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Notes Payable, Long-term Debt, Commitments and Contingencies | 9 Months Ended
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Oct. 01, 2016
Notes Payable, Long-term Debt, Commitments and Contingencies |
Notes Payable, Long-term Debt, Commitments and Contingencies | Note 7 – Notes Payable, Long-term Debt, Commitments and Contingencies Notes Payable Of the $129 million of notes payable outstanding at October 1, 2016, $106 million are related to foreign subsidiaries, with $90 million denominated in South African rand, $11 million denominated in Argentine pesos and $5 million denominated in Zambian kwacha. The weighted average interest rate for outstanding notes payable was 10.21% and 11.74% at October 1, 2016 and December 31, 2015, respectively. As of October 1, 2016, Seaboard had uncommitted bank lines totaling $381 million, of which $331 million related to foreign subsidiaries. The notes payable under the credit lines are unsecured and do not require compensating balances. On September 30, 2016, Seaboard entered into a $100 million committed bank line with Wells Fargo Bank, National Association (“Wells Fargo”) that matures on September 29, 2017. Interest is computed at LIBOR plus 0.50% and Seaboard incurs an unused commitment fee of 0.09% per annum. This bank line is secured by certain short-term investments. The line of credit is subject to standard representations and covenants. There was no outstanding balance as of October 1, 2016. Seaboard’s borrowing capacity under its committed and uncommitted lines was reduced by $129 million drawn under the uncommitted lines and letters of credit totaling $4 million as of October 1, 2016. Long-term Debt The following is a summary of long-term debt:
|  |  | October 1, |  | December 31,
(Millions of dollars) |  |  | 2016 |  | 2015
Term Loan due 2022 |  | $ | 500 |  | $ | 500 |
Foreign subsidiary obligations due 2018 through 2023 |  |  | 21 |  |  | 23 |
Total long-term debt at face value |  |  | 521 |  |  | 523 |
Current maturities of long-term debt and unamortized discount |  |  | (18) |  |  | (5) |
Long-term debt, less current maturities and unamortized discount |  | $ | 503 |  | $ | 518 |
The interest rate on the Term Loan due 2022 was 2.14% and 1.90% at October 1, 2016 and December 31, 2015, respectively. The weighted average interest rate on Seaboard’s foreign subsidiary obligations was 23.82% and 30.23% at October 1, 2016 and December 31, 2015, respectively. Seaboard was in compliance with all restrictive debt covenants relating to these agreements as of October 1, 2016. Commitments In 2015, Seaboard’s Pork segment and Triumph Foods, LLC (“Triumph”) entered into a new joint venture, Seaboard Triumph Foods, LLC (“STF LLC”), with equal ownership of 50%. This joint venture is constructing a new pork processing facility in Sioux City, Iowa, which is expected to be completed by mid-2017. Seaboard originally agreed to contribute up to $207 million in connection with the development and operation of the facility; however, in the first quarter of 2016, third-party financing was obtained by STF LLC, and the subscription agreement was amended to require $150 million in capital contributions. As of October 1, 2016, $15 million is expected to be contributed during the remainder of 2016, with $73 million due in 2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. Contingencies On April 29, 2015, Seaboard received from the Department of Justice, Asset Forfeiture and Money Laundering Section (“AFMLS”), a Grand Jury subpoena issued by the U.S. District Court for the District of Columbia (the “DC District Court”) requesting records related to 37 specified foreign companies and five individuals. Seaboard has previously produced documents responsive to Grand Jury subpoenas dated September 18, 2014 and October 17, 2014. The subpoena issued September 18, 2014 requested records related to nine entities and one individual, and the subpoena issued October 17, 2014 requested records with respect to eight additional entities and one additional individual. Two additional subpoenas, each dated July 2, 2015, were received by Seaboard requesting records related to a certain customer. The companies and individuals as to which the requested records relate to are not affiliated with Seaboard. The AFMLS attorney conducting the investigation advised Seaboard during discussions in 2015 that it was not a target of the investigation. On June 6, 2016, a request was received for additional information relating to an affiliate of Seaboard as to which Seaboard is in the process of responding. Seaboard has retained outside counsel and is cooperating with the government’s investigation. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome or to estimate the amount of potential loss, if any, resulting from the government’s inquiry. On September 19, 2012, the U.S. Immigration and Customs Enforcement (“ICE”) executed three search warrants authorizing the seizure of certain records from Seaboard’s offices in Merriam, Kansas and at the Seaboard Foods LLC ("Seaboard Foods") employment office and the human resources department in Guymon, Oklahoma. The warrants generally called for the seizure of employment-related files, certain e-mails and other electronic records relating to Medicaid and Medicaid recipients, certain health care providers in the Guymon area, and Seaboard’s health plan and certain personnel issues. The U.S. Attorney’s Office for the Western District of Oklahoma (“USAO”), which has been leading the investigation, previously advised Seaboard that it intended to close its investigation and that no charges would be brought against Seaboard. However, discussions continue with the USAO, ICE and the Oklahoma Attorney General's office regarding the matter, including the possibility of a settlement. No proceedings have been filed or brought as of the date of this report. It is not possible at this time to determine whether a settlement will be reached or whether Seaboard will incur any material fines, penalties or liabilities in connection with this matter. On February 16, 2016, Seaboard Foods received an information request from the U.S. Environmental Protection Agency (“EPA”) seeking information under the Clean Air Act with regard to various ammonia releases at Seaboard Foods’ pork processing plant in Guymon, Oklahoma. Seaboard has been cooperating with the EPA with regard to the investigation and has responded to the request. It is not possible at this time to determine whether Seaboard will incur any material fines, penalties or liabilities in connection with this matter. Seaboard is subject to various administrative and judicial proceedings and other legal matters related to the normal conduct of its business. In the opinion of management, the ultimate resolution of these items is not expected to have a material adverse effect on the Condensed Consolidated Financial Statements of Seaboard. Contingent Obligations Certain of the non-consolidated affiliates and third-party contractors who perform services for Seaboard have bank debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of that debt in order to further Seaboard’s business objectives. Seaboard does not issue guarantees of third parties for compensation. As of October 1, 2016, guarantees outstanding to third parties were not material. Seaboard has not accrued a liability for any of the third-party or affiliate guarantees as management considers the likelihood of loss to be remote. See Notes Payable section above for discussion of letters of credit.

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