SHORT-TERM BORROWINGS, LONG-TERM DEBT, AND AVAILABLE CREDIT FACILITIES |
9 Months Ended |
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Sep. 30, 2026 | |
| Debt Disclosure [Abstract] | |
| SHORT-TERM BORROWINGS, LONG-TERM DEBT, AND AVAILABLE CREDIT FACILITIES | SHORT-TERM BORROWINGS, LONG-TERM DEBT, AND AVAILABLE CREDIT FACILITIES A summary of Qnity's short-term borrowings, long-term debt and available credit facilities can be found in Note 14 to the Consolidated Financial Statements included in the Company's Annual Report. If applicable, updates have been included in the respective section below. Short-term Borrowings Long-term debt due within one year was $23 million and $24 million at September 30, 2026 and December 31, 2025, respectively. These balances are presented net of current portion of unamortized debt issuance cost and are recorded in "Short-term borrowings" in the interim Condensed Consolidated Balance Sheets. Long-Term Debt Long-term debt at September 30, 2026 and December 31, 2025 was $3,996 million and $4,003 million, respectively. The estimated fair value of the Company's long-term borrowings was determined using Level 2 inputs within the fair value hierarchy. Based on quoted market prices for the same or similar issues, or on current rates offered to the Company for debt of the same remaining maturities, the fair value of the Company's long-term borrowings, including long-term debt due within one year, was $4,011 million and $4,154 million at September 30, 2026 and December 31, 2025, respectively. As of September 30, 2026, the Company was in compliance with all applicable covenants included in the terms of its debt arrangements. Senior Secured Credit Facilities On October 31, 2025 in connection with the Separation, the Company entered into a credit agreement (the "Credit Agreement") providing for (a) a five-year revolving credit facility in the aggregate committed amount of $1.25 billion (up to $100 million of such revolving facility is available for the issuance of letters of credit) (the "Senior Secured Revolving Facility"), and (b) a seven-year term loan facility in the aggregate principal amount of $2.35 billion (the "Senior Secured Term Loan Facility" and, together with the Senior Secured Revolving Facility, the "Senior Secured Credit Facilities"). The borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum equal to either of the following, plus, in each case, an applicable margin: (a) the base rate or (b) term Secured Overnight Financing Rate ("SOFR"). On July 1, 2026 (the "Repricing Closing Date"), the Company entered into the first amendment to the Credit Agreement (the "First Amendment"). The First Amendment reduced the applicable margin on term SOFR borrowings under the Senior Secured Term Loan Facility from 2.00% to 1.75% (and, in the case of base rate loans, from 1.00% to 0.75%), with no material changes to principal, maturity, amortization, or covenant structure. In connection with the repricing, the repriced borrowings under the Senior Secured Term Loan Facility are subject to a 1.00% premium on certain prepayments, repayments, and amendments constituting a “Repricing Event” occurring on or prior to the date that is six (6) months after the Repricing Closing Date. The Company analyzed the changes of the First Amendment on a lender-by-lender basis and determined that the transaction would primarily be accounted for as a modification, with a portion of it accounted for as debt extinguishment and corresponding new debt issuance. As a result, the Company recognized a loss on extinguishment of $3 million in the third quarter of 2026, primarily related to unamortized debt issuance costs related to the portion of the Senior Secured Term Loan Facility that was extinguished. As part of the First Amendment, the majority of the Senior Secured Term Loan Facility lenders elected to roll over their loan balances immediately preceding the repricing, while certain lenders elected to be repaid and reassign all or a portion of their loan balances. On July 1, 2026, approximately $1,978 million of the outstanding principal was rolled over as a non-cash financing activity. The remaining approximately $360 million of the outstanding principal balance was repaid and subsequently reissued. In connection with the First Amendment, the Company incurred $2 million of third-party fees in the third quarter of 2026. Fees attributable to the modified debt were expensed as incurred and recorded within Other income (expense) - net, in the unaudited interim Company's consolidated statement of operations during the three months ended September 30, 2026. Fees attributable to the issuance of new debt were capitalized as debt issuance costs. Capitalized debt issuance costs associated with the new debt issuance were less than $1 million. Committed Credit Facilities and Outstanding Letters of Credit The Company's $1,250 million Senior Secured Revolving Facility matures October 2030. As of September 30, 2026, there were no drawings on the facility, and outstanding letters of credit under the facility were approximately $12 million. Uncommitted Credit Facilities and Outstanding Letters of Credit Unused bank credit lines on uncommitted credit facilities were approximately $136 million at September 30, 2026. These lines are available to support short-term liquidity needs and general corporate purposes including letters of credit. Outstanding letters of credit and credit lines under these uncommitted credit facilities were approximately $27 million at September 30, 2026. These letters of credit support commitments made in the ordinary course of business.
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