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Debt | 12 Months Ended
--- | ---
Dec. 31, 2013
Long-term Debt, Unclassified [Abstract] |
Debt | Debt The following table provides details of the carrying value of debt as of the dates indicated (in millions):
|  |  |  | December 31,
Description |  | Maturity Date |  | 2013 |  | 2012
Credit facility |  | October 29, 2018 |  | $ | 53.0 |  |  | $ | 134.0 |
4.875% senior notes |  | March 15, 2023 |  | 400.0 |  |  | — |
7.625% senior notes |  | February 1, 2017 |  | — |  |  | 150.0 |
2011 4.0% senior convertible notes |  | June 15, 2014 |  | 103.8 |  |  | 100.9 |
2011 4.25% senior convertible notes |  | December 15, 2014 |  | 94.5 |  |  | 92.1 |
2009 4.0% senior convertible notes |  | June 15, 2014 |  | 9.6 |  |  | 9.7 |
2009 4.25% senior convertible notes |  | December 15, 2014 |  | 3.0 |  |  | 3.0 |
Capital lease obligations, weighted average interest rate of 2.7% |  | In installments through March 30, 2020 |  | 126.0 |  |  | 79.0 |
Notes payable for equipment, weighted average interest rate of 3.2% |  | In installments through May 1, 2018 |  | 26.9 |  |  | 30.2 |
Total debt |  | $ | 816.8 |  |  | $ | 598.9 |
Less current maturities |  | (51.4 | ) |  | (52.6 | )
Long-term debt |  | $ | 765.4 |  |  | $ | 546.3 |
Credit Facility On October 29, 2013, the Company entered into an amendment to its previous credit facility. The Company refers to the amendment as its 2013 Credit Facility, and to its previous credit facility as the 2011 Credit Facility. The 2013 Credit Facility, which has a maturity date of October 29, 2018, expanded maximum available borrowing capacity from $600 million to $750 million, of which up to $100 million may be borrowed in Canadian dollars. The amount available for letters of credit has been increased from $350 million to $450 million, the letter of credit sublimit that may be used for letters of credit denominated in Canadian dollars has been increased from $25 million to $50 million and the amount available for swing line loans has been increased from $50 million to $75 million. Borrowings under the 2013 Credit Facility will be used to refinance existing indebtedness and for working capital, capital expenditures and other corporate purposes, including the repurchase or prepayment of indebtedness. Approximately $1.9 million of financing costs were incurred in connection with the 2013 Credit Facility, which are included within other assets in the consolidated balance sheets and are being amortized over the remaining term of the 2013 Credit Facility. As of December 31, 2013, the Company had outstanding revolving loans under its 2013 Credit Facility of $53.0 million, which accrued interest at a weighted average rate of approximately 2.14% per annum. As of December 31, 2012, the Company had outstanding revolving loans under its 2011 Credit Facility of $134.0 million, which accrued interest at a weighted average rate of approximately 3.95% per annum. Letters of credit of approximately $134.8 million and $120.8 million were outstanding as of December 31, 2013 and 2012, respectively. The remaining borrowing capacity of $562.1 million and $345.2 million as of December 31, 2013 and 2012, respectively, was available for revolving loans or up to $315.2 million and $229.2 million, respectively, of new letters of credit. Outstanding letters of credit mature at various dates and most have automatic renewal provisions, subject to prior notice of cancellation. As of December 31, 2013, interest on outstanding letters of credit accrued at either 0.75% or 1.5% per annum, based on the type of letter of credit issued. As of December 31, 2012, interest on outstanding letters of credit accrued at either 1% or 2% per annum. The unused facility fee was 0.30% and 0.35% as of December 31, 2013 and 2012, respectively. Under the 2013 Credit Facility, the Company has the option to increase the revolving commitments and/or establish additional term loan tranches from time to time in an aggregate amount of up to $250 million. These additional term loan tranches may, subject to certain terms and conditions described in the 2013 Credit Facility, rank equal or junior in respect of right of payment and/or collateral to the 2013 Credit Facility and may, subject to certain limitations described in the 2013 Credit Facility, have terms and pricing that differ from the 2013 Credit Facility. Amounts borrowed under the 2013 Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) a Eurocurrency