v3.26.3
Debt
 9 Months Ended
Sep. 30, 2026
Debt Disclosure [Abstract]  
Debt Disclosure Debt
2022 Credit Facility
The LLC is party to a Third Amended and Restated Credit Agreement, dated July 12, 2022, as amended from time to time, which we refer to as the “2022 Credit Facility.” On August 6, 2026, the LLC entered into a Sixth Amendment to the 2022 Credit Facility (the “Sixth Amendment”) with Bank of America, N.A. (the “Administrative Agent”), in its capacity as administrative agent for the lenders, swing line lender, and L/C issuer. The Sixth Amendment, among other things, waived the milestone fees that otherwise would have been payable under the Fifth Amendment Transaction Letter, reduced the aggregate revolving commitments under the Credit Agreement from $100,000,000 to $54,000,000, and extended the maturity date to January 12, 2028. The Sixth Amendment also made several other changes to the Credit Agreement, including reducing the portion of Combined Eligible Availability that may be attributable to any individual subsidiary business from 40% to 25%, removing the Incremental Delayed Draw Term Loan facility, permitting Rimports Holdings, Inc., any other individual subsidiary business approved by the administrative agent, and their respective subsidiaries to enter into supply chain financing arrangements, and permitting the Company and its subsidiaries to pay fees under the Ninth Amended and Restated Management Services Agreement, dated July 12, 2026, between the Company and Compass Group Management LLC. In addition, the Sixth Amendment reduced the aggregate amount available under the incremental facilities from $250,000,000 to $150,000,000. Under the Sixth Amendment, the Company is required to maintain a Consolidated Total Leverage Ratio of no more than (a) 5.75 to 1.00 for the fiscal quarter ending September 30, 2026, (b) 5.25 to 1.00 for the fiscal quarters ending December 31, 2026 and March 31, 2027, (c) 5.00 to 1.00 for fiscal quarters ending June 30, 2027 and September 30, 2027 and (d) 4.50 to 1.00 for each fiscal quarter thereafter. If the Company has not repaid the term loans under the Credit Agreement on or before December 31, 2026, the Company will be required to pay a milestone fee in the amount of $4,000,000.
In October 2026, the Company used the $29.8 million distribution received in September 2026 in connection with the Lugano bankruptcy to repay a portion of the term loans under the 2022 Credit Facility.
At September 30, 2026, there were no revolving borrowings and approximately $1.0 million of outstanding letters of credit under the 2022 Credit Facility, resulting in net availability of approximately $53.0 million. Amounts outstanding under the 2022 Credit Facility mature on January 12, 2028.
Borrowings bear interest at either a base rate or Term SOFR, plus an applicable margin based on the Company’s Consolidated Total Leverage Ratio, which applicable margin ranges from 0.50% to 2.25% for borrowings bearing interest based on the base rate and from 1.50% to 3.25% for borrowings bearing interest based on Term SOFR. The 2022 Credit Facility is secured by substantially all assets of the Company, including equity interests in, and loans to, its consolidated subsidiaries, and contains customary affirmative and negative covenants, financial covenants, restrictions on certain restricted payments and management fee payments, enhanced reporting requirements, and requirements to use net cash proceeds from certain dispositions and deleveraging transactions to repay indebtedness.
Senior Notes
The Company has outstanding $1,029.4 million aggregate principal amount of 5.250% Senior Notes due April 15, 2029 (the “2029 Senior Notes”) and $308.8 million aggregate principal amount of 5.000% Senior Notes due January 15, 2032 (the “2032 Senior Notes”), which we refer to collectively as the “Senior Notes.” Interest on the 2029 Senior Notes is payable in cash semi-annually on April 15 and October 15 of each year, and interest on the 2032 Senior Notes is payable in cash semi-annually on January 15 and July 15 of each year. The outstanding principal amounts of the Senior Notes reflect paid-in-kind payments made in 2025 in connection with an indenture forbearance arrangement which was described in detail in the 2025 Form 10-K.
The Senior Notes rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior in right of payment to all of the Company’s future subordinated indebtedness, if any. The Senior Notes are effectively subordinated to the Company’s existing and future secured indebtedness, including indebtedness under the 2022 Credit Facility, to the extent of the value of the assets securing such indebtedness. The indentures governing the Senior Notes contain customary restrictive covenants, subject to certain exceptions, including limitations on the incurrence of additional indebtedness, restricted payments, transactions with affiliates, asset sales, mergers and consolidations, subsidiary guarantees, liens, sale-leaseback transactions and certain investments.
