the Company and the Guarantors entered into a separate amendment (the “Second Amendment” and, collectively with the First Amendment, the “Prudential Amendments”) to the Shelf Agreement. The Prudential Amendments, among other things, amend a financial covenant contained in the Shelf Agreement to provide the Company greater flexibility to consummate acquisitions. The financial covenant amendment allows for an increase in the Company’s permitted maximum leverage ratio during the three quarters subsequent to an acquisition valued in excess of $75.0. We are allowed this increase up to two times during the term of the Shelf Agreement (each, a “Leverage Holiday”). If a Leverage Holiday is elected, in addition to the interest accruing on the Series A Notes, the Company must pay to each holder of a Series A Note a fee (an “Excess Leverage Fee”) equivalent to 0.75% per annum.

On December 19, 2014, the Company entered into a Second Amendment (the “JPM Amendment”) to the $700 revolving credit facility and term loan in the amount of $200, dated as of November 19, 2012 (as amended, the “Facility”), among the Company, the subsidiary borrowers, the subsidiary guarantors, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent. The Facility provides for revolving loans of up to $700, plus a term loan in the amount of $180.0. The JPM Amendment extends the maturity date of the Facility to December 19, 2019 and, among other amendments, amends the Facility to provide for Leverage Holidays similar to those discussed above regarding the Series A Notes. New deferred financing costs related to the JPM Amendment were $1.5, along with existing costs of $1.9, are being amortized to interest expense over the term of the Facility.

With respect to the Facility, as of December 31, 2014, we had $14.4 in outstanding letters of credit issued and $495.3 of maximum borrowing capacity, of which $361.9 of borrowing capacity is immediately available based on our leverage covenant at December 31, 2014, with additional amounts available in the event of a qualifying acquisition.  The weighted-average interest rates on borrowings under the Facility were 1.27% for the three months ended December 31, 2014, and 1.35% for the same period in the prior year.  The Facility carries a leverage-based facility fee, assessed on the entire facility amount. The weighted average facility fee was 0.25% for the three months ended December 31, 2014.
 
The weighted average interest rates on the term loan were 1.54% for the three months ended December 31, 2014, and 1.68% for the same period in the prior year.
 
In the normal course of business, the Process Equipment Group provides customers with 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, we maintain adequate capacity to provide the guarantees.  As of December 31, 2014, we had guarantee arrangements with capacity totaling $236.5 under which $179.6 was utilized for this purpose.  These arrangements include a €150.0 Syndicated Letter of Guarantee Facility (“LG Facility”) under which unsecured letters of credit, bank guarantees, or other surety bonds may be issued.
 
The availability of borrowings under the Facility and the LG Facility is subject to our ability to meet certain conditions including compliance with covenants, absence of default, and continued accuracy of certain representations and warranties. Financial covenants include a maximum ratio of Indebtedness to EBITDA (as such terms defined in the relevant agreements) of 3.5 to 1.0 and a minimum ratio of EBITDA (as defined in the agreements) to interest expense of 3.5 to 1.0. As of December 31, 2014, the LG Facility does not provide for Leverage Holidays. As of December 31, 2014, we were in compliance with all covenants.
 
We had restricted cash of $0.6 and $0.4 at December 31, 2014 and September 30, 2014.