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Long-Term Debt and Finance Lease Obligations

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt and Finance Lease Obligations

(9) Long-Term Debt and Finance Lease Obligations

Long-term debt and finance lease obligations consist of the following:

(in millions)			September 30, 2020						December 31, 2019
CVR Partners:
9.25% Senior Secured Notes, due June 2023			$	645					$	645
6.50% Senior Notes, due April 2021, net of current portion (1)			—						2
Unamortized discount and debt issuance costs			(12)						(15)
Total CVR Partners debt, net of current portion			$	633					$	632
CVR Refining:
6.50% Senior Notes, due November 2022 (2)			$	—					$	500
Finance lease obligations, net of current portion (3)			56						61
Unamortized debt issuance cost			—						(3)
Total CVR Refining debt, net of current portion			$	56					$	558
CVR Energy:
5.25% Senior Notes, due February 2025			$	600					$	—
5.75% Senior Notes, due February 2028			400						—
Unamortized debt issuance costs			(6)						—
Total CVR Energy debt			994						—
Total long-term debt and finance lease obligations, net of current portion			$	1,683					$	1,190
Current portion of long-term debt and finance lease obligations (4)			7						5
Total long-term debt and finance lease obligations, including current portion			$	1,690					$	1,195

(1)The 6.50% Notes, due April 2021, mature within 12 months, and, therefore, the outstanding balance of $2 million has been classified as short-term debt as of September 30, 2020.

(2)On January 27, 2020, the Company redeemed all of the 6.50% Senior Notes due November 2022 (the “2022 Notes”) for a redemption price equal to 101.083%, plus accrued and unpaid interest on the redeemed notes.

(3)Current portion of finance lease obligations recognized was approximately $5 million and $5 million as of September 30, 2020 and December 31, 2019, respectively.

(4)Amounts reported in Other current liabilities.

CVR Refining

On January 27, 2020, the Company redeemed all of the outstanding 2022 Notes and settled accrued interest of approximately $8 million through the date of redemption. The redeemed notes were repurchased for approximately $505 million, or 101.083% of par value. As a result of this transaction, the Company recognized an $8 million loss on extinguishment of debt in the first quarter of 2020, which includes the call premium paid of $5 million and the write-off of unamortized deferred financing costs of $3 million.

CVR Energy

2025 Notes and 2028 Notes - On January 27, 2020, CVR Energy completed a private offering of $600 million aggregate principal amount of 5.25% Senior Notes due 2025 (the “2025 Notes”) and $400 million aggregate principal amount of 5.75% Senior Notes due 2028 (the “2028 Notes” and, collectively with the 2025 Notes, the “Notes”). Interest on the Notes is payable semi-annually in arrears on February 15 and August 15 each year, commencing on August 15, 2020. The 2025 Notes mature on February 15, 2025, unless earlier redeemed or repurchased by the issuers. The 2028 Notes mature on February 15, 2028, unless earlier redeemed or repurchased by the issuers. The Notes are jointly and severally guaranteed on a senior unsecured basis by the wholly-owned subsidiaries of CVR Energy with the exception of CVR GP, CVR Partners and its subsidiaries, and certain

immaterial wholly-owned subsidiaries of CVR Energy. See Part II, Item 8 of the 2019 Form 10-K for further details of the Notes.

Credit Agreements

(in millions)			Total Available Borrowing Capacity						Amount Borrowed as of September 30, 2020						Outstanding Letters of Credit						Available Capacity as of September 30, 2020						Maturity Date
CVR Partners:
Asset Based (“Nitrogen Fertilizer ABL”) Credit Agreement (1)(2)			$	25					$	—					$	—					$	25					September 30, 2022
CVR Refining:
Amended and Restated Asset Based (“Petroleum ABL”) Credit Agreement (3)			$	400					$	—					$	7					$	393					November 14, 2022

(1)Through December 31, 2020, loans under the Nitrogen Fertilizer ABL bear interest at an annual rate equal to (i) 2.00% plus LIBOR or (ii) 1.00% plus a base rate. Thereafter, loans will bear interest (i) at such rates if our quarterly excess availability is greater than 50% and (ii) (a) 2.50% plus LIBOR or (b) 1.50% plus a base rate, otherwise.

(2)The Nitrogen Fertilizer ABL was amended on September 29, 2020, to, among other things, reduce the commitments thereunder to $35 million and extend the maturity date to September 30, 2022. Deferred financing costs of less than $1 million were capitalized related to this amendment and will be amortized from Prepaid expenses and other current assets and Other long-term assets over the remaining term of the Nitrogen Fertilizer ABL.

(3)Loans under the Petroleum ABL bear interest at an annual rate equal to (i) (a) 1.50% plus LIBOR or (b) 0.50% plus a base rate, if our quarterly excess availability is greater than 50% and (ii) 1.75% plus LIBOR or (b) 0.75% plus a base rate, otherwise.

Covenant Compliance

The Company and its subsidiaries were in compliance with all covenants under their respective debt instruments as of September 30, 2020.

X

- Definition

The entire disclosure for debt and capital lease obligations can be reported. 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. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 840
-URI http://asc.fasb.org/topic&trid=2208923

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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- References

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