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Long-Term and Other Debt | 12 Months Ended
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Dec. 31, 2021
Debt Disclosure [Abstract] |
Long-Term and Other Debt | Long-Term Debt Outstanding Debt The following table reflects our outstanding debt:
| As of December 31,
| 2021 |  | 2020
| Final Maturity |  | Rate(s) |  | Face Value |  | Unamortized debt discount/premium and deferred financing costs, net |  | Book Value |  | Book Value
Senior Secured Credit Facilities: |  |  |  |  |  |  |  |  |  |  |
SGI Revolver | 2024 |  | variable |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 535 |
SGI Term Loan B-5 | 2024 |  | variable |  | 4,018 |  |  | (36) |  |  | 3,982 |  |  | 4,012 |
SciPlay Revolver | 2024 |  | variable |  | — |  |  | — |  |  | — |  |  | — |
SGI Senior Notes: |  |  |  |  |  |  |  |  |  |  |
2025 Secured Notes(1) | 2025 |  | 5.000% |  | 1,250 |  |  | (10) |  |  | 1,240 |  |  | 1,237 |
2026 Secured Euro Notes(2) | 2026 |  | 3.375% |  | 367 |  |  | (3) |  |  | 364 |  |  | 395 |
2025 Unsecured Notes | 2025 |  | 8.625% |  | 550 |  |  | (6) |  |  | 544 |  |  | 542 |
2026 Unsecured Euro Notes(2) | 2026 |  | 5.500% |  | 283 |  |  | (3) |  |  | 280 |  |  | 303 |
2026 Unsecured Notes | 2026 |  | 8.250% |  | 1,100 |  |  | (10) |  |  | 1,090 |  |  | 1,088 |
2028 Unsecured Notes | 2028 |  | 7.000% |  | 700 |  |  | (8) |  |  | 692 |  |  | 691 |
2029 Unsecured Notes | 2029 |  | 7.250% |  | 500 |  |  | (6) |  |  | 494 |  |  | 493 |
Other(3) | 2023 |  | 4.089% |  | 4 |  |  | — |  |  | 4 |  |  | 7 |
Total long-term debt outstanding |  |  |  |  | $ | 8,772 |  |  | $ | (82) |  |  | $ | 8,690 |  |  | $ | 9,303 |
Less: current portion of long-term debt |  |  |  |  |  |  |  |  | (44) |  |  | (44) |
Long-term debt, excluding current portion |  |  |  |  |  |  |  |  | $ | 8,646 |  |  | $ | 9,259 |
Fair value of debt(4) |  |  |  |  | $ | 9,009 |  |  |  |  |  |  |
(1) We entered into certain cross-currency interest rate swap agreements to achieve more attractive interest rates by effectively converting $460 million of the fixed-rate, U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. These cross-currency swaps have been designated as a hedge of our net investment in certain subsidiaries.
(2) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 16 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $62 million, of which a gain of $41 million, a loss of $51 million and a gain of $9 million were recognized on remeasurement of debt in the Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019, respectively.
(3) Primarily comprised of certain revenue transactions presented as debt in accordance with ASC 470.
(4) Fair value of our fixed rate and variable interest rate debt is classified within Level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities.
The following reflects the principal amount of debt and finance lease payments due over the next five years and beyond as of December 31, 2021:
Due |  | Total Principal Due |  |  |  | Series of Debt/Finance lease |  | Principal Due per Series of Debt/Lease
2022 |  | $ | 44 |  |  |  |  | Term Loan B-5 |  | $ | 42 |
|  |  | Other |  | 2 |
2023 |  | 44 |  |  |  |  | Term Loan B-5 |  | 42 |
|  |  | Other |  | 2 |
2024 |  | 3,934 |  |  |  |  | Term Loan B-5 |  | 3,934 |
|  |  | Drawn Revolving Credit Facility |  | — |
2025 |  | 1,800 |  |  |  |  | 2025 Secured Notes |  | 1,250 |
|  |  | 2025 Unsecured Notes |  | 550 |
2026 |  | 1,750 |  |  |  |  | 2026 Secured Euro Notes |  | 367 |
|  |  | 2026 Unsecured Euro Notes |  | 283 |
|  |  | 2026 Unsecured Notes |  | 1,100 |
2027 and beyond |  | 1,200 |  |  |  |  | 2028 Unsecured Notes |  | 700 |
|  |  | 2029 Unsecured Notes |  | 500 |
Unamortized deferred financing costs and discount/premium |  | (82) |  |  |  |  |  |  |
Total debt book value as of December 31, 2021 |  | $ | 8,690 |  |  |  |  |  |  |
Description of Outstanding Debt Credit agreement SGC and certain of its subsidiaries are party to a credit agreement, dated as of October 18, 2013, by and among SGI, as the borrower, SGC, as a guarantor, Bank of America, N.A., as administrative agent, and the lenders and other agents party thereto (the “credit agreement”). As of December 31, 2021, the credit agreement included (a) a revolving credit facility of $650 million through November 20, 2024, with up to $350 million available for issuances of letters of credit and (b) a $4,018 million term B-5 loan facility that matures August 14, 2024. The term B-5 loans amortize in equal quarterly installments in an amount equal to 1.00% per annum of the stated principal amount thereof, with the remaining balance due at final maturity. All of the debt incurred under the revolving credit facility is subject to accelerated maturity if loans under our term B-5 loan facility remain outstanding 91 days prior to their stated maturity date of August 14, 2024 