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Long-Term Debt | 6 Months Ended
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Jun. 30, 2019
Debt Disclosure [Abstract] |
Long-Term Debt |
(2 2) | Long-Term Debt
Long-term debt consisted of the following (in thousands):
|  | June 30, 2019 |  |  | December 31, 2018 |
6.125% Senior Notes |  | $ | 539,206 |  |  | $ | 537,926 |
Credit Facility |  |  | 43,634 |  |  |  | — |
Total long-term debt |  | $ | 582,840 |  |  | $ | 537,926 |
6.125% Senior Notes On November 6, 2018, Newmark closed its offering of $550.0 million aggregate principal amount of 6.125% Senior Notes due 2023 (the “6.125% Senior Notes”). The 6.125% Senior Notes were priced at 98.937% to yield 6.375%. The 6.125% Senior Notes, which were priced on November 1, 2018, were offered and sold by Newmark in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended. The 6.125% Senior Notes were subsequently exchanged for notes with substantially similar terms that were registered under the Securities Act. The 6.125% Senior Notes bear an interest rate of 6.125% per annum, payable on each May 15 and November 15, beginning on May 15, 2019, and will mature on November 15, 2023. The carrying amount of the 6.125% Senior Notes as of June 30, 2019 was $539.2 million, net of debt issue costs of $5.6 million and net of debt discount of $5.2 million. Newmark uses the effective interest rate method to amortize the debt discount over the life of the loan. Newmark amortized $0.3 million and $0.6 million of debt discount for the three and six months ended June 30, 2019, respectively. Newmark uses the straight-line method to amortize these debt issue costs over the life of the loan. Newmark amortized $0.3 million and $0.6 million for the three and six months ended June 30, 2019, respectively. Newmark recorded interest expense related to the 6.125% Senior Notes of $8.7 million and $17.4 million for the three and six months ended June 30, 2019, respectively. These amounts are included in “Interest expense, net” in Newmark’s unaudited condensed consolidated statement of operations. Credit Facility On November 28, 2018, Newmark entered into a credit agreement by and among Newmark, the several financial institutions from time to time party thereto, as Lenders, and Bank of America N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement provides for a $250.0 million three-year unsecured senior revolving credit facility (“the Credit Facility”). Borrowings under the Credit Facility will bear an annual interest equal to, at Newmark’s option, either (a) LIBOR for specified periods, or upon the consent of all Lenders, such other period that is 12 months or less, plus an applicable margin, or (b) a base rate equal to the greatest of (i) the federal funds rate plus 0.5%, (ii) the prime rate as established by the administrative agent, and (iii) one-month LIBOR plus 1.0%. The applicable margin is 200 basis points with respect to LIBOR borrowings in (a) above and can range from 0.25% to 1.25%, depending upon Newmark’s credit rating. The Credit Facility also provides for an unused facility fee. The carrying amount of the advance as of June 30, 2019 was $43.6 million, net of debt issue costs of $1.4 million. Newmark uses the straight-line method to amortize these debt issue costs over the life of the loan. Newmark amortized $0.1 million and $0.3 million of debt issue costs for the three and six months ended June 30, 2019, respectively. Newmark recorded interest expense of $0.8 million and $1.0 million for the three and six months ended June 30, 2019, respectively. These amounts are included in “Interest expense, net” in Newmark’s unaudited condensed consolidated statement of operations. Term Loan On September 8, 2017, BGC entered into a committed unsecured senior term loan credit agreement with Bank of America, N.A., as administrative agent, and a syndicate of lenders. The term loan credit agreement provides for loans of up to $575.0 million (the “Term Loan”). The maturity date of the agreement was September 8, 2019. Borrowings under the Term Loan bore interest at either LIBOR or a defined base rate plus an additional margin which ranged from 50 basis points to 325 basis points depending on BGC’s debt rating as determined by S&P and Fitch and whether such loan was a LIBOR loan or a base rate loan. On November 22, 2017, BGC and Newmark entered into an amendment to the unsecured senior term loan