Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.22.2.2
DEBT
 3 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
DEBT DEBT
The following table summarizes our debt as of September 30, 2022 and June 30, 2022:
As of September 30, 2022 As of June 30, 2022
Amount
(In thousands)		 Effective
Interest Rate		 Amount
(In thousands)		 Effective
Interest Rate
Fixed-rate 4.650% Senior Notes due on November 1, 2024
 $ 750,000  4.682  % $ 1,250,000  4.682  %
Fixed-rate 5.650% Senior Notes due on November 1, 2034
 250,000  5.670  % 250,000  5.670  %
Fixed-rate 4.100% Senior Notes due on March 15, 2029
800,000  4.159  % 800,000  4.159  %
Fixed-rate 5.000% Senior Notes due on March 15, 2049
400,000  5.047  % 400,000  5.047  %
Fixed-rate 3.300% Senior Notes due on March 1, 2050
750,000  3.302  % 750,000  3.302  %
Fixed-rate 4.650% Senior Notes due on July 15, 2032
 1,000,000  4.657  % 1,000,000  4.657  %
Fixed-rate 4.950% Senior Notes due on July 15, 2052
 1,200,000  5.009  % 1,200,000  5.009  %
Fixed-rate 5.250% Senior Notes due on July 15, 2062
 800,000  5.259  % 800,000  5.259  %
Revolving Credit Facility 425,000  4.409  % 275,000  2.258  %
 Total 6,375,000  6,725,000 
Unamortized discount/premium, net (18,720) (19,304)
Unamortized debt issuance costs (43,531) (44,978)
Total $ 6,312,749  $ 6,660,718 
Reported as:
Long-term debt $ 6,312,749  $ 6,660,718 
Total $ 6,312,749  $ 6,660,718 
Senior Notes and Debt Redemption
In June 2022, we issued $3.00 billion aggregate principal amount of senior, unsecured notes (the “2022 Senior Notes”) as follows: $1.00 billion of 4.650% senior, unsecured notes due July 15, 2032; $1.20 billion of 4.950% senior, unsecured notes due July 15, 2052; and $800.0 million of 5.250% senior, unsecured notes due July 15, 2062. A portion of the net proceeds of the 2022 Senior Notes was used to complete a tender offer in July 2022 for $500.0 million of our Senior Notes due November 1, 2024 including associated redemption premiums, accrued interest and other fees and expenses. The transaction resulted in pre-tax net loss on extinguishment of debt of $13.3 million for the three months ended September 30, 2022. The remainder of the net proceeds were used for share repurchases and for general corporate purposes.
Prior to June 2022, the following aggregate principal amounts of senior, unsecured long-term notes were issued in the following periods: $750.0 million in February 2020 (the “2020 Senior Notes”), $1.20 billion in March 2019 (the “2019 Senior Notes”) and $2.50 billion in November 2014 (the “2014 Senior Notes”). These along with the 2022 Senior Notes are collectively referred to as the “Senior Notes.”
The original discounts on the Senior Notes are being amortized over the life of the debt. Interest is payable as follows: semi-annually on January 15 and July 15 of each year for the 2022 Senior Notes; semi-annually on March 1 and September 1 of each year for the 2020 Senior Notes; semi-annually on March 15 and September 15 of each year for the 2019 Senior Notes; and semi-annually on May 1 and November 1 of each year for the 2014 Senior Notes. The relevant indentures for the Senior Notes (collectively, the “Indenture”) include covenants that limit our ability to grant liens on our facilities and enter into sale and leaseback transactions.
In certain circumstances involving a change of control followed by a downgrade of the rating of a series of Senior Notes by at least two of Moody’s Investors Service, S&P Global Ratings and Fitch Inc., unless we have exercised our rights to redeem the Senior Notes of such series, we will be required to make an offer to repurchase all or, at the holder’s option, any part, of each holder’s Senior Notes of that series pursuant to the offer described below (the “Change of Control Offer”). In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of Senior Notes repurchased plus accrued and unpaid interest, if any, on the Senior Notes repurchased, up to, but not including, the date of repurchase.
Based on the trading prices of the Senior Notes on the applicable dates, the fair value of the Senior Notes as of September 30, 2022 and June 30, 2022 was $5.44 billion and $6.39 billion, respectively. While the Senior Notes are recorded at cost, the fair value of the long-term debt was determined based on quoted prices in markets that are not active; accordingly, the long-term debt is categorized as Level 2 for purposes of the fair value measurement hierarchy.
As of September 30, 2022, we were in compliance with all of our covenants under the Indenture associated with the Senior Notes.
Revolving Credit Facility    
As of March 31, 2022, we had in place a Credit Agreement (“Prior Credit Agreement”) providing for a $1.00 billion five-year unsecured Revolving Credit Facility with a maturity date of November 30, 2023 (“Prior Revolving Credit Facility”). In the fourth quarter of fiscal 2022, we replaced the Prior Credit Agreement and Prior Revolving Credit Facility with a renegotiated Credit Facility (“Credit Agreement”) and renegotiated unsecured Revolving Credit Facility (“Revolving Credit Facility”) having a maturity date of June 8, 2027 that allows us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $250.0 million in the aggregate. During the quarter ended September 30, 2022, we borrowed $300.0 million from the Revolving Credit Facility and repaid $150.0 million, leaving $425.0 million aggregate principal amount of borrowings outstanding at September 30, 2022.
We may borrow, repay and reborrow funds under the Revolving Credit Facility until the maturity date, at which time we may exercise two one-year extension options with the consent of the lenders. We may prepay outstanding borrowings under the Revolving Credit Facility at any time without a prepayment penalty.
Borrowings under the Revolving Credit Facility can be made as Term Secured Overnight Financing Rate (“SOFR”) Loans or Alternate Base Rate (“ABR”) Loans, at the Company’s option. In the event that Term SOFR is unavailable, any Term SOFR elections will be converted to Daily Simple SOFR, as long as it is available. Each Term SOFR Loan will bear interest at a rate per annum equal to the applicable Adjusted Term SOFR rate, which is equal to the applicable Term SOFR rate plus 10 bps that shall not be less than zero, plus a spread ranging from 75 bps to 125 bps, as determined by the Company’s credit ratings at the time. Each ABR Loan will bear interest at a rate per annum equal to the ABR plus a spread ranging from 0 bps to 25 bps, as determined by the Company’s credit ratings at the time. We are also obligated to pay an annual commitment fee on the daily undrawn balance of the Revolving Credit Facility, which ranges from 4.5 bps to 12.5 bps, subject to an adjustment in conjunction with changes to our credit rating. The applicable interest rates and commitment fees are also subject to adjustment based on the Company’s performance against certain environmental sustainability key performance indicators related to greenhouse gas emissions and renewable electricity usage. As of September 30, 2022, the all-in interest rate of the $425.0 million outstanding Term SOFR loans reflected the applicable Adjusted Term SOFR rate plus a spread of 100 bps and the applicable commitment fee on the daily undrawn balance of the Revolving Credit Facility was 9 bps.
Under the Credit Agreement, the maximum leverage ratio on a quarterly basis is 3.50 to 1.00, covering the trailing four consecutive fiscal quarters for each fiscal quarter, which can be increased to 4.00 to 1.00 for a period of time in connection with a material acquisition or a series of material acquisitions. As of September 30, 2022, our maximum allowed leverage ratio was 3.50 to 1.00.
We were in compliance with all covenants under the Credit Agreement as of September 30, 2022.
For additional details, refer to Note 8 “Debt” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.