and we do not have sufficient liquidity at that time. In this case, liquidity would be based on our unrestricted cash (excluding SciPlay cash) and availability under our revolving credit facility. SGI may voluntarily prepay all or any portion of outstanding amounts under the credit agreement at any time, without premium or penalty, subject to redeployment costs in the case of a prepayment of eurocurrency loans on a day that is not the last day of the relevant interest period. The applicable margin for the term B-5 loans is 2.75% per annum for eurocurrency (LIBOR) loans and 1.75% per annum for base rate loans. The applicable margin for revolver borrowings is 3.00% per annum for eurocurrency (LIBOR) loans and 2.00% per annum for base rate loans. SGI is required to pay commitment fees to revolving lenders on the actual daily unused portion of the revolving commitments at a rate of 0.50% per annum through maturity, subject to a step-down to 0.375% based upon the achievement of certain net first lien leverage ratios. In July 2021, we amended our Credit Agreement to provide for additional flexibility on executing the pending transactions, to include among other items: (a) extended the time period for conversion of securities into cash for purposes of satisfying the 75% minimum cash proceeds requirement from 180 to 365 days for proceeds received from the intended disposition of our Sports Betting business (“the Disposition Transaction”), (b) amend the basket for non-cash consideration received in connection with a permitted disposition, (c) permit any capital stock received as consideration in the Disposition Transactions and (d) require that at least 25% of the net cash proceeds received from the Disposition Transactions will be used to prepay outstanding term loans within ten business days of the Disposition Transactions. On February 28, 2022, we amended our Credit Agreement to permit the Company to make restricted payments in an amount not to exceed $150 million to repurchase certain capital stock so long as it complies with certain minimum liquidity levels on a pro forma basis. SciPlay Revolver On May 27, 2021, SciPlay Holding, a subsidiary of SciPlay, entered into the SciPlay Revolver, a $150 million revolving credit agreement, dated as of May 7, 2019, that matures in May 2024, by and among SciPlay Holding, as the borrower, SciPlay Parent LLC, as a guarantor, the subsidiary guarantors party thereto (which are all domestic entities that comprise our SciPlay business segment), the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent. The interest rate is either Adjusted LIBOR (as defined in the SciPlay Revolver) plus 2.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) or ABR (as defined in the SciPlay Revolver) plus 1.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) at the option of SciPlay Holding. SciPlay Holding is required to pay to the lenders a commitment fee of 0.500% per annum on the average daily unused portion of the revolving commitments through maturity, which fee varies based on the total net leverage ratio and is subject to a floor of 0.375%. The SciPlay Revolver provides for up to $15 million in letter of credit issuances. On February 28, 2022, SciPlay entered into Amendment No. 2 to the SciPlay Revolver, that among other things, (i) amends certain interest rate provisions related to Sterling-denominated revolving loans, (ii) increases SciPlay’s capacity to acquire non-loan parties and (iii) allows for the acquisition of Alictus (see Note 10). Notes Issuance of 2025 Secured Notes, 2026 Secured Euro Notes and 2026 Unsecured Euro Notes On February 14, 2018, SGI issued an additional $900 million aggregate principal amount of its 2025 Secured Notes, €325 million aggregate principal amount of its 2026 Secured Euro Notes and €250 million aggregate principal amount of its 2026 Unsecured Euro Notes, and entered into an amendment to our credit agreement to refinance our term loan B-4 facility and increase the term loans outstanding by $900 million under term loan B-5 facility. Issuance of 2026 Unsecured Notes On March 19, 2019, SGI issued $1,100 million in aggregate principal amount of its 2026 Unsecured Notes. We used the net proceeds of the 2026 Unsecured Notes offering to redeem $1,000 million of our outstanding 2022 Unsecured Notes and pay accrued and unpaid interest thereon plus related premiums, fees, and costs, which redemption was completed on April 4, 2019, and paid related fees and expenses of the 2026 Unsecured Notes offering. Issuance of 2028 and 2029 Unsecured Notes On November 26, 2019, SGI issued $700 million in aggregate principal amount of its 2028 Unsecured Notes and $500 million in aggregate principal amount of its 2029 Unsecured Notes. We used the net proceeds of the 2028 Unsecured Notes and the 2029 Unsecured Notes, together with cash on hand and borrowings under the revolving credit facility, to