| Debt | NOTE I – DEBT The following table summarizes Ashland’s current and long-term debt at September 30, 2021 and 2020.
(In millions) 2021 2020
4.750 % notes, due 2022 $ — $ 411
3.375 % Senior Notes, due 2031 450 —
2.00 % Senior Notes, due 2028 (Euro 500 million principal) 580 587
6.875 % notes, due 2043 282 282
Term loan A 250 250
Accounts receivable securitizations 117 177
6.50 % junior subordinated notes, due 2029 57 55
Revolving credit facility 225 80
Other (a) 9 11
Total debt 1,970 1,853
Short-term debt (includes current portion of long-term debt) ( 374 ) ( 280 )
Long-term debt (less current portion and debt issuance costs) $ 1,596 $ 1,573
(a) Other includes $ 17 million and $ 15 million of debt issuance costs as of September 30, 2021 and 2020 , respectively. Additionally, as of both September 30, 2021 and 2020, Other included a European short-term loan facility with an outstanding balance of $ 23 million. At September 30, 2021 , Ashland’s total debt had an outstanding principal balance of $ 2,027 million, discounts of $ 40 million and debt issuance costs of $ 17 million. The scheduled aggregate maturities of long-term debt for the next five fiscal years (including the current portion and excluding debt issuance costs) are as follows: $ 9 million in 2022, $ 22 million in 2023, $ 44 million in 2024, $ 175 million in 2025 and zero in 2026. Credit Agreements and Refinancing Note Issuance and existing notes tender During August 2021, a subsidiary of Ashland, Ashland LLC, completed the issuance of 3.375 % senior unsecured notes due 2031 with an aggregate principal amount of $ 450 million (the 2031 Notes). The notes are senior unsecured obligations of Ashland LLC and initially guaranteed on an unsecured basis by Ashland Global Holdings Inc. Ashland used the net proceeds of the offering (after deducting initial purchasers' discounts and other fees and expenses) to redeem its obligations under the existing 4.750 % senior notes due 2022 described below in debt repayments, and to pay fees and expenses associated therewith. Ashland incurred $ 6 million of new debt issuance costs in connection with the 2031 Notes, which is amortized using the effective interest method over the Notes' term and was included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). During January 2020, a subsidiary of Ashland, Ashland Services B.V., completed the issuance of 2.00 % senior unsecured notes due 2028 with an aggregate principal amount of € 500 million (the 2028 Notes). The notes are senior unsecured obligations of Ashland Services B.V and initially guaranteed on an unsecured basis by each of Ashland Global Holdings Inc. and Ashland LLC. Ashland used the net proceeds of the offering (after deducting initial purchasers’ discounts and other fees and expenses), together with the proceeds of the new term loan facility and other funds of Ashland LLC or its subsidiaries, to repurchase the existing notes described below in cash tender offers, and to pay fees and expenses associated therewith. Ashland incurred $ 8 million of new debt issuance costs in connection with the 2028 Notes, which is amortized using the effective interest method over the Notes’ term. 2020 Credit Agreement During January 2020, Ashland LLC and Ashland Services B.V., subsidiaries of Ashland, entered into a new senior unsecured credit agreement (the 2020 Credit Agreement) with a group of lenders, replacing the 2017 Credit Agreement. The 2020 Credit Agreement provides for (i) a $ 600 million unsecured five-year revolving credit facility (the 2020 Revolving Credit Facility) and (ii) a $ 250 million unsecured five-year term loan facility (the 2020 Term Loan Facility). The 2020 Credit Agreement is guaranteed by Ashland Global Holdings Inc. and Ashland Chemco Inc., and the obligations of Ashland Services B.V. under the 2020 Revolving Credit Facility are guaranteed by Ashland LLC. Proceeds of borrowings under the 2020 Revolving Credit Facility were used to refinance the Ashland’s existing 2017 Credit Agreement, to provide ongoing working capital and for other general corporate purposes. The proceeds under the 2020 Term Loan Facility were used to refinance a portion of Ashland’s outstanding 4.750 % Senior Notes due 2022 , 6.875 % Senior Notes due 2043 and Hercules LLC’s 6.500 % junior subordinated debentures. At Ashland’s option, loans issued under the 2020 Credit Agreement bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. Loans initially bear interest at LIBOR plus 1.375 % per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.375 %, in the alternative, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between LIBOR plus 1.250 % per annum and LIBOR plus 1.750 % per annum (or between the alternate base rate plus 