Zurn Elkay Water Solutions CorpZWS
Zurn Elkay Water Solutions Corp Debt Disclosure
Long-Term Debt
Cash interest paid for the years ended December 31, 2024, 2023, and 2022 was $30.9 million, $36.1 million and $24.3 million, respectively.
Long-term debt is summarized as follows (in millions):
| December 31, 2024 | December 31, 2023 | |||||||||||||
| Term loan (1) | $ | 475.0 | $ | 473.6 | ||||||||||
| Finance leases (2) | 20.6 | 21.7 | ||||||||||||
| Total | 495.6 | 495.3 | ||||||||||||
| Less current maturities | 0.8 | 0.9 | ||||||||||||
| Long-term debt | $ | 494.8 | $ | 494.4 | ||||||||||
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(1)Includes unamortized debt issuance costs of $5.4 million and $6.8 million at December 31, 2024 and December 31, 2023, respectively.
(2)See more information related to finance leases within Note 13, Leases.
Senior Secured Credit Facility
On October 4, 2021, ZBS Global, Inc. (“Holdings”), Zurn Holdings, Inc., Zurn LLC (together, the “Original Borrowers”), the lenders from time to time party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders (in such capacity, the “Administrative Agent”) entered into a Fourth Amended and Restated First Lien Credit Agreement as amended by that certain Amendment No. 1 to Fourth Amended and Restated First Lien Credit Agreement dated as of July 1, 2022 (the "Amendment") (as so amended, the “Credit Agreement”). Pursuant to the Amendment, Elkay joined the Credit Agreement as a borrower (Elkay and the Original Borrowers, collectively, the "Borrowers"). The Credit Agreement is funded by a syndicate of banks and other financial institutions and provides for (i) a $550.0 million term loan facility (the “Term Loan”) and (ii) a $200.0 million revolving credit facility (the “Revolving Credit Facility”).
The obligations under the Credit Agreement and related documents are secured by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021, among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, as supplemented pursuant to that certain Supplement No. 1 dated as of July 1, 2022, executed by Elkay and its domestic subsidiaries, and certain other collateral documents.
The Credit Agreement contains representations, warranties, covenants and events of default, including, without limitation, a financial covenant under which the Borrowers are, if certain conditions are met, obligated to maintain on a consolidated basis, as of the end of each fiscal quarter, a certain maximum Net First Lien Leverage Ratio (as defined in the Credit Agreement). As of December 31, 2024, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.
Term Debt
The Credit Agreement provides for the issuance of a term loan facility in an aggregate principal amount of $550.0 million. The proceeds of the Term Loan were, together with the dividend received by the Company in connection with the Spin-Off Transaction and cash on hand, used to (i) repay in full the aggregate principal amount outstanding of the Prior Term Loan, together with accrued interest thereon, (ii) redeem the $500 million of outstanding principal amount of the 4.875% Senior Notes due 2025, and (iii) pay related fees and expenses.
On October 11, 2023, the Company made a voluntary prepayment on its Term Loan of $60.0 million. In connection with this prepayment, the Company recognized a $0.9 million loss on debt extinguishment to write off a portion of the unamortized debt issuance costs.
The Term Loan has a maturity date of October 4, 2028. Commencing on March 31, 2022, the Borrowers were required to make quarterly payments of principal in an amount equal to $1.4 million each quarter until the maturity date. In connection with the voluntary prepayment of $60.0 million, the quarterly principal payments of $1.4 million are no longer required.
For purposes of the Term Loan, effective July 1, 2023, the secured overnight financing rate ("SOFR") replaced LIBOR, and accordingly, beginning July 1, 2023 the Term Loan bears interest at the Borrowers' option, by reference to a base rate or a rate based on Term SOFR, plus a Term SOFR adjustment of 0.115%, 0.262%, or 0.428% for interest periods of one month, three months, and six months, respectively, plus an applicable margin based on the Borrowers' Net First Lien Leverage Ratio as of the last day of each fiscal quarter. If the Net First Lien Leverage Ratio is greater than 1.80 to 1.00, the applicable margin shall equal 1.25% in the case of base rate borrowings and 2.25% in the case of SOFR borrowings. In the event the Borrowers’ Net First Lien Leverage Ratio is less than or equal to 1.80 to 1.00, the applicable margin on both base rate and
SOFR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 0.86 to 1.00 as of December 31, 2024 and therefore the applicable rate is 2.00%.
Prior to July 1, 2023, the Term Loan bore interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter as illustrated above.
At December 31, 2024 and December 31, 2023, the borrowings under the Term Loan had weighted-average effective interest rates of 6.42% and 7.47%, respectively. During the year ended December 31, 2024 and December 31, 2023, the borrowings under the Term Loan had weighted-average effective interest rates of 7.28% and 7.09%, respectively.
Revolving Credit Facility
The Credit Agreement includes a $200.0 million revolving credit facility that has a maturity date of October 2, 2026. Similar to the Term Loan, effective July 1, 2023, the SOFR replaced LIBOR, and accordingly, beginning July 1, 2023 the Revolving Credit Facility bears interest by reference to a base rate or a rate based on Term SOFR, plus a Term SOFR adjustment of 0.115%, 0.262%, or 0.428% for interest periods of one month, three months, and six months, respectively, plus an applicable margin based on the Borrowers' Net First Lien Leverage Ratio as of the last day of each fiscal quarter. If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the applicable margin shall equal 1.00% in the case of base rate borrowings and 2.00% in the case of SOFR borrowings. In the event the Borrowers' Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the applicable margin on both base rate and SOFR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 0.86 to 1.00 as of December 31, 2024. The Borrowers are also required to pay a quarterly commitment fee on the average daily unused portion of the Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit. If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the commitment fee is 0.50%, and if the Company's Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the commitment fee is 0.375%.
Prior to July 1, 2023, borrowings under the Revolving Credit Facility bore interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter as illustrated above.
At December 31, 2024 and December 31, 2023, there were no amounts borrowed under the Revolving Credit Facility. As of December 31, 2024 and December 31, 2023, $11.3 million and $11.0 million of the Revolving Credit Facility was considered utilized in connection with outstanding letters of credit, respectively.
Finance Leases
At December 31, 2024 and 2023, the Company had finance lease obligations of $20.6 million and $21.7 million, respectively. For more information related to finance leases, see Note 13, Leases.
Future Debt Maturities
Future maturities of debt and finance lease obligations as of December 31, 2024, excluding the unamortized debt issuance costs of $5.4 million, were as follows (in millions):
| Years ending December 31: | |||||
| 2025 | $ | 0.8 | |||
| 2026 | 0.9 | ||||
| 2027 | 1.0 | ||||
| 2028 | 481.5 | ||||
| 2029 | 1.2 | ||||
| Thereafter | 15.7 | ||||
| $ | 501.1 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 10, 2025 | Showing above |
| 2023 | Feb 6, 2024 | |
| 2022 | Feb 14, 2023 | |
| 2021 | Feb 9, 2022 | |
| 2020 | May 12, 2020 | |
| 2019 | May 14, 2019 | |
| 2018 | May 14, 2018 | |
| 2017 | May 17, 2017 | |
| 2016 | May 19, 2016 | |
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.