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Long-Term Debt and Finance Lease Obligations

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Long-Term Debt and Finance Lease Obligations

(8) Long-Term Debt and Finance Lease Obligations

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

(in millions)			June 30, 2021						December 31, 2020
CVR Partners:
9.25% Senior Secured Notes, due June 2023 (1)			$	95					$	645
6.125% Senior Secured Notes, due June 2028			550						—
Unamortized discount and debt issuance costs			(5)						(11)
Total CVR Partners debt, net of current portion			$	640					$	634
CVR Refining:
Finance lease obligations, net of current portion (2)			52						55
Total CVR Refining debt, net of current portion			$	52					$	55
CVR Energy:
5.25% Senior Notes, due February 2025			$	600					$	600
5.75% Senior Notes, due February 2028			400						400
Unamortized debt issuance costs			(5)						(6)
Total CVR Energy debt			995						994
Total long-term debt and finance lease obligations, net of current portion			$	1,687					$	1,683
Current portion of long-term debt and finance lease obligations (2)(3)			6						8
Total long-term debt and finance lease obligations, including current portion			$	1,693					$	1,691

(1)The call price of the 9.25% Senior Secured Notes, due June 2023 (the “2023 UAN Notes”) decreased to par on June 15, 2021. On June 23, 2021, CVR Partners redeemed $550 million of the 2023 UAN Notes, at par, plus accrued and unpaid interest. The remaining balance of $95 million is outstanding as of June 30, 2021.

(2)Current portion of finance lease obligations recognized was approximately $6 million as of June 30, 2021 and December 31, 2020. The current amounts are reported in Other current liabilities.

(3)The $2 million outstanding balance of the 6.50% Notes, due April 2021, was paid in full on April 15, 2021.

Credit Agreements

(in millions)			Total Available Borrowing Capacity						Amount Borrowed as of June 30, 2021						Outstanding Letters of Credit						Available Capacity as of June 30, 2021						Maturity Date
CVR Partners:
Asset Based (“Nitrogen Fertilizer ABL”) Credit Agreement (1)			$	32					$	—					$	—					$	32					September 30, 2022
CVR Refining:
Amended and Restated Asset Based (“Petroleum ABL”) Credit Agreement (2)			$	400					$	—					$	36					$	364					November 14, 2022

(1)Beginning January 1, 2021, loans under the Nitrogen Fertilizer ABL bear interest at an annual rate equal to (i) (a) 2.00% plus LIBOR, to the extent available, or (b) 1.00% plus a base rate, if our quarterly excess availability is greater than 50%, and (ii) (a) 2.50% plus LIBOR, to the extent available, or (b) 1.50% plus a base rate, otherwise.

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

2028 UAN Notes - On June 23, 2021, CVR Partners and its subsidiary, CVR Nitrogen Finance Corporation (“Finance Co.” and, together with CVR Partners, the “Issuers”), completed a private offering of $550 million aggregate principal amount of 6.125% Senior Secured Notes due 2028 (the “2028 UAN Notes”). Interest on the 2028 UAN Notes is payable semi-annually in arrears on June 15 and December 15 each year, commencing on December 15, 2021. The 2028 UAN Notes mature on June 15, 2028, unless earlier redeemed or repurchased by the Issuers. The 2028 UAN Notes are jointly and severally guaranteed on a senior secured basis by all the existing domestic subsidiaries of CVR Partners, excluding Finance Co.

In relation to the issuance of the 2028 UAN Notes, CVR Partners received $547 million of net cash proceeds, net of underwriting fees and other third-party fees and expenses associated with the offering. The debt issuance costs of the 2028 UAN Notes totaled approximately $3 million and are being amortized over the term of the 2028 UAN Notes as interest expense using the effective-interest amortization method.

The Issuers may, at their option, at any time and from time to time prior to June 15, 2024, on any one or more occasions, redeem all or part of the 2028 UAN Notes, at a price equal to 100% of the principal amount plus a “make whole” premium, plus accrued and unpaid interest. On or after June 15, 2024, the Issuers may, on any one or more occasions, redeem all or part of the 2028 UAN Notes at the redemption prices set forth below, expressed as a percentage of the principal amount of the respective notes, plus accrued and unpaid interest to the applicable redemption date.

12-month period beginning June 15,						Percentage
2024						103.063%
2025						101.531%
2026 and thereafter						100.000%

The indenture governing the 2028 UAN Notes contains covenants that are substantially the same as the indenture governing the 2023 UAN Notes. However, the 2028 Notes contain a permitted investment activity carveout that allows for the transfer of certain carbon capture assets to a joint venture for the purpose of monetizing potential tax credits.

2023 UAN Notes - On June 23, 2021, CVR Partners redeemed $550 million aggregate principal amount of the outstanding 2023 UAN Notes at par and settled accrued interest of approximately $1 million through the date of redemption. As a result of the redemption, CVR Partners recognized in Interest expense, net an $8 million loss on extinguishment of debt in the second quarter of 2021, which includes the write-off of unamortized deferred financing costs and discount of $3 million and $5 million, respectively.

Covenant Compliance

The Company and its subsidiaries were in compliance with all covenants under their respective debt instruments as of June 30, 2021.

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- 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/otherTransitionRef
-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/otherTransitionRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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- References

No definition available.

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