0.250 % per annum and the alternate base rate plus 0.750 % annum), based upon the consolidated net leverage ratio (as defined in the 2020 Credit Agreement) at such time. In addition, Ashland is initially required to pay fees of 0.20 % per annum on the daily unused amount of the 2020 Revolving Facility through and including the date of delivery of a compliance certificate, and thereafter the fee rate will fluctuate between 0.15 % and 0.30 % per annum, based upon the consolidated net leverage ratio. The Credit Facilities may be prepaid at any time without premium. The term loan A (TLA) Facility will not amortize in each of the first and second years and will amortize at a rate of 5.0 % per annum, 10 % per annum and 20 % per annum in the third, fourth and fifth years, respectively (payable in equal quarterly installments), with the outstanding balance of the TLA Facility to be paid on January 10, 2025 . The 2020 Credit Agreement contains financial covenants for leverage and interest coverage ratios akin to those in effect under the 2017 Credit Agreement. The 2020 Credit Agreement contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional indebtedness, further negative pledges, investments, mergers, sale of assets and restricted payments, and other customary limitations. Ashland incurred $ 4 million of new debt issuance costs in connection with the 2020 Credit Agreement, of which $ 1 million was expensed immediately during 2020 within the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). The remaining balance is amortized using either the effective interest method or straight-line method. Financing activity related to the 2017 Credit Agreement During 2019, Ashland utilized proceeds from the sale of its Composites business (excluding the Maleic business) and the Marl facility to repay the remaining principal balance of the TLA Facility and the TLB Facility. As a result of these repayments, Ashland recognized accelerated amortization of previously capitalized debt issuance costs of $ 6 million during 2019, which was included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). During January 2020, Ashland entered into the 2020 Credit Agreement, replacing the 2017 Credit Agreement. As a result of the termination of the 2017 Credit Agreement, Ashland recognized a $ 1 million charge for accelerated amortization of previously capitalized debt issuance costs during 2020, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Debt repayments and repurchases Cash repatriation During 2021 and 2020, Ashland repatriated approximately $ 131 million and $ 576 million (including the proceeds of the 2020 senior notes due 2028), respectively, in cash that was primarily used to repay existing debt, principally portions of the 4.75 % senior notes due 2022 , the 6.875 % senior notes due 2043 and the 6.5 % junior notes in 2020 and the TLA Facility and TLB Facility in 2019 (as previously discussed). 2021 Debt repayments and repurchases Redemption of 4.750% senior notes due 2022 During 2021, Ashland redeemed all of its outstanding 4.750 % senior notes due 2022 (the 2022 Notes), of which approximately $ 411 million were outstanding. Ashland recognized a $ 1 million charge related to accelerated accretion on debt discounts and accelerated amortization of previously capitalized debt issuance costs, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Proceeds from the 2031 Notes were used to pay for the redemption. Total premiums paid for all the tender offers in 2021 noted above were $ 16 million, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). 2020 Debt repayments and repurchases Tender offers of 4.750% senior notes due 2022 During 2020, Ashland executed tender offers of the 2022 Notes. As a result of these repurchases, the carrying values of the 2022 Notes was reduced by $ 670 million. Ashland recognized a $ 5 million charge related to accelerated accretion on debt discounts and accelerated amortization of previously capitalized debt issuance costs, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Tender offers of 6.875% notes due 2043 During 2020, Ashland executed tender offers of its 6.875 % notes due 2043 (the 2043 Notes). As a result of these repurchases, the carrying values of the 2043 Notes was reduced by $ 92 million. Ashland recognized a $ 1 million charge related to accelerated accretion on debt premiums and accelerated amortization of previously capitalized debt issuance costs, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Tender offers of 6.500% Junior Subordinated Debentures due 2029 During 2020, Ashland executed tender offers of Hercules LLC’s 6.500 % junior subordinated debentures due 2029 (the 2029 Junior Debentures). As a result of these repurchases, the carrying values of the 2029 Junior Debentures was reduced by $ 2 million. Total premiums paid for all the tender offers in 2020 noted above were $ 59 million, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). 