credit agreement. Pursuant to the term loan amendment and effective as of December 13, 2017, Newmark assumed the obligations of BGC as borrower under the Term Loan. The net proceeds from the IPO were used to partially repay $304.3 million of the Term Loan. During the year ended December 31, 2018, Newmark repaid the outstanding balance of $270.7 million on the Term Loan, at which point the facility was terminated. Newmark recorded interest expense related to the Term Loan of $2.6 million for the three and six months ended June 30, 2018, respectively. Prior to the Spin-Off, the Term Loan was repaid in full. Converted Term Loan On September 8, 2017, BGC entered into a committed unsecured senior revolving credit agreement with Bank of America, N.A., as administrative agent, and a syndicate of lenders (the “Converted Term Loan”). The revolving credit agreement provides for revolving loans of up to $400.0 million. The maturity date of the facility was September 8, 2019. Borrowings under the Converted Term Loan bore interest at either LIBOR or a defined base rate plus an additional margin, which range d from 50 basis points to 325 basis points depending on BGC’s debt rating as determined by S&P and Fitch and whether such loan wa s a LIBOR loan or a base rate loan. The Term Loan was paid in full on March 9, 2018. Since the Term Loan was repaid in full, the pricing of the Converted Term Loan returned to the levels previously described. On November 22, 2017, BGC and Newmark entered into an amendment to the unsecured senior revolving credit agreement. Pursuant to the amendment, the then-outstanding borrowings of BGC under the revolving credit facility were converted into a term loan. There was no change in the maturity date or interest rate. As of December 13, 2017, Newmark assumed the obligations of BGC as borrower under the Converted Term L oan. On June 19, 2018, Newmark repaid $152.9 million, and on September 26, 2018, Newmark repaid $113.2 million of the Converted Term Loan using proceeds from the Newmark OpCo Preferred Investment. On November 6, 2018, Newmark repaid the remaining $134.0 million outstanding principal amount of the Converted Term Loan using the proceeds from the sale of its 6.125% Senior Notes. Therefore, there were no borrowings outstanding as of December 31, 2018. Newmark recorded interest expense related to the Converted Term Loan of $4.4 million and $9.0 million for the three and six months ended June 30, 2018, respectively. P rior to the Spin-Off, the outstanding amount under the Converted Term Loan was repaid in full. 2019 Promissory Note and 2042 Promissory Note On December 13, 2017, in connection with the Separation, Newmark assumed from BGC an aggregate of $300.0 million principal amount due December 9, 2019 (the “2019 Promissory Note”) and $112.5 million principal amount due June 26, 2042 (the “2042 Promissory Note”). On September 4, 2018, Newmark OpCo borrowed $112.5 million from BGC pursuant to the Intercompany Credit Agreement which loan bore interest at an annual rate equal to 6.5%. Newmark OpCo used the proceeds of the Intercompany Credit Agreement loan to repay the $112.5 million of the 2042 Promissory Note. The 2019 Promissory Note bore interest at 5.375% and the 2042 Promissory Note bore interest at 8.125%. Newmark repaid the $300 million outstanding principal amount under the 2019 Promissory Note on November 23, 2018. Upon repayment of the 2019 Promissory Note, Newmark no longer has debt obligations owed to BGC. Newmark recorded interest expense related to the 2019 Promissory Note of $4.3 million and $8.6 million for the three and six months ended June 30, 2018, respectively. Additionally, Newmark recorded interest expense related to the 2042 Promissory Note of $2.3 million and $4.6 million for the three and six months ended June 30, 2018, respectively. In connection with the repayment of the 2019 Promissory Note, Newmark incurred a prepayment penalty of $7.0 million. In 2018, the 2019 and 2042 Promissory Notes were recorded at amortized cost. The fair value of the 2042 Promissory Note was determined using observable market prices as the 8.125% BGC Senior Notes were considered Level 1 within the fair value hierarchy as they were deemed to be actively traded and the 2019 Promissory Note are considered Level 2 within the fair value hierarchy.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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