Lugano Financing Arrangements
Lugano entered into various financing arrangements with third parties that were not recorded in the financial statements of Lugano as debt. In connection with the Lugano Investigation, the Company determined that the inventory and sales transactions recorded in connection with these financing agreements were invalid because they were inconsistent with the underlying substance of the agreements. These financing arrangements represented debt and the financing arrangements and related interest expense were recorded in the consolidated financial statements. Interest expense was determined based on documentation related to the underlying arrangement or, when no documentation existed related to the financing arrangement, imputed based on various factors associated with the arrangement. Lugano recorded $20.8 million in interest expense in the nine months ended September 30, 2025 related to these financing arrangements which is included in interest expense in the consolidated statement of operations.
Covenants
The Company is subject to customary affirmative and restrictive covenants under the 2022 Credit Facility, including financial maintenance covenants. The following table reflects the financial covenant requirements and actual ratios as of September 30, 2026 under the 2022 Credit Facility, as amended by the Sixth Amendment:
Description of Required Covenant RatioCovenant Ratio RequirementActual Ratio
Consolidated Fixed Charge Coverage RatioGreater than or equal to 1.00:1.00
1.82:1.00
Consolidated Senior Secured Leverage RatioLess than or equal to 2.50: 1.00
0.48:1.00
Consolidated Total Leverage RatioLess than or equal to 5.75: 1.00
4.53:1.00
As of September 30, 2026, the Company was in compliance with all covenants as defined by the 2022 Credit Facility, as amended.
The following table provides the Company’s outstanding long-term debt and effective interest rates at September 30, 2026 and December 31, 2025 (in thousands):
September 30, 2026December 31, 2025
Effective Interest RateAmountEffective Interest RateAmount
2029 Senior Notes5.25%$1,029,371 8.15%$1,029,371 
2032 Senior Notes5.00%308,811 7.93%308,811 
2022 Credit Facility - Term Loan7.11%233,500 10.14%552,500 
Unamortized premiums and debt issuance costs (10,410)(13,365)
Total debt$1,561,272 $1,877,317 
Less: Current portion of long-term debt(75,000)(37,500)
Long-term debt$1,486,272 $1,839,817 
The contractual annual maturities of the Company's debt obligations at September 30, 2026 are as follows (in thousands):
Remainder of 2026$11,250 
202745,000 
2028177,250 
20291,029,371 
2030— 
2031 and thereafter308,811 
$1,571,682 

The Senior Notes consisted of the following carrying value and estimated fair value (in thousands):
Fair Value Hierarchy LevelSeptember 30, 2026
Maturity DateRateCarrying ValueFair Value
2032 Senior NotesJanuary 15, 20325.000 %2$308,811 $273,298 
2029 Senior NotesApril 15, 20295.250 %2$1,029,371 $965,035 
Debt Issuance Costs
Deferred debt issuance costs represent the costs incurred in connection with the Company's financing arrangements. Debt issuance costs associated with the revolving loan commitments under the 2022 Credit Facility are recorded in other non-current assets because the commitments are available under a revolving credit arrangement. Debt issuance costs associated with term loans under the 2022 Credit Facility and the Senior Notes are recorded as a reduction of the related debt balances.The Company recorded $1.7 million in deferred debt issuance costs related to the Sixth Amendment of the 2022 Credit Facility in the three months ended September 30, 2026. The Sixth Amendment to the 2022 Credit Facility reduced the aggregate borrowing amount available for revolving commitments to $54 million from $100 million. As a result of the reduction in available revolving commitments, the Company wrote-off a portion of the deferred financing costs associated with the 2022 Revolving Credit Facility and recognized $1.0 million in loss on debt modification in the third quarter of 2026.
The following table summarizes debt issuance costs at September 30, 2026 and December 31, 2025, and the balance sheet classification in each of the periods presented (in thousands):
September 30, 2026December 31, 2025
Deferred debt issuance costs $39,518 $38,906 
Accumulated amortization(27,654)(21,849)
Deferred debt issuance costs, net$11,864 $17,057 
Balance sheet classification:
Other noncurrent assets$1,454 $3,692 
Long-term debt10,410 13,365 
$11,864 $17,057