Debt | DEBT Total debt consisted of the following: Debt Description Maturity Interest Rate as of June 27, 2020 June 27, 2020 December 28, 2019 ABL Facility May 31, 2024 1.43% $ 400 $ — ABS Facility (1) — — — 190 Initial Term Loan Facility (net of $3 and $4 June 27, 2023 1.92% 2,114 2,125 2019 Incremental Term Loan Facility (net of $33 September 13, 2026 3.07% 1,460 1,465 2020 Incremental Term Loan Facility (net of $12 of unamortized deferred financing costs) April 24, 2025 4.25% 288 — Senior Secured Notes (net of $14 of unamortized deferred financing costs) April 15, 2025 6.25% 986 — Unsecured Senior Notes (net of $4 of unamortized June 15, 2024 5.875% 596 596 Obligations under financing leases 2020–2030 1.63% - 6.17% 362 352 Other debt 2021–2031 3.12% - 4.99% 8 8 Total debt 6,214 4,736 Current portion of long-term debt (2) (149 ) (142 ) Long-term debt $ 6,065 $ 4,594 (1) The ABS Facility was paid in full on May 1, 2020 and subsequently terminated as further discussed below. (2) The current portion of long-term debt as of June 27, 2020 and December 28, 2019 for the Initial Term Loan Facility, the 2019 Incremental Term Loan Facility and the 2020 Incremental Term Loan Facility includes five principal payments due to the Company's 53-week fiscal year 2020. As of June 27, 2020 , after considering interest rate swaps that fixed the interest rate on $733 million of principal of the Initial Term Loan Facility described below, approximately 58% of the Company’s total debt bears interest at a floating rate. ABL Facility On May 4, 2020, USF entered into an amendment to its asset based senior secured revolving credit facility (the “ABL Facility”). Pursuant to this amendment, the total aggregate amount of commitments under the ABL Facility was increased from $1,600 million to $1,990 million . Extensions of credit under the ABL Facility are subject to availability under a borrowing base comprised of various percentages of the value of eligible accounts receivable, eligible inventory, eligible transportation equipment and certain unrestricted cash and cash equivalents, which, along with other assets, also serve as collateral for borrowings under the ABL Facility. As discussed below, on May 1, 2020 USF terminated the ABS Facility and transitioned the accounts receivable that secured the ABS Facility to the collateral pool that secures the ABL Facility. This transition increases the size of the borrowing base under the ABL Facility. The ABL Facility is scheduled to mature on May 31, 2024, subject to a springing maturity date in the event that more than $300 million of aggregate principal amount of earlier maturing indebtedness under either USF’s senior secured term loan facility or Unsecured Senior Notes remains outstanding on a date that is sixty (60) days prior to the maturity date for such senior secured term loan facility or Unsecured Senior Notes, respectively. Borrowings under the ABL Facility bear interest, at USF's periodic election, at a rate equal to the sum of an alternative base rate (“ABR”), as described under the ABL Facility, plus a margin ranging from 0.00% to 0.50% , or the sum of LIBOR plus a margin ranging from 1.00% to 1.50% , in each case based on USF’s excess availability under the ABL Facility. The margin under the ABL Facility as of June 27, 2020 was 0.25% for ABR loans and 1.25% for LIBOR loans. The ABL Facility also carries a commitment fee of 0.25% per annum on the average unused amount of the commitments under the ABL Facility. USF incurred $3 million of third-party costs in connection with the ABL Facility amendment which were capitalized as deferred financing costs. These deferred financing costs, along with $5 million of unamortized deferred financing costs related to the former asset based senior secured revolving credit facility, will be amortized through May 31, 2024, the ABL Facility maturity date. USF had $400 million of outstanding borrowings, and had issued letters of credit totaling $252 million , under the ABL Facility as of June 27, 2020 , Outstanding letters of credit included: (1) $217 million issued in favor of certain commercial insurers to secure USF’s obligations with respect to its self-insurance program, (2) $34 million issued to secure USF’s obligations with respect to certain real estate leases, and (3) $1 million issued for other obligations. There was available capacity of $1,275 million under the ABL Facility as of June 27, 2020 . ABS Facility On May 1, 2020, USF repaid in full all $542 million principal amount of borrowings then outstanding under the ABS Facility using cash on hand and subsequently terminated the ABS Facility. The accounts receivable that secured the ABS Facility were transitioned to the collateral pool that secures the ABL Facility. The Company recorded a debt extinguishment loss of $1.3 million in interest expense, consisting of a write-off of unamortized debt costs associated with the ABS Facility of $1.1 million , as well as $0.2 million of third-party costs associated with the termination of the ABS Facility. Term Loan Facilities Under its term loan credit agreement, USF