Rate (as defined in the 2013 Credit Facility) plus a margin of 1.00% to 2.00% (a reduction from 1.50% to 2.50% under the 2011 Credit Facility) or (b) a Base Rate (as described below) plus a margin of 0.00% to 1.00% (a reduction from 0.50% to 1.50% under the 2011 Credit Facility). Financial standby letters of credit and commercial letters of credit issued under the 2013 Credit Facility are subject to a letter of credit fee of 1.00% to 2.00% (a reduction from 1.50% to 2.50% under the 2011 Credit Facility), and performance standby letters of credit are subject to a letter of credit fee of 0.50% to 1.00% (a reduction from 0.75% to 1.25% under the 2011 Credit Facility). The Company must also pay a commitment fee to the lenders of 0.20% to 0.40% (a reduction from 0.25% to 0.45% under the 2011 Credit Facility) on any unused availability under the 2013 Credit Facility. In each of the foregoing cases, the applicable margin or fee is based on the Company’s consolidated leverage ratio (as defined in the 2013 Credit Facility) as of the then most recent fiscal quarter. The Base Rate equals the highest of (i) the Federal Funds Rate (as defined in the 2013 Credit Facility) plus 1/2 of 1%, (ii) Bank of America’s prime rate and (iii) the Eurocurrency Rate plus 1.00%. The 2013 Credit Facility is guaranteed by certain subsidiaries of the Company (the “Subsidiary Guarantors”) and the obligations under the 2013 Credit Facility are secured by substantially all of the Company’s and the Subsidiary Guarantors’ respective assets, subject to certain exceptions. Under the 2013 Credit Facility, if the "Loan Party EBITDA" (as defined in the 2013 Credit Facility) as of the last four consecutive fiscal quarters does not represent at least 70% (the “70% Guaranty Threshold”) of the "Adjusted Consolidated EBITDA" (as defined in the 2013 Credit Facility) for such period, then the Company must designate additional subsidiaries as Subsidiary Guarantors, and cause them to join the applicable guaranty and security agreements to the 2013 Credit Facility. The 70% Guaranty Threshold represents a reduction from the 80% threshold applicable under the 2011 Credit Facility. Additionally, any domestic subsidiary with consolidated EBITDA of at least 15% of the Adjusted Consolidated EBITDA must become a Subsidiary Guarantor and join the applicable guaranty and security agreements, which represents an increase from the 10% threshold applicable under the 2011 Credit Facility. As amended, the 2013 Credit Facility continues to require that the Company maintain a maximum consolidated leverage ratio (as defined in the 2013 Credit Facility) of 3.50 and a minimum consolidated interest coverage ratio (as defined in the 2013 Credit Facility) of 3.00; however, the 2013 Credit Facility now provides that, for purposes of calculating the consolidated leverage ratio, funded indebtedness will exclude all undrawn standby performance letters of credit. Additionally, subject to certain conditions, if a permitted acquisition or series of permitted acquisitions having consideration exceeding $50 million occurs during a fiscal quarter, the Company has the right to permit the consolidated leverage ratio to exceed 3.50 during such fiscal quarter and the subsequent two fiscal quarters so long as the consolidated leverage ratio does not exceed 3.75 at any time during such period. Such right may be exercised no more than two times during the term of the 2013 Credit Facility. Subject to customary exceptions, the 2013 Credit Facility limits the borrowers’ and the Subsidiary Guarantors’ ability to engage in certain activities, including acquisitions, mergers and consolidations, debt incurrence, investments, capital expenditures, asset sales, debt prepayments, lien incurrence and the making of distributions or repurchases of capital stock. However, distributions payable solely in capital stock are permitted. The 2013 Credit Facility provides for customary events of default and carries cross-default provisions with the Company’s other significant debt instruments, including the Company’s indemnity agreement with its surety provider, as well as customary remedies upon an Event of Default (as defined in the 2013 Credit Facility), including the acceleration of repayment of outstanding amounts and other remedies with respect to the collateral securing the 2013 Credit Facility obligations. Issuance of 4.875% Senior Notes and Repurchase and Redemption of 7.625% Senior Notes On March 18, 2013, the Company issued $400 million of 4.875% Senior Notes due March 15, 2023 in a registered public offering. The 4.875% Senior Notes bear interest at a rate of 4.875% per annum, payable on March 15 and September 15 of each year. Interest payments commenced on September 15, 2013. The 4.875% Senior Notes are senior unsecured unsubordinated obligations and rank equal in right of payment with existing and future unsubordinated debt, and rank senior in right of payment to existing and future subordinated debt. The 4.875% Senior Notes, as well as the Company's 2011 Convertible Notes and 2009 Convertibles Notes are effectively junior to MasTec's secured debt, including the 2013 Credit Facility, to the extent of the value of the assets securing that debt. The 4.875% Senior Notes are guaranteed on an unsecured unsubordinated basis by MasTec's direct and indirect 100%-owned domestic subsidiaries that guarantee the 2013 Credit Facility. The Company has the option to redeem all or a portion of the 4.875% Senior Notes at any time on or after March 15, 2018 at the redemption prices set forth in the indenture that governs the 4.875% Senior Notes (the “4.875% Senior Notes Indenture”) plus accrued and unpaid interest, if any, to the redemption date. At any time prior to March 15, 2018, the Company may redeem all or a part of the 4.875% Senior Notes at a redemption price equal to 100% of the principal amount of 4.875% Senior Notes redeemed plus an applicable premium, as defined in the 4.875% Senior Notes Indenture, together with accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to March 15, 2016, the Company may redeem up to 35% of the principal amount of the 4.875% Senior Notes using the net cash proceeds of one or more sales of the Company's capital stock, as defined in the 4.875% Senior Notes Indenture, at a redemption price of 104.875% of the principal amount, plus accrued and unpaid interest to the redemption date. The 4.875% Senior Notes Indenture, among other things, generally limits the ability of the Company and certain of its subsidiaries, subject to certain exceptions, to (i) incur additional debt and issue preferred stock, (ii) create liens, (iii) pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments, (iv) place limitations on distributions from certain subsidiaries, (v) issue guarantees, (vi) issue or sell the capital stock of certain subsidiaries, (vii) sell assets, (viii) enter into transactions with affiliates and (ix) effect mergers. The 4.875% Senior Notes Indenture provides for customary events of default, as well as customary remedies upon an event of default, as defined in the 4.875% Senior Notes Indenture, including acceleration of repayment of outstanding amounts. Approximately $7.7 million in financing costs were incurred in connection with the issuance of the 4.875% Senior Notes. These deferred financing costs are included in other long-term assets in the consolidated financial statements and are being amortized over the term of the 4.875% Senior Notes using the effective interest method. The Company used a portion of the proceeds from the 4.875% Senior Notes offering to fund the repurchase and redemption of the Company's $150 million principal amount of 7.625% senior notes due 2017 (the “7.625% Senior Notes”), discussed below, and to repay the outstanding balance of the 2011 Credit Facility. The remaining net proceeds were used for working capital and other general corporate purposes. In connection with the issuance of the 4.875% Senior Notes, the Company repurchased approximately $121.1 million of its 7.625% Senior Notes on March 18, 2013 in a tender offer at a price of 102.792% of the principal amount, which included an early tender payment of $30.00 per $1,000 principal amount of notes tendered. The holders of the tendered 7.625% Senior Notes also received accrued interest from the most recent interest payment date to, but not including, the date of repurchase. In addition, on March 29, 2013, the Company redeemed the remaining outstanding $28.9 million aggregate principal amount of the 7.625% Senior Notes in accordance with their terms at a price of 102.542% of the principal amount plus accrued interest from the most recent interest payment date to, but not including, the date of redemption. A pre-tax debt extinguishment loss of $5.6 million was recognized during the year ended December 31, 2013 in connection with the repurchase and redemption of the 7.625% Senior Notes, including $4.1 million of early payment premiums