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Debt | 12 Months Ended
--- | ---
Dec. 31, 2019
Debt Disclosure [Abstract] |
Debt | Note 20. Debt The following table sets forth the components of the Company’s debt at December 31, 2019 and 2018.
|  | December 31, |
|  | 2019 |  |  | 2018 |
Senior secured term loans: |  |  |  |  |  |  |  |
Tranche B-2 U.S. dollar term loan due May 2025 |  | $ | 884 |  |  | $ | 893 |
Tranche B-2 euro term loan due May 2025 (€344 at December 31, 2019 and €347 at December 31, 2018) |  |  | 383 |  |  |  | 396 |
Senior unsecured notes: |  |  |  |  |  |  |  |
6.625% due May 2023 |  |  | 908 |  |  |  | 908 |
7.000% due May 2025 |  |  | 750 |  |  |  | 750 |
4.000% due May 2026 (€450 at December 31, 2019 and 2018) |  |  | 501 |  |  |  | 513 |
5.375% due May 2027 |  |  | 500 |  |  |  | 500 |
Securitization Facility |  |  | 110 |  |  |  | — |
Finance lease liabilities |  |  | 59 |  |  |  | 2 |
Financing obligation (1) |  |  | 95 |  |  |  | 55 |
Other |  |  | 6 |  |  |  | — |
Total debt |  |  | 4,196 |  |  |  | 4,017 |
Less: Unamortized issue discounts |  |  | (8 | ) |  |  | (10 | )
Less: Unamortized debt issuance costs |  |  | (28 | ) |  |  | (35 | )
Less: Short-term and current maturities of long-term debt |  |  | (134 | ) |  |  | (13 | )
Total long-term debt, net |  | $ | 4,026 |  |  | $ | 3,959 |
| (1) | At December 31, 2019, financing obligation includes $95 in connection with the financed portion of the Chemours Discovery Hub, which was considered a build-to-suit lease liability of $55 at December 31, 2018. Refer to “Note 14 – Leases” for further details.
Senior Secured Credit Facilities On April 3, 2018, the Company amended and restated its credit agreement (“Credit Agreement”) that provides for a seven-year, senior secured term loan facility and a five-year, $800 senior secured revolving credit facility (“Revolving Credit Facility”) (collectively, the “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities are subject to a springing maturity in the event that the senior unsecured notes due in May 2023 are not redeemed, repaid, modified, and/or refinanced within the 91-day period prior to their maturity date. The senior secured term loan facility under the Senior Secured Credit Facilities provides for a class of term loans, denominated in U.S. dollars, in an aggregate principal amount of $900 (“Dollar Term Loan”) and a class of term loans, denominated in euros, in an aggregate principal amount of €350 (“Euro Term Loan”) (collectively, the “Term Loans”). The Dollar Term Loan bears a variable interest rate equal to, at the election of the Company, adjusted LIBOR plus 1.75% or adjusted base rate plus 0.75%, subject to an adjusted LIBOR or an adjusted base rate floor of 0.00% or 1.00%, respectively. The Euro Term Loan bears a variable interest rate equal to adjusted EURIBOR plus 2.00%, subject to an adjusted EURIBOR floor of 0.50%. The Term Loans will mature on April 3, 2025, and are subject to acceleration in certain circumstances. The proceeds of any loans made under the Revolving Credit Facility can be used for working capital needs and other general corporate purposes, including permitted acquisitions, as defined in the Credit Agreement. The Revolving Credit Facility bears a variable interest rate range based on the Company’s total net leverage ratio, as defined in the Credit Agreement, between (i) a 0.25% and a 1.00% spread for adjusted base rate loans, and (ii) a 1.25% and a 2.00% spread for LIBOR and EURIBOR loans. In addition, the Company is required to pay a commitment fee on the average daily unused amount of the Revolving Credit Facility within an interest rate range based on its total net leverage ratio, between 0.10% and 0.25%. The Revolving Credit Facility will mature on April 3, 2023, and is subject to acceleration in certain circumstances. During the year ended December 31, 2019, the Company borrowed and subsequently repaid $150 under the Revolving Credit Facility. There were no borrowings outstanding under the Revolving Credit Facility at December 31, 2019 and 2018. Issued and outstanding letters of credit under the Revolving Credit Facility amounted to $103 and $104 at December 31, 2019 and 2018, respectively. At December 31, 2019, the effective interest rates on the Dollar Term Loan and the Euro Term Loan were 3.6% and 2.5%, respectively, and commitment fees on the Revolving Credit Facility were assessed at a rate of 0.20% per annum. In connection with the issuance of the Senior Secured Credit Facilities, the Company incurred a loss on debt extinguishment of $3 for the year ended December 31, 2018. Under the Credit Agreement, solely with respect to the Revolving Credit Facility, the Company is required to maintain a senior secured net leverage ratio not to exceed 2.00 to 1.00 in each quarter, through the date of maturity. In addition, the Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict the Company’s and its subsidiaries’ ability, subject to certain exceptions, to incur additional indebtedness or liens, pay dividends, and engage in certain transactions, including mergers, acquisitions, asset sales, or investments, outside of specified carve-outs. The Credit Agreement also contains customary representations and warranties and events of default. The Company was in compliance with its debt covenants at December 31, 2019 and 2018. The Company’s obligations under the Senior Secured Credit Facilities are guaranteed on a senior secured basis by all of its material domestic subsidiaries, which are also guarantors of the Company’s outstanding notes, subject to certain exceptions. The obligations under the Senior Secured Credit Facilities are also, subject to certain exceptions, secured by a first priority lien on substantially all of the Company’s assets and substantially all of the assets of its wholly-owned, material domestic subsidiaries, including 100% of the stock of certain of its domestic subsidiaries and 65% of the stock of certain of its foreign subsidiaries. Senior Unsecured Notes Senior Unsecured Notes due May 2023 and May 2025 On May 12, 2015, Chemours issued an aggregate principal amount of $2,503 in senior unsecured notes consisting of an aggregate principal amount of $1,350 6.625% senior unsecured notes due May 2023, denominated in U.S. dollars (the “2023 Dollar Notes”), an aggregate principal amount of €360 6.125% senior unsecured notes due May 2023, denominated in euros (the “2023 Euro Notes”), and an aggregate principal amount of $750 