Legence Corp.LGN
Legence Corp. Debt Disclosure
Debt
Debt obligations consist of the following (in thousands):
| Debt obligations | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Term loan | $ | 797,772 | $ | 1,590,350 | |||||||
| Notes payable | 27,345 | 27,083 | |||||||||
| Finance lease liabilities | 10,642 | 7,216 | |||||||||
| Total debt | 835,759 | 1,624,649 | |||||||||
| Less: Current portion | (16,694) | (22,984) | |||||||||
| Less: Unamortized debt issuance costs and discounts | (6,667) | (15,819) | |||||||||
| Long-term debt, net of current portion | $ | 812,398 | $ | 1,585,846 | |||||||
Future payments on debt as of December 31, 2025 are presented in the table below (in thousands):
| Year ending December 31, | |||||
| 2026 | $ | 12,963 | |||
| 2027 | 18,592 | ||||
| 2028 | 19,722 | ||||
| 2029 | 7,978 | ||||
| 2030 | 7,978 | ||||
| Thereafter | 757,884 | ||||
| Total | $ | 825,117 | |||
| 10,642 | |||||
| Total debt | $ | 835,759 | |||
Term loan
On December 16, 2020, Legence Holdings entered into a credit agreement with Jefferies Finance LLC as the administrative agent for a group of lenders, which provided for (a) a term loan credit facility, (b) a delayed draw term loan credit facility and (c) a $200.0 million revolving credit facility. The term loan matures on December 16, 2031, and is secured by substantially all assets of the Company, subject to customary exclusions. A portion of the term loan is held by entities associated with the Company and BX Aggregators. They are subject to the same terms described below, including interest payments, principal payments and maturity. The credit agreement has been amended from time to time, including as described below:
•On February 27, 2023, Legence Holdings amended the credit agreement to transition its benchmark interest from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”) for an additional credit spread adjustment of 0.10%.
•On July 31, 2023, Legence Holdings obtained a $155.0 million incremental term loan, and the proceeds were used to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $3.5 million related to this incremental term loan.
•On January 19, 2024, Legence Holdings obtained a $125.0 million incremental term loan, and the proceeds were used to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $0.9 million related to this incremental term loan.
•On June 18, 2024, Legence Holdings obtained a $125.0 million incremental term loan, and the proceeds were used to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $0.2 million related to this incremental term loan.
•On November 21, 2024, Legence Holdings obtained a $315.0 million incremental term loan, and the proceeds were used for general corporate purposes, including to fund a shareholder distribution, as discussed in "Note 12—Stockholders' Equity / Member's Equity,” and to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $0.4 million related to this incremental term loan.
•On February 6, 2025, the credit agreement was amended to reduce the interest rate and extend the maturity date of the term loan from December 16, 2027, to December 16, 2028. In connection with the amendment, Legence Holdings incurred $2.9 million of fees with third parties that are recognized in Credit agreement amendment fees on the Consolidated Statements of Operations.
•On September 8, 2025, Legence Holdings and certain of its subsidiaries amended the credit agreement to, among other things, facilitate the Corporate Reorganization.
•On September 15, 2025, the Company used IPO proceeds and cash on hand to prepay $780.3 million of the term loan debt. In connection with the prepayment, Legence Holdings recognized a loss on debt extinguishment of $5.7 million related to previously deferred discounts and debt issuance costs. These costs are recognized in Loss on debt extinguishment in the Consolidated Statements of Operations for the year ended December 31, 2025.
•On October 30, 2025, the credit agreement was amended to reduce the interest rate and extend the maturity date of the term loan from December 16, 2028, to December 16, 2031. In connection with the amendment, Legence Holdings incurred $3.7 million of fees, of which $3.0 million relate to third parties that are recognized in Credit agreement amendment fees on the Consolidated Statements of Operations.
Prior to the February 6, 2025 amendment, SOFR rate loans bore interest at SOFR plus 3.25% to 3.75% based on Legence Holdings's Consolidated First Lien Net Leverage Ratio (the "Net Leverage Ratio"), (generally defined as the ratio of indebtedness net of cash to consolidated pro forma adjusted EBITDA for the preceding four fiscal quarters), with a SOFR floor of 0.75%, plus a 0.10% credit spread adjustment. Base rate loans bore interest at 2.25% to 2.75% plus the base rate, which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate and (c) the SOFR rate for one month plus 1.00% ("Base Rate"), plus a 0.10% credit spread adjustment.
After the February 6, 2025 amendment and until October 30, 2025, SOFR rate loans bore interest at SOFR plus 2.75% to 3.25% with a SOFR floor of 0.75%. Base rate loans bore interest at 1.75% to 2.25% plus the Base Rate.
As a result of the IPO, the interest rate for term loans was reduced by 0.25%.
After the October 30, 2025 amendment, SOFR rate loans bear interest at SOFR plus 2.25% with a SOFR floor of 0.75%. Base rate loans bear interest at 1.25% plus the base rate.
Interest on SOFR rate loans is payable based on the selected interest period if less than three months or quarterly if the selected interest period is three months or longer. Interest on base rate loans is payable quarterly.