and $1.5 million of unamortized deferred financing costs. This loss is separately disclosed within the consolidated statements of operations. Senior Convertible Notes 2011 Convertible Notes. During the first quarter of 2011, the Company exchanged $105.3 million of its 4.0% senior convertible notes issued in 2009 (the "2009 4.0% Notes") and $97.0 million of its 4.25% senior convertible notes issued in 2009 (the "2009 4.25% Notes") for identical principal amounts of 2011 4.0% Notes and 2011 4.25% Notes, respectively, for an exchange fee of approximately 50 basis points, or 0.5%, of the aggregate principal amount of the notes exchanged. The terms of the 2011 Convertible Notes are substantially identical to those of the 2009 Convertible Notes, except that the 2011 Convertible Notes have an optional physical (share), cash or combination settlement feature and contain certain conditional conversion features. The 2011 Convertible Notes are guaranteed by the Company's subsidiaries that guarantee the 2009 Convertible Notes. The 2011 Convertible Notes are convertible at any time during the three months immediately preceding their respective maturity dates; prior to such time, however, the 2011 Convertible Notes are convertible only if one of the following three conditions is satisfied:
(i) | if the last reported sale price of the Company’s common stock is greater than or equal to 130% of the applicable conversion price of the 2011 Convertible Notes during at least 20 of the last 30 consecutive trading days ending on and including the last trading day of a calendar quarter, then the applicable 2011 Convertible Notes may be converted during the immediately following calendar quarter (and only during such calendar quarter);
(ii) | if after any five consecutive trading-day period in which the trading price per $1,000 principal amount of 2011 Convertible Notes for each trading day during such period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate, then the applicable 2011 Convertible Notes may be converted during the immediately following five business day period; or
(iii) | if the Company effects certain distributions to its shareholders or if the Company is party to a consolidation, merger, binding share exchange, or a sale, transfer, lease or other conveyance of all or substantially all of its assets, pursuant to which the Company’s common stock would be converted into or exchanged for, or would constitute solely the right to receive cash, securities or other assets, or in the case of certain other fundamental changes, then the 2011 Convertible Notes may be converted during the period that is 45 trading days prior to the ex-dividend date or the initial anticipated effective date of the transaction, as applicable.
The Company has divided the principal balance of the 2011 Convertible Notes between the fair value of the debt component and the fair value of the common stock conversion feature. Using an income approach, management discounted the values of the 2011 Convertible Notes at an estimated effective interest rate of 6.73%, which represents the estimated market interest rate for a similar nonconvertible instrument as of the date of the exchange. The resulting total debt discount of $17.4 million for the 2011 Convertible Notes is being accreted to interest expense over the remaining terms of the 2011 Convertible Notes, which will increas e interest expense during the term of the 2011 Convertible Notes above their 4.0% and 4.25% cash coupon interest rates. As of December 31, 2013, the remaining period of amortization associated with the debt discount and related financing costs was approximately 1 year. The fair value of the common stock conversion feature was recorded as a component of equity. Unamortized debt discount and financing costs associated with the 2011 Convertible Notes totaled $4.0 million and $9.3 million as of December 31, 2013 and 2012, respectively. 