redeem the remaining $1,200 million of our outstanding 2022 Unsecured Notes and all $244 million of our outstanding 2020 Notes and pay accrued and unpaid interest thereon plus related premiums, fees, and costs, which redemption was completed on December 12, 2019, and paid related fees and expenses of the offering. Issuance of 2025 Unsecured Notes On July 1, 2020, we completed the issuance of $550 million in aggregate principal amount of 8.625% senior unsecured notes due 2025 in a private offering and received total net proceeds of $543 million. We used a portion of the net proceeds to redeem all $341 million of our outstanding 2021 Notes and paid accrued and unpaid interest thereon plus related premiums, fees and costs, which redemption was completed on July 17, 2020, and used the remaining net proceeds to fund working capital and general corporate purposes. The following table sets forth the date of the indenture, redemption prices and dates and ranking, guarantees and collateral for each of our outstanding series of notes:
Series of Notes |  | Indenture Date |  | Redeemable at Make Whole Price Prior To(1) |  | Ranking, Guarantees and Collateral
2025 Secured Notes |  | October 17, 2017 |  | October 15, 2020 |  | Senior Secured
2026 Secured Euro Notes(2) |  | February 14, 2018 |  | February 15, 2021 |  | Senior Secured
2025 Unsecured Notes |  | July 1, 2020 |  | July 1, 2022 |  | Senior Unsecured
2026 Unsecured Euro Notes(2) |  | February 14, 2018 |  | February 15, 2021 |  | Senior Unsecured
2026 Unsecured Notes |  | March 19, 2019 |  | March 15, 2022 |  | Senior Unsecured
2028 Unsecured Notes |  | November 26, 2019 |  | May 15, 2023 |  | Senior Unsecured
2029 Unsecured Notes |  | November 26, 2019 |  | November 15, 2024 |  | Senior Unsecured
(1) Refers to the date prior to which such series of notes may be redeemed at a redemption price equal to 100% of the principal amount of such notes plus accrued and unpaid interest, if any, to the date of redemption plus a “make whole” premium. On or after such date, such notes may be redeemed at the prices specified in the indenture governing such notes.
(2) Effective April 30, 2018, the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes were listed on the Official List of The International Stock Exchange.
Ranking, guarantees and collateral Borrowings under the credit agreement and the Secured Notes are senior secured obligations of SGI, rank equally to all of SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future senior subordinated debt, if any. The Unsecured Notes are senior unsecured obligations of SGI, rank equally to all of SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future senior subordinated debt, if any. Borrowings under the credit agreement and the Senior Notes are guaranteed by us and each of our current and future direct and indirect wholly owned domestic subsidiaries (other than SGI, the unrestricted business entities comprising our SciPlay business segment and certain immaterial subsidiaries), subject to certain customary exceptions as set forth in the credit agreement and the indentures governing such notes. Borrowings under the credit agreement and the Senior Notes are structurally subordinated to all of the liabilities of our Non-Guarantor Subsidiaries. The obligations under the credit agreement and the Secured Notes are secured by a first priority lien on (1) substantially all the property and assets (real and personal, tangible and intangible) of SGI and the other guarantors, and (2) 100% of the capital stock (or other equity interests) of the direct domestic subsidiaries of SGC, SGI and the guarantors and 65% of the capital stock (or other equity interests) of the direct foreign subsidiaries of SGC, SGI and the guarantors, in each case, subject to certain customary exceptions. The SciPlay Revolver is secured by a (i) first priority pledge of the equity securities of SciPlay Holding, SciPlay Parent LLC’s restricted subsidiaries and each subsidiary guarantor party thereto and (ii) first priority security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee-owned real property of SciPlay Parent LLC, SciPlay Holding and each subsidiary guarantor party thereto, in each case, subject to customary exceptions. Restrictive covenants Our only financial maintenance covenant (excluding SciPlay’s Revolver) is contained in SGI’s credit agreement. Failure to comply with any of the covenants in these agreements could result in a default under these agreements and under other agreements containing cross-default provisions. Such a default would permit lenders to accelerate the maturity of the debt under these agreements and other agreements containing cross-default provisions and, in the case of the credit agreement and the indentures governing the Secured Notes, to foreclose upon any collateral securing such debt. We amended the consolidated net first lien