2019 Debt repayments and repurchases Repayment of the Term loan A due 2022 During 2019, Ashland repaid all of the outstanding principal balance of its term loan A for a total of $ 195 million. As a result of these repayments, Ashland recognized accelerated amortization of previously capitalized debt issuance costs of $ 1 million during 2019, which was included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Repayment of the Term loan B due 2024 During 2019, Ashland repaid all of the outstanding principal balance of its term loan B for a total of $ 593 million. As a result of these repayments, Ashland recognized accelerated amortization of previously capitalized debt issuance costs of $ 5 million during 2019, which was included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). Redemption of 9.35% notes due 2019 During 2019, Ashland redeemed all of its outstanding 9.35 % medium term notes due 2019 , of which approximately $ 5 million were outstanding. Cash on hand was used to pay for the redemption. Open market repurchases of 4.750% notes due 2022 and 6.875% notes due 2043 During 2019, Ashland executed open market repurchases of its 4.750 % notes due 2022 (2022 Senior Notes) and its 6.875 % notes due 2043 (2043 Senior Notes). As a result of these repurchases, the carrying values of the 2022 and 2043 Senior Notes were reduced by $ 3 million and $ 1 million, respectively. Accounts receivable facilities and off-balance sheet arrangements U.S. accounts receivable sales program On March 17, 2021, a wholly-owned, bankruptcy-remote special purpose and consolidated Ashland subsidiary entered into an agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of two other U.S. based Ashland subsidiaries. Under the agreement, Ashland can transfer whole receivables up to a limit established by the buyer, which is currently set at $ 125 million between February and October of each year and up to $ 100 million all other times. Ashland’s continuing involvement is limited to servicing the receivables, including billing, collections and remittance of payments to the buyers as well as a limited guarantee on over-collateralization. The arrangement terminates on May 31, 2023, unless terminated earlier pursuant to the terms of the agreement. Ashland determined that any receivables transferred under this agreement are put presumptively beyond the reach of Ashland and its creditors, even in bankruptcy or other receivership. Ashland received a true sale at law and non-consolidation opinions to support the legal isolation of these receivables. Ashland accounts for the receivables transferred to buyers as sales. Ashland recognizes any gains or losses based on the excess of proceeds received net of buyer’s discounts and fees compared to the carrying value of the assets. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statements of Consolidated Cash Flows. Losses on sale of assets, including related transaction expenses are recorded within the Net interest and other expense (income) caption of the Statements of Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting guarantee liability when warranted. When applicable, Ashland discloses the amount of the receivable that serves as over-collateralization as a restricted asset. Ashland recognized a $ 1 million loss within the Statements of Consolidated Comprehensive Income (Loss) for 2021 within the net interest and other expense caption associated with sales under the program. Ashland has recorded $ 113 million of sales against the buyer’s limit, which was $ 125 million at September 30, 2021. Ashland transferred $ 167 million in receivables to the SPE as of September 30, 2021. Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2021 of less than $ 1 million. As of September 30, 2021, the year-to-date gross cash proceeds received for receivables transferred and derecognized was $ 432 million, of which $ 319 million was collected by Ashland in our capacity as a servicer of the receivables and remitted to the buyer. The difference of $ 113 million represents the proceeds from new transfers of receivables as of September 30, 2021 of which $ 21 million related to Performance Adhesives. 2018 foreign accounts receivable securitization During July 2018, Ashland entered into a € 115 million accounts receivable securitization facility (the Program) for the transfer by certain subsidiaries of Ashland (the Sellers) directly or indirectly to Ester Finance Titrisation (the Purchaser), a wholly-owned subsidiary of Crédit Agricole Corporate and Investment Bank (the Arranger), of certain receivables and/or collections originated by the Sellers towards certain corporate debtors located in multiple European jurisdictions and denominated in multiple currencies. The Program originally had a term of two years , but was extended to August 2021 in September 2019. During July 2021, the termination date of the Program was extended to July 2023 . During July 2020, the available funding for qualified receivables under the accounts receivable securitization facility decreased from € 115 million to € 100 million. Under the Program, each Seller will assign, on an ongoing basis, certain of its accounts receivable and the right to the collections on those accounts receivable to the Purchaser. Under the terms of the Program, the Sellers could, from time to time, obtain up to € 100 million from the Purchaser through the sale of an undivided interest in such accounts receivable and collections. Ashland accounts for the securitization facility as secured borrowings, and the receivables sold pursuant to the facility are included in the Consolidated Balance Sheets as accounts receivable. Fundings under the Program will be repaid as accounts receivable are collected, with new fundings being advanced (through daily advanced purchase price) as new accounts receivable are originated by the Sellers and assigned to the Purchaser, with settlement occurring monthly. Ashland classifies any borrowings under this facility as a short-term debt instrument within the Consolidated Balance Sheets. Once sold to the Purchaser, the accounts receivable and rights to collection described above are separate and distinct from each Sellers’ own assets and are not available to its creditors should such Sellers become insolvent. At September 30, 2021 and 2020 , the outstanding amount of accounts receivable transferred by Ashland to the Purchaser was $ 152 million and $ 131 million, respectively, and there were $ 117 million and $ 93 million, respectively, of borrowings (denominated in multiple currencies) under the facility. The weighted-average interest rate for this instrument was 0.6 % and 1.2 % for 2021 and 2020, respectively. 2012 U.S. accounts receivable securitization On August 31, 2012, Ashland entered into a $ 350 million accounts receivable securitization facility pursuant to (i) a Sale Agreement, among Ashland and certain of its direct and indirect subsidiaries (each an Originator and collectively, the Originators) and CVG Capital III LLC, a wholly-owned “bankruptcy remote” special purpose subsidiary of the Originators (CVG) and (ii) a Transfer and Administration Agreement, among CVG, each Originator, Ashland, as Master Servicer, certain Conduit Investors, Uncommitted Investors, Letter of Credit Issuers, Managing Agents, Administrators and Committed Investors, and The Bank of Nova Scotia, as agent for various secured parties (the Agent). The Transfer and Administration Agreement had a term of three years but was extendable at the discretion of Ashland and the Investors. Under the Sale Agreement, each Originator transfers, on an ongoing basis, certain of its accounts receivable, certain related assets and the right to the collections on those accounts receivable to CVG. Ashland accounts for the securitization facility as secured borrowings, and the receivables sold pursuant to the facility are included in the Consolidated Balance Sheets as accounts receivable. Fundings under the Transfer and Administration Agreement will be repaid as accounts receivable are collected, with new fundings being advanced (through daily reinvestments) as new accounts receivable are originated by the Originators and transferred to CVG, with settlement generally occurring monthly. Ashland continues to classify any borrowings under this facility as a short-term debt instrument within the Consolidated Balance Sheets. Once sold to CVG, the accounts receivable, related assets and rights to collection described above are separate and distinct from each Originator’s own assets and are not available to its creditors should such Originator become insolvent. Substantially all of CVG’s assets have been pledged to the Agent in support of its obligations under the Transfer and Administration Agreement. During 2016, the termination date of the commitments under the Transfer and Administration Agreement was extended from December 31, 2015, the previous termination extension date, to March 22, 2017. During March 2017, this facility was extended for an additional year with similar terms as the previous facility agreement. During March 2018, the termination date of the accounts receivable securitization facility was extended from March 2018 to March 2020. During March 2020, the termination date of the accounts receivable securitization was extended from March 2020 to March 2021. The available funding for qualified receivables under the accounts receivable securitization facility increased from $ 100 million to $ 115 million, however this was decreased back to $ 100 million on August 30, 2019 in conjunction with the Composites and Marl facility divestiture. On March 17, 2021, Ashland terminated its U.S. 2012 Accounts Receivable Securitization Facility. This program had no outstanding borrowings at its termination. At September 30, 2020, the outstanding amount of accounts receivable pledged was $ 151 million and borrowings under the facility totaled $ 84 million. The weighted-average interest rate for this instrument was 1.8 % for 2020. This program did not meet the criteria for sale accounting and was reported as secured borrowing under ASC 860. Other debt At September 30, 2021 and 2020 , Ashland held other debt totaling $ 83 million and $ 81 million, respectively, comprised primarily of a European short-term loan facility, the 6.50 % notes due 2029 and other notes. Available borrowing capacity and liquidity The borrowing capacity remaining under the $ 600 million 2020 Revolving Credit Facility was $ 356 million due to an outstanding balance of $ 225 million, as well as a reduction of $ 19 million for letters of credit outstanding at September 30, 2021. Ashland's total borrowing capacity at September 30, 2021 was $ 356 million, which included zero of available capacity from the foreign 2018 accounts receivable securitization facility. Additionally, Ashland has $ 12 million available liquidity under its current U.S. Accounts Receivable Sales Program. Covenants related to current Ashland debt agreements Ashland’s debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of September 30, 2021, Ashland was in compliance with all debt agreement covenant restrictions. The maximum consolidated net leverage ratio permitted under Ashland’s most recent credit agreement (the 2020 Credit Agreement) is 4.0 . The 2020 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the 2020 Credit Agreement defines Covenant Adjusted EBITDA as net income plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, non-cash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any non-cash gains or other items increasing net income. The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled within item 7 of this document. In general, consolidated indebtedness includes debt plus all purchase money indebtedness, banker’s acceptances and bank guaranties, deferred purchase price of property or services, attributable indebtedness and guarantees. At September 30, 2021 , Ashland’s calculation of the consolidated net leverage ratio was 3.2 . The minimum required consolidated interest coverage ratio under the 2020 Credit Agreement is 3.0 . The 2020 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest charges for any measurement period. At September 30, 2021 , Ashland’s calculation of the consolidated interest coverage ratio was 9.4 . Guarantee of senior notes Ashland Global Holdings Inc. fully and unconditionally guaranteed the 2.00 % notes due 2028 , 3.375 % notes due 2031 and 6.875 % notes due 2043 and has no significant independent assets or operations. Net interest and other expense (income)
(In millions) 2021 2020 2019
Interest expense (a) $ 69 $ 88 $ 114
Interest income ( 1 ) ( 1 ) ( 2 )
Loss on the accounts receivables sale program 1 — —
Investment securities income (b) ( 33 ) ( 30 ) ( 17 )
Other financing costs (c) 20 62 4
$ 56 $ 119 $ 99
(a) Includes $ 1 million , $ 8 million and $ 6 million of accelerated accretion and/or amortization for original issue discounts and debt issuance costs during 2021, 2020 and 2019 , respectively. (b) Represents investment income related to the restricted investments discussed in Note F. (c) Includes costs of $ 16 million related to early redemption premium payments for the 2022 notes during 2021, and $ 59 million related to early redemption premium payments for the 2022 Notes, 2043 Notes and 2029 Junior Debentures during 2020. The following table details the debt issuance cost and original issue discount amortization included in interest expense during 2021, 2020 and 2019.
(In millions) 2021 2020 2019
Normal amortization $ 6 $ 7 $ 7
Accelerated amortization (a) 1 8 6
Total $ 7 $ 15 $ 13
(a) Fiscal year 2021 includes $ 1 million of accelerated debt issuance cost for the 2022 Notes. Fiscal year 2020 includes $ 2 million of accelerated accretion of the recorded debt discount for the 2022 Notes, 2029 Junior Debentures and 2043 Notes, while the remaining amounts in each year related to the accelerated amortization of debt issuance costs. |