2009 Senior Convertible Notes. In November 2009, the Company issued $100 million of 2009 4.25% Notes due December 15, 2014 in a private placement. Of this amount, $97.0 million was canceled and exchanged in the first quarter of 2011 for a like principal amount of 2011 4.25% Notes in connection with the debt exchange discussed above. The 2009 4.25% Notes bear interest at a rate of 4.25% per year, payable semi-annually in arrears, on June 15 and December 15 of each year. On or prior to December 12, 2014, holders may convert their 2009 4.25% Notes into shares of MasTec common stock at an initial conversion rate of 64.6162 shares of MasTec common stock per $1,000 principal amount of 2009 4.25% Notes, which represents an initial conversion price of approximately $15.48 per share, subject to customary anti-dilution adjustment terms for these types of notes. Approximately $3.7 million in financing costs were incurred in connection with the issuance of the 2009 4.25% Notes, which are included within other assets in the consolidated balance sheets and are being amortized over their remaining term. In June 2009, the Company issued $115 million of 2009 4.0% Notes due June 15, 2014 in a registered offering. Of this amount, $105.3 million was canceled and exchanged in the first quarter of 2011 for a like principal amount of 2011 4.0% Notes in connection with the debt exchange discussed above. The 2009 4.0% Notes bear interest at a rate of 4.0% per year, payable semi-annually in arrears, on June 15 and December 15 of each year. On or prior to June 13, 2014, holders may convert their 2009 4.0% Notes into shares of MasTec common stock at an initial conversion rate of 63.4417 shares of MasTec common stock per $1,000 principal amount of 2009 4.0% Notes, which represents an initial conversion price of approximately $15.76 per share, subject to customary anti-dilution adjustment terms for these types of notes. Approximately $5.4 million in financing costs were incurred in connection with the issuance of the 2009 4.0% Notes, which are included within other assets in the consolidated balance sheets and are being amortized over their remaining term. The 4.25% and 4.0% senior convertible notes are guaranteed by certain of the Company's 100%-owned direct and indirect domestic operating subsidiaries. There are no financial covenants associated with these notes; however, there are certain nonfinancial provisions and covenants. Classification of Senior Convertible Notes. The 4.0% senior convertible notes mature in June 2014 and the 4.25% senior convertible notes mature in December 2014. The Company expects to refinance the $215.0 million principal amount of the senior convertible notes on a long-term basis either through its 2013 Credit Facility or through other sources of available funding and, therefore, has included the carrying amounts of these notes as a component of long-term debt as of December 31, 2013. Acquisition Debt In connection with certain acquisitions, the Company has entered into or assumed certain debt and/or capital lease obligations. As of December 31, 2013 and 2012, $9.8 million and $20.6 million, respectively, of acquisition-related debt remained outstanding. As of December 31, 2013, there are no financial covenants associated with this acquisition-related debt. Debt Guarantees and Covenants The Company’s 4.875% Senior Notes, 2011 Convertible Notes and 2009 Convertible Notes are, and, through March 29, 2013, the Company's 7.625% Senior Notes were, fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by certain of the Company's existing and future 100%-owned direct and indirect domestic subsidiaries that are guarantors of the 2013 Credit Facility or other outstanding indebtedness. See Note 19 - Supplemental Guarantor Condensed Consolidating Financial Information. MasTec was in compliance with all provisions and covenants pertaining to its outstanding debt instruments as of December 31, 2013 and December 31, 2012. Contractual Maturities of Debt and Capital Lease Obligations Contractual maturities of MasTec’s debt and capital lease obligations as of December 31, 2013 were as follows (in millions):
2014 | $ | 51.4 |
2015 | 41.9 |
2016 | 33.3 |
2017 | 19.3 |
2018 | 270.2 |
Thereafter | 400.7 |
Total | $ | 816.8 |
Interest Expense, Net The following table provides details of interest expense, net, classified within continuing operations for the periods indicated (in millions):
| Years Ended December 31,
| 2013 |  | 2012 |  | 2011
Interest expense: |  |  |  |  |
Contractual and other interest expense | $ | 37.6 |  |  | $ | 29.2 |  |  | $ | 27.4 |
Accretion of senior convertible note discount | 5.2 |  |  | 4.9 |  |  | 4.2 |
Amortization of deferred financing costs | 4.0 |  |  | 3.7 |  |  | 3.4 |
Total interest expense | $ | 46.8 |  |  | $ | 37.8 |  |  | $ | 35.0 |
Interest income | (0.4 | ) |  | (0.4 | ) |  | (0.5 | )
Interest expense, net | $ | 46.4 |  |  | $ | 37.4 |  |  | $ | 34.5 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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