NOTE 5 DEBT

As of September 30, 2018 and December 31, 2017, our long-term debt consisted of the following credit agreements, second lien notes and senior notes:


	Outstanding Principal
	(in millions)
	September 30,		December 31,
	2018		2017		Interest Rate	Maturity	Security
Credit Agreements
2014 Revolving Credit Facility	$	342	$	363	LIBOR plus 3.25%-4.00% ABR plus 2.25%-3.00%	June 30, 2021	Shared First-Priority Lien
2017 Credit Agreement		1,300		1,300	LIBOR plus 4.75% ABR plus 3.75%	December 31, 2022(a)	Shared First-Priority Lien
2016 Credit Agreement		1,000		1,000	LIBOR plus 10.375% ABR plus 9.375%	December 31, 2021	First-Priority Lien
Second Lien Notes
Second Lien Notes		2,122		2,250	8%	December 15, 2022(b)	Second-Priority Lien
Senior Notes
5% Senior Notes due 2020		100		100	5%	January 15, 2020	Unsecured
51/2% Senior Notes due 2021		100		100	5.5%	September 15, 2021	Unsecured
6% Senior Notes due 2024		144		193	6%	November 15, 2024	Unsecured
Total	$	5,108	$	5,306

Note: For a detailed description of our credit agreements, second lien notes and senior notes, please see our most recent Form 10-K for the year ended December 31, 2017.

(a)

The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million in principal of the 2016 Credit Agreement is outstanding at that time.

(b)

The Second Lien Notes require principal repayments of approximately $335 million in June 2021, $67 million in December 2021 and $70 million in June 2022.

Deferred Gain and Issuance Costs

As of September 30, 2018, net deferred gain and issuance costs were $253 million, consisting of $357 million of a deferred gain offset by $104 million of deferred issuance costs and original issue discounts. The December 31, 2017 net deferred gain and issuance costs were $287 million, consisting of $415 million of a deferred gain offset by $128 million of deferred issuance costs and original issue discounts.

2014 Revolving Credit Facility

As of September 30, 2018, we had approximately $490 million of available borrowing capacity, subject to a $150 million month-end minimum liquidity requirement. The borrowing base under this facility was reaffirmed at $2.3 billion in October 2018. Our 2014 Revolving Credit Facility also includes a sub-limit of $400 million for the issuance of letters of credit. As of September 30, 2018 and December 31, 2017, we had letters of credit outstanding of approximately $167 million and $148 million, respectively. These letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.

Note Repurchases

In the third quarter of 2018, we repurchased $31 million in aggregate principal amount of our 8% senior secured second lien notes due December 15, 2022 (Second Lien Notes) and $1 million of our 6% senior notes due November 15, 2024 (2024 Notes) for $30 million, resulting in a $2 million pre-tax gain, net of a reduction in deferred issuance costs. In the nine months ended September 30, 2018, we repurchased $128 million and $49 million in aggregate principal amount of our Second Lien Notes and our 2024 Notes, respectively, for $149 million in cash resulting in a pre-tax gain of $26 million, net of a reduction in deferred issuance costs.

Fair Value

We estimate the fair value of fixed-rate debt, which is classified as Level 1, based on prices from known market transactions for our instruments. The estimated fair value of our debt at September 30, 2018 and December 31, 2017, including the fair value of variable-rate debt, was approximately $5.0 billion and $4.8 billion, respectively, compared to a carrying value of approximately $5.1 billion and $5.3 billion, respectively.

Amendments

On August 20, 2018, we entered into an amendment to the 2014 Credit Agreement. The 2014 Credit Agreement was amended to, among other things:

permit us to draw on our revolver to repurchase our Second Lien Notes and Senior Notes at a discount to par in an amount up to $300 million;

permit us to draw on our revolver to repurchase our Second Lien Notes and Senior Notes at a discount to par, without regard to time limit, in an amount not to exceed a specified portion of proceeds from future dispositions of certain assets;

in connection with any repurchase of certain of our indebtedness, increase the minimum liquidity required to make such repurchase (calculated on a pro forma basis after giving effect to the repurchase) from $250 million to $300 million; and

enhance our ability to refinance our outstanding term loans under our 2017 Credit Agreement and 2016 Credit Agreement, Second Lien Notes and Senior Notes, in each case by allowing the use of permitted refinancing indebtedness for such refinancing so long as certain conditions are met.

On September 18, 2018, we entered into an amendment to the 2017 Credit Agreement. The 2017 Credit Agreement was amended to, among other things:

permit us to repurchase our Second Lien Notes and Senior Notes at a discount to par, without regard to time limit, in an amount not to exceed a specified portion of proceeds from dispositions of certain assets; and

enhance our ability to refinance our outstanding Second Lien Notes, Senior Notes and 2016 Credit Agreement, in each case by allowing the use of permitted refinancing indebtedness for such refinancing so long as certain conditions are met.

Other

At September 30, 2018, we were in compliance with all financial and other debt covenants.

All obligations under our 2014 Revolving Credit Facility, 2017 Credit Agreement and 2016 Credit Agreement (collectively, Credit Facilities) as well as our Second Lien Notes and Senior Notes are guaranteed both fully and unconditionally and jointly and severally by all of our material wholly owned subsidiaries.

A one-eighth percent change in the variable interest rates on the borrowings under our Credit Facilities on September 30, 2018 would result in a $3 million change in annual interest expense.