As of December 31, 2025, principal payments on the term loans of $2.0 million are payable quarterly, with any remaining principal balance due on December 16, 2031. Subject to the requirements of the agreement, Legence Holdings may also be required, as applicable, to make additional principal payments based on its excess cash flow, as defined in the agreement. The credit agreement contains customary representations and warranties and customary events of default, as well as certain affirmative and negative covenants. Legence Holdings is in compliance with the financial covenants as of December 31, 2025.
Subsequent to the year ended December 31, 2025, on January 2, 2026, Legence Holdings obtained a $200.0 million incremental term loan, and used the proceeds to fund acquisition-related payments. The incremental term loan increased the quarterly principal payments to $2.5 million.
Revolving line of credit
Legence Holdings has a revolving line of credit agreement with Jefferies Finance LLC as the administrative agent for a group of lenders, up to $200.0 million. Borrowings under the revolving line of credit agreement are secured by substantially all the assets of the Company.
On November 21, 2024, the maturity date of the revolving line of credit agreement was extended from December 16, 2025 to December 16, 2026.
On October 30, 2025, the revolving line of credit agreement was amended to increase the revolving line of credit capacity from $90.0 million to $200.0 million and extended the maturity date from December 16, 2026, to September 22, 2030.
Advances, including standby letters of credit, under the revolving line of credit agreement may be elected to be treated as either SOFR rate loans or base rate loans.
Prior to the October 30, 2025 amendment, SOFR rate loans bore interest at SOFR plus 3.50% to 4.00% based on Legence Holdings's Net Leverage Ratio, with a SOFR floor of 0%, and base rate loans bore interest at 2.50% to 3.00% plus the base rate, which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate and (c) the SOFR rate for one month plus 1.00%. As a result of the IPO, the interest rate for revolving credit loans and the fee rate on letters of credit was reduced by 0.25%. As a result of the October 30, 2025 amendment, SOFR rate loans bear interest at SOFR plus 2.25% and base rate loans bear interest at 1.25% plus the base rate.
Interest on SOFR rate loans is payable based on the selected interest period if less than three months or quarterly if the selected interest period is three months or longer. Interest on base rate loans is payable quarterly.
In addition, a revolver commitment fee is payable quarterly for the unused portion of the revolving line of credit at a rate of 0.38% to 0.50% based on Legence Holdings's Net Leverage Ratio. As of December 31, 2025, the rate for the unused portion of the revolving line of credit is 0.38%. The revolving line of credit may be used to issue standby letters of credit, which reduce the available borrowings. As of December 31, 2025, there are $5.7 million letters of credit outstanding under the revolving line of credit, with an interest rate of 2.38%.
As of December 31, 2025, $194.3 million was available to be borrowed under the revolving line of credit. There were no borrowings under the revolving line of credit as of December 31, 2025 or 2024.
Subsequent to the year ended December 31, 2025, on January 2, 2026, Legence Holdings borrowed $25.0 million under the revolving line of credit to fund working capital needs. The borrowing was repaid in January 2026.
The Company's revolving line of credit agreement, in addition to customary affirmative covenants, contains a springing financial maintenance covenant that requires the Consolidated First Lien Net Leverage Ratio to be less than 8.50 to 1.00 if certain testing conditions are satisfied. The springing financial maintenance covenant is only tested if as of the last day of a Test Period (generally quarterly) the amount of loans and/or letters of credit outstanding under the revolving line of credit is greater than 35% of the facility size. The springing financial maintenance covenant was not required to be tested during the periods presented in the Consolidated Financial Statements, and the Company is in compliance with the financial covenant as of December 31, 2025.
Notes payable
As part of the consideration transferred to acquire certain companies in prior years, the Company issued notes payable to former owners of the acquired companies. The former owners are considered related parties when they are employees or Parent interests holders. The Company can prepay these notes without penalty.
The Company issued a promissory note payable in connection with a 2022 acquisition. As of December 31, 2025 and 2024, the outstanding balance is $10.6 million and $10.0 million, respectively, and the carrying value is $10.1 million and $9.3 million, respectively, recorded in Long-term debt, net of current portion on the Consolidated Balance Sheets. The stated interest rate is 5.5%. All principal and interest are due at the earlier of the end of the 5-year term in 2027 or upon a sale event as defined in the note agreement.
The Company issued promissory notes payable in connection with the 2023 acquisition of San Jose Boiler and a 2022 acquisition, and the holders of the promissory notes were related parties as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, the outstanding balance is $13.7 million and $14.6 million, respectively, and the carrying value is $12.8 million and $13.4 million, respectively. As of December 31, 2025 and 2024, $10.8 million and $11.8 million, respectively, are recorded in Long-term debt, net of current portion on the Consolidated Balance Sheets. As of December 31, 2025 and 2024, $2.0 million and $1.6 million, respectively, is recorded in Current portion of long-term debt on the Consolidated Balance Sheets. The promissory notes have a range of stated interest rates from 5.5% to 6.0% and maturities ranging from 2026 to 2028, at which time all principal and interest are due. The promissory note related to the 2022 acquisition requires the Company to repay all principal and interest earlier if the Company undergoes a change of control as defined in the note agreement.
The Company also financed certain insurance-related payments. As of December 31, 2025 and 2024, the outstanding balance is $3.0 million with an interest rate of 7.4% and $2.1 million with an interest rate of 8.5%, respectively. The outstanding balance is included in Current portion of long-term debt.
Finance leases
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.