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Note 9 - Senior Notes, Credit Facility and Capital Leases | 9 Months Ended
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Sep. 30, 2017
Notes to Financial Statements |
Debt Disclosure [Text Block] | Note 9. Senior Notes, Credit Facility and Capital Leases Senior Notes On April 12, 2013, we completed an offering of $500 million in aggregate principal amount of our Senior Notes due May 1, 2021 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, and in 2014, an additional $6.5 million aggregate principal amount of the Senior Notes were issued to one of our pension plans. The Senior Notes were subsequently exchanged for substantially identical Senior Notes registered with the SEC. The Senior Notes are governed by the Indenture, dated as of April 12, 2013, as amended (the "Indenture"), among Hecla Mining Company ("Hecla") and certain of our subsidiaries and The Bank of New York Mellon Trust Company, N.A., as trustee. The net proceeds from the initial offering of the Senior Notes ( $490 million) were used to partially fund the acquisition of Aurizon and for general corporate purposes, including expenses related to the Aurizon acquisition. The Senior Notes are recorded net of a 2% initial purchaser discount totaling $10 million at the time of the April 2013 issuance and having an unamortized balance of $4.6 million as of September 30, 2017. The Senior Notes bear interest at a rate of 6.875% per year from the date of original issuance or from the most recent payment date on which interest has been paid or provided for. Interest on the Senior Notes is payable on May 1 and November 1 of each year, commencing November 1, 2013. During the nine months ended September 30, 2017 and 2016, interest expense related to the Senior Notes, including amortization of the initial purchaser discount and fees related to the issuances of the Senior Notes, was $26.3 million and $15.2 million, respectively. The interest expense related to the Senior Notes for the nine months ended September 30, 2017 and 2016 was net of $0.9 million and $12.0 million, respectively, in capitalized interest, primarily related to the #4 Shaft project at our Lucky Friday unit which was completed in January 2017. Interest expense for the nine months ended September 30, 2017 also includes $0.9 million in costs related to our proposed private offering of new Senior Notes in June 2017 and concurrent tender offer to purchase our existing Senior Notes, which were not completed. The Senior Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries (the "Guarantors"). The Senior Notes and the guarantees are, respectively, Hecla's and the Guarantors' general senior unsecured obligations and are subordinated to all of Hecla's and the Guarantors' existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Senior Notes are effectively subordinated to all of the liabilities of Hecla's subsidiaries that are not guaranteeing the Senior Notes, to the extent of the assets of those subsidiaries. The Senior Notes became redeemable in whole or in part, at any time and from time to time after May 1, 2016, on the redemption dates and at the redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a change of control (as defined in the Indenture), each holder of Senior Notes will have the right to require us to purchase all or a portion of such holder's Senior Notes pursuant to a change of control offer (as defined in the Indenture), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject to the rights of holders of the Senior Notes on the relevant record date to receive interest due on the relevant interest payment date. Credit Facility In May 2016, we entered into a $100 million senior secured revolving credit facility with a three -year term, which was amended in July 2017 to extend the term until July 14, 2020. The credit facility is collateralized by the shares of common stock held in our material domestic subsidiaries and by our joint venture interests in the Greens Creek mine, all of our rights and interests in the joint venture agreement, and all of our rights and interests in the assets of the joint venture. Below is information on the interest rates, standby fee, and financial covenant terms under our credit facility:
Interest rates: |  |  |  |  |  |
Spread over the London Interbank Offer Rate |  |  | 2.25 | - | 3.25% |
Spread over alternative base rate |  |  | 1.25 | - | 2.25% |
Standby fee per annum on undrawn amounts |  |  |  | 0.50% |  |
Covenant financial ratios: |  |  |  |  |  |
Senior leverage ratio (debt secured by liens/EBITDA) |  |  | not more than 2.50:1 |
Leverage ratio (total debt less unencumbered cash/EBITDA) |  |  | not more than 4.00:1 |
Interest coverage ratio (EBITDA/interest expense) |  |  | not more than 3.00:1 |
We are also able to obtain letters of credit under the facility, and for any such letters we are required to pay a participation fee of between 2.25% and 3.25% based on our total leverage ratio, as well as a fronting fee to each issuing bank of 0.20% annually on the average daily dollar amount of any outstanding letters of credit. We believe we were in compliance with all covenants under the credit agreement and no amounts were outstanding as of September 30, 2017. With the exception of $2.6 million in letters of credit outstanding as of September 30, 2017, we have not drawn funds on the current revolving credit facility as of the filing date of this report. Capital Leases We have entered into various lease agreements, primarily for equipment at our Greens Creek, Lucky Friday, and Casa Berardi units, which we have determined to be capital leases. At September 30, 2017, the total liability balance associated with capital leases, including certain purchase option amounts, was $13.3 million, with $5.9 million of the liability classified as current and the remaining $7.4 million classified as non-current. At December 31, 2016, the total liability balance associated with capital leases was $11.5 million, with $5.7 million of the liability classified as current and $5.8 million classified as non-current. The total obligation for future minimum lease payments was $14.1 million at September 30, 2017, with $0.8 million attributed to interest. At September 30, 2017, the annual maturities of capital lease commitments, including interest, are (in thousands):
Twelve-month period ending September 30, |  |  |  |
2018 |  | $ | 6,293 |
2019 |  |  | 4,179 |
2020 |  |  | 2,369 |
2021 |  |  | 1,260 |
Total |  |  | 14,101 |
Less: imputed interest |  |  | (813 | )
Net capital lease obligation |  | $ | 13,288 |

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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 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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