7.000% senior unsecured notes due May 2025, denominated in U.S dollars (the “2025 Notes”) (collectively, the “Original Notes”). The Original Notes required or require, as applicable, payment of principal at maturity and payments of interest semi-annually in cash and in arrears on May 15 and November 15 of each year. The proceeds from the Original Notes were issued to fund a cash distribution to DuPont in connection with the Separation. As discussed in more detail below, the Company purchased or redeemed, as applicable, all of the outstanding 2023 Euro Notes and a $250 aggregate principal amount of the 2023 Dollar Notes during the year ended December 31, 2018. The Original Notes were or are, as applicable, fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis, by each of Chemours’ existing and future direct or indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior Secured Credit Facilities, or (ii) guarantees certain other indebtedness of the Company or any guarantor in an aggregate principal amount in excess of $75. The Original Notes were or are, as applicable, unsecured and unsubordinated by Chemours and its guarantor subsidiaries. The Original Notes ranked or rank, as applicable, equally in right of payment to all of Chemours’ existing and future unsecured unsubordinated debt and senior in right of payment to all of its existing and future debt that is by its terms expressly subordinated in right of payment to the Original Notes. The Original Notes were or are, as applicable, subordinated to indebtedness under the Senior Secured Credit Facilities as well as any future secured debt to the extent of the value of the assets securing such debt. Pursuant to the terms of the indenture governing the Original Notes, the Company was or is, as applicable, obligated to offer to purchase the Original Notes at a price of (i) 101% of their principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the occurrence of certain change of control events, and (ii) 100% of their principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, with the proceeds from certain asset dispositions. These restrictions and prohibitions were or are, as applicable, subject to certain qualifications and exceptions set forth in the indenture governing the Original Notes, including without limitation, reinvestment rights with respect to the proceeds of asset dispositions. Chemours is permitted to currently redeem some or all of the 2023 Dollar Notes at specified redemption prices, and may redeem some or all of the 2025 Notes on or after May 15, 2020 at specified redemption prices. Chemours may also redeem some or all of the 2023 Dollar Notes or the 2025 Notes by means other than a redemption, including tender offer or open market purchases. Pursuant to the terms of the tax matters agreement entered into at the time of the Separation, the Company’s ability to pre-pay, pay down, redeem, retire, or otherwise acquire the 2025 Notes is limited in the absence of obtaining certain tax opinions. Senior Unsecured Notes Due May 2027 On May 23, 2017, Chemours issued a $500 aggregate principal amount of 5.375% senior unsecured notes due May 2027 (the “2027 Notes”). The 2027 Notes require payment of principal at maturity and interest semi-annually in cash and in arrears on May 15 and November 15 of each year. The Company received proceeds of $489, net of an original issue discount of $5 and underwriting fees and other related expenses of $6, which are deferred and amortized to interest expense using the effective interest method over the term of the 2027 Notes. A portion of the net proceeds from the 2027 Notes was used to pay the $335 accrued for the global settlement of the multi-district “PFOA MDL Settlement,” as discussed in “Note 22 – Commitments and Contingent Liabilities.” The remaining proceeds from the 2027 Notes were available for general corporate purposes. The 2027 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis by each of Chemours’ existing and future direct and indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior Secured Credit Facilities, or (ii) guarantees certain other indebtedness of Chemours or any guarantor in an aggregate principal amount in excess of $100. The guarantees of the 2027 Notes will rank equally with all other senior indebtedness of the guarantors. The 2027 Notes rank equally in right of payment to all of Chemours’ existing and future unsecured unsubordinated debt and are senior in right of payment to all of its existing and future debt that is by its terms expressly subordinated in right of payment to the 2027 Notes. The 2027 Notes are subordinated to indebtedness under the Senior Secured Credit Facilities as well as any future secured debt to the extent of the value of the assets securing such debt, and structurally subordinated to the liabilities of any non-guarantor subsidiaries. Pursuant to the terms of the indenture governing the 2027 Notes, Chemours may redeem the 2027 Notes, in whole or in part, at an amount equal to 100% of the aggregate principal amount plus a specified “make-whole” premium and accrued and unpaid interest, if any, to the date of purchase prior to February 15, 2027. Chemours may also redeem some or all of the 2027 Notes by means other than a redemption, including tender offer and open market repurchases. Chemours is obligated to offer to purchase the 2027 Notes at a price of 101% of the principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the occurrence of certain change of control events. Senior Unsecured Notes due May 2026 On June 6, 2018, the Company issued an aggregate principal amount of €450 4.000% senior unsecured notes due May 2026, denominated in euros (the “2026 Euro Notes”). The 2026 Euro Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis, by each of the Company’s existing and future direct and indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior Secured Credit Facilities, or (ii) guarantees certain other indebtedness of the Company or any guarantor in an aggregate principal amount in excess of $100. The 2026 Euro Notes require payment of principal at maturity and payments of interest semi-annually in cash and in arrears on May 15 and November 15 of each year. Pursuant to the terms of the indenture governing the 2026 Euro Notes, the Company is obligated to offer to purchase the 2026 Euro Notes at a price of 101% of the principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the occurrence of certain change of control events. Prior to