| Debt and Financing Arrangements |
| | | | | | | | | | | | | | | | 8. Debt and Financing Arrangements |
Long-term and short-term debt consisted of the following:
| | | | | | | | | | | | | | | | (in millions) | | March 31, 2025 | | September 30, 2024 | | Long-term debt: | | | | | 8.25% Notes due 2031 | | $ | 500 | | | $ | 500 | | 7.00% Secured Notes due 2028 | | 500 | | | 500 | | | Term Loan B due in 2031 | | 629 | | | 632 | | 4.875% Notes due in 2026 | | — | | | 795 | | 7.50% Notes due in 2033 | | 795 | | | — | | | | | | | | Other bank borrowings and finance lease obligations | | 5 | | | 5 | | | | | | | | Less: debt issuance costs | | (35) | | | (28) | | | Gross long-term debt | | 2,394 | | | 2,404 | | | Less: current portion | | 8 | | | 8 | | | Net long-term debt | | $ | 2,386 | | | $ | 2,396 | | | | | | | | Short-term debt: | | | | | | | | | | | | | | | | Other bank borrowings | | $ | 2 | | | $ | 1 | | | Total short-term debt | | $ | 2 | | | $ | 1 | |
Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the "ABL Credit Facility"), which provides for a revolving line of credit up to $1,250 million, including a North American subfacility of up to $950 million and a European subfacility of up to $300 million, subject to borrowing base capacity and certain other restrictions, including a minimum fixed charge coverage ratio. The ABL Credit Facility is set to mature on November 2, 2027, subject to certain springing maturity provisions. Adient will pay a commitment fee of 0.25% to 0.375% on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability. Letters of credit are limited to the lesser of (x) $150 million and (y) the aggregate unused amount of commitments under the ABL Credit Facility then in effect. Subject to certain conditions, the ABL Credit Facility may be expanded by up to $250 million in additional commitments. Loans under the ABL Credit Facility may be denominated, at the option of Adient, in U.S. Dollars, Euros, Pounds Sterling or Swedish Krona. It also provides flexibility for future amendments to the ABL Facility to incorporate certain sustainability-based pricing provisions. The ABL Credit Agreement is secured on a first-priority lien on all accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority lien on all of the tangible and intangible assets of certain Adient subsidiaries. Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to Term Secured Overnight Financing Rate (“SOFR”), in the case of amounts outstanding in Dollars, Euro Interbank Offered Rate (“EURIBOR”), in the case of amounts outstanding in Euros, Stockholm Interbank Offered Rate (“STIBOR”), in the case of amounts outstanding in Swedish Krona and Sterling Over Night Indexed Average (“SONIA”), in the case of amounts outstanding in Pounds Sterling, in each case, plus an applicable margin of 1.50% to 2.00%. As of March 31, 2025, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $843 million (net of $8 million of letters of credit).
In addition, Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintains a senior secured term loan facility (the "Term Loan B Agreement"), that had an outstanding balance of $629 million and $632 million as of March 31, 2025 and September 30, 2024, respectively. During fiscal 2024, the Term Loan B Agreement was amended to reduce the applicable margin from 3.25% to 2.75% and extend final maturity to January 31, 2031. Adient incurred $5 million of costs associated with the modification, of which $4 million was recorded as deferred financing costs. During the first quarter of fiscal 2025, the Term Loan B Agreement was further amended to reduce the applicable margin from 2.75% to 2.25%. Adient incurred $1 million of costs associated with the modification, which was recorded as deferred financing costs. The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. The Term Loan B Agreement permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions. Interest on the Term Loan B Agreement accrues at Term SOFR plus an applicable margin.
The ABL Credit Facility and Term Loan B Agreement contain covenants that are usual and customary for facilities and debt instruments of this type and that, among other things, restrict the ability of Adient and its restricted subsidiaries to: create certain liens and enter into sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; pay dividends or make other distributions on, or repurchase or redeem, Adient’s capital stock or certain other debt; make other restricted payments; and consolidate or merge with, or convey, transfer or lease all or substantially all of Adient’s and its restricted subsidiaries’ assets, to another person. These covenants are subject to a number of other limitations and exceptions set forth in the agreements. The agreements also provide for customary events of default, including, but not limited to, cross-default clauses with other debt arrangements, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving Adient and its significant subsidiaries.
Adient Global Holdings Ltd. ("AGH"), a wholly-owned subsidiary of Adient, maintains (i) $500 million in aggregate principal amount of 7.00% senior secured notes due 2028 and (ii) $500 million in aggregate principal amount of 8.250% senior unsecured notes due 2031. Interest on both of these notes is paid on April 15 and October 15 each year, beginning on October 15, 2023. These notes contain covenants that are usual and customary. AGH also maintained $795 million in aggregate principal amount of 4.875% USD-denominated unsecured notes due 2026 as of September 30, 2024. In February 2025, AGH issued $795 million (net proceeds of $783 million) in aggregate principal amount of 7.50% senior unsecured notes. Adient incurred $12 million of costs associated with the transaction, which was recorded as deferred financing costs. Proceeds from the sale of the notes, together with cash on hand, were used to fully redeem AGH's 4.875% senior unsecured notes in March 2025. Upon redemption of the 4.875% notes, Adient wrote off $2 million of previously deferred financing costs associated with the notes to net financing charges. The new notes mature on February 15, 2033 and bear interest at a rate of 7.50% per annum. Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2025. These notes also contain covenants that are usual and customary.
Net Financing Charges
Adient's net financing charges in the consolidated statements of income (loss) contained the following components:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | Six Months Ended
March 31, | | (in millions) | | 2025 | | 2024 | | 2025 | | 2024 | | Interest expense, net of capitalized interest costs | | $ | 48 | | | $ | 46 | | | $ | 95 | | | $ | 94 | | | Banking fees and debt issuance cost amortization | | 7 | | | 5 | | | 11 | | | 9 | | | Interest income | | (6) | | | (6) | | | (13) | | | (15) | | | | | | | | | | | | | | | | | | | | | Net foreign exchange | | (1) | | | 2 | | | — | | | 3 | | | Net financing charges | | $ | 48 | | | $ | 47 | | | $ | 93 | | | $ | 91 | |
Banking fees for the three and six months ended March 31, 2025 include $2 million of one-time accelerated-deferred financing fee charges associated with early redemption of the 4.875% notes. Total interest paid on both short and long-term debt for the six months ended March 31, 2025 and 2024 was $84 million and $97 million, respectively. Other Arrangements
Adient enters into supply chain financing programs in certain domestic and foreign jurisdictions to either sell or discount accounts receivable without recourse to third-party institutions. Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. As of March 31, 2025, $170 million was funded under these programs which was a similar amount funded as of September 30, 2024.
Adient also has a program with an external financial institution under which Adient's suppliers can sell their receivables from Adient to the financial institution at their sole discretion. Adient is not a party to the agreements between the participating suppliers and the financial institution. Adient's obligation under the program is to pay the original amounts of supplier invoices to the financial institution on the original invoice dates. No fees are paid and no assets are pledged by Adient. The payment terms for trade payables can range from 45 days to 120 days depending on types of services and goods being purchased. The payment terms for molds, dies and other tools that are acquired as part of pre-production activities are in general longer, and are normally dependent on the terms which Adient has agreed with its customers. As of March 31, 2025, and September 30, 2024, Adient's liabilities related to this program were $91 million and $76 million, respectively. Cash flows related to the program are all presented within operating activities in Adient's consolidated statements of cash flows.
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