leverage ratio covenant in the credit agreement with the requisite lenders under SGI’s revolving credit facility on May 8, 2020 (the “Credit Agreement Amendment”) and subsequently extended the Credit Agreement Amendment on October 8, 2020 (the “Credit Agreement Extension Amendment”) to implement a financial covenant relief period, which extends the relief period through the first quarter of 2022 (“Covenant Relief Period”). As a result, (a) SGI is not required to maintain compliance with the consolidated net first lien leverage ratio covenant during the Covenant Relief Period, (b) the step down of the consolidated net first lien leverage ratio covenant following the Covenant Relief Period was revised, (c) SGI must maintain liquidity (excluding SciPlay) of at least $275 million during the Covenant Relief Period, (d) SGI is restricted in its ability to further incur indebtedness and liens, make restricted payments and investments and prepay junior indebtedness during the Covenant Relief Period, subject to certain exceptions and further subject, in some instances, to maintaining minimum liquidity (excluding SciPlay) of at least $400 million and (e) a LIBOR floor of 0.500% was established on borrowings under the revolving credit facility during the Covenant Relief Period. The following table summarizes the revised consolidated net first lien leverage ratio and Consolidated EBITDA:
Revised Consolidated Net First Lien Leverage Ratio Covenant Calculation
Period ending |  | Revised Consolidated Net First Lien Leverage Ratio Covenant |  | Consolidated EBITDA multiplier(1)
3/31/2022 |  | 6.00x |  | 4x Q1-2022
6/30/2022 |  | 6.00x |  | 2x YTD Q2-2022
9/30/2022 |  | 5.75x |  | 1.33x YTD Q3-2022
12/31/2022 |  | 5.75x |  | N/A - Calculated based on the previous 12 month period including the quarter being tested
3/31/2023 |  | 5.25x |
6/30/2023 |  | 5.25x |
9/30/2023 |  | 4.75x |
12/31/2023 |  | 4.75x |
3/31/2024 and thereafter |  | 4.50x |
(1) Consolidated EBITDA is defined in the Credit Agreement Extension Amendment and is calculated as testing year-to-date period-end consolidated EBITDA times multiplier.
Additionally, the SciPlay Revolver requires that SciPlay maintain a maximum total net leverage ratio not to exceed 2.50x and maintain a minimum fixed charge coverage ratio of no less than 4.00x. Our only financial maintenance covenant (excluding SciPlay’s Revolver) is contained in SGI’s credit agreement. Prior to the Credit Agreement Amendment dated May 8, 2020, this covenant was tested at the end of each fiscal quarter and required us to not exceed a maximum consolidated net first lien leverage ratio of 5.00x Consolidated EBITDA (as defined in the credit agreement). Prior to the Credit Agreement Amendment and Credit Agreement Extension Amendment, this ratio stepped down to 4.75x beginning with the fiscal quarter ended December 31, 2020 and to 4.50x beginning with the fiscal quarter ending December 31, 2021. Additionally, the SciPlay Revolver requires that SciPlay maintain a maximum total net leverage ratio not to exceed 2.50x and maintain a minimum fixed charge coverage ratio of no less than 4.00x. We had no amounts drawn on our SciPlay Revolver as of December 31, 2021. We were in compliance with the financial covenants under our debt agreements as of December 31, 2021. Debt issuance costs and Loss on Debt Financing Transactions We capitalize debt issuance costs associated with long-term financing arrangements and amortize the deferred debt issuance costs over the term of the arrangement using the effective interest method. The capitalized debt issuance costs associated with long-term debt financing, other than line-of-credit arrangements, are presented as a direct reduction from the carrying value of long-term debt, consistent with the treatment of unamortized debt discount. In connection with the issuance of the 2026 Unsecured Notes, 2028 Unsecured Notes and 2029 Unsecured Notes, we reflected $26 million, $16 million and $17 million, respectively, in financing costs presented primarily as a reduction to long-term debt. In connection with the July 2020 issuance of the 2025 Unsecured Notes, we reflected $8 million in financing costs presented primarily as a reduction to long-term debt. The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting:
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
Repurchase and cancellation of principal balance at premium | $ | — |  |  | $ | — |  |  | $ | 80 |
Unamortized debt (premium) discount and deferred financing costs, net | — |  |  | — |  |  | 20 |
Third party debt issuance fees | — |  |  | 1 |  |  | — |
Total loss on debt financing transactions | $ | — |  |  | $ | 1 |  |  | $ | 100 |

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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 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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