has entered into an initial senior secured term “B” loan facility in an aggregate principal amount of $2.2 billion (the “Initial Term Loan Facility”), an incremental senior secured term “B” loan facility in an aggregate principal amount of $1.5 billion (the “2019 Incremental Term Loan Facility”), and an incremental senior secured term loan facility in an aggregate principal amount of $700 million (the "2020 Incremental Term Loan Facility"). Borrowings under the 2019 Incremental Term Loan Facility were used to pay a portion of the purchase price for the acquisition of the Food Group and related fees and expenses, and borrowings under the 2020 Incremental Term Loan Facility were used to pay a portion of the purchase price for the acquisition of Smart Foodservice and related fees and expenses (see Note 4). The Initial Term Loan Facility had a carrying value of $2.1 billion , net of $3 million of unamortized deferred financing costs as of June 27, 2020 . The table above reflects the interest rate on the unhedged portion of the Initial Term Loan Facility as of June 27, 2020 . The effective interest rate of the portion of the Initial Term Loan Facility subject to interest rate hedging agreements was 3.45% as of June 27, 2020 . The Initial Term Loan Facility is scheduled to mature on June 27, 2023. The 2019 Incremental Term Loan Facility entered into to finance a portion of the Food Group acquisition, had a carrying value of $1,460 million , net of $33 million of unamortized deferred financing costs as of June 27, 2020 . Borrowings under the Incremental Term Loan Facility bear interest at a rate per annum equal to, at USF’s option, either the sum of LIBOR plus a margin of 2.00% , or the sum of an alternative base rate, determined in accordance with the term loan credit agreement, plus a margin of 1.00% . The 2019 Incremental Term Loan Facility is scheduled to mature on September 13, 2026. On April 24, 2020, USF entered into the “2020 Incremental Term Loan Facility” and used the proceeds to fund, in part, the Smart Foodservice acquisition. On April 28, 2020, USF repaid $400 million of the principal amount of the 2020 Incremental Term Loan Facility with a portion of the proceeds from the senior secured notes offering further discussed below. In connection with the 2020 Incremental Term Loan Facility repayment, the Company applied debt extinguishment accounting and recorded a debt extinguishment loss of $2 million in interest expense, consisting of a write-off of debt issuance costs associated with the $400 million in principal amount of the 2020 Incremental Term Loan Facility that was repaid. Lender fees and third-party costs incurred of $15 million associated with the remaining $300 million in principal amount of the 2020 Incremental Term Loan Facility were capitalized as deferred financing costs and will be amortized through April 24, 2025, which is the 2020 Incremental Term Loan Facility maturity date. Borrowings under the 2020 Incremental Term Loan Facility will bear interest at a rate per annum equal to, at USF’s option, either LIBOR plus a margin of 3.25% (subject to a LIBOR “floor” of 1.00% ), or an alternative base rate plus a margin of 2.25% . The interest rate margins on the 2020 Incremental Term Loan Facility will increase by 0.50% on each of April 28, 2021, April 28, 2022, April 28, 2023 and April 28, 2024, respectively. USF’s obligations under the Initial Term Loan Facility, the 2019 Incremental Term Loan Facility and the 2020 Incremental Term Loan Facility are guaranteed by certain of USF’s subsidiaries, and those obligations and guarantees are secured by substantially all of the non-real estate assets of USF and the subsidiary guarantors. Senior Secured Notes On April 28, 2020, USF completed a private offering of $1.0 billion aggregate principal amount of its 6.25% Secured Notes due April 15, 2025. USF used the net proceeds of the Secured Notes to repay $400 million in principal amount of the 2020 Incremental Term Loan Facility and the balance of the net proceeds has been and will be used for general corporate purposes. The Secured Notes had a carrying value of $986 million , net of $14 million of unamortized deferred financing costs, as of June 27, 2020 . The Secured Notes mature April 15, 2025. On or after April 15, 2022, the Secured Notes are redeemable, at USF’s option, in whole or in part at a price of 103.13% of the remaining principal, plus accrued and unpaid interest, if any, to the redemption date. On or after April 15, 2023 and April 15, 2024, the optional redemption price for the Secured Notes declines to 101.56% and 100.00% , respectively, of the remaining principal amount, plus accrued and unpaid interest, if any, to the redemption date. Debt Covenants The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends, or engage in mergers or consolidations. USF had $1.3 billion of restricted payment capacity under these covenants, and approximately $2.7 billion of its net assets were restricted considering the net deferred tax assets and intercompany balances that eliminate in consolidation as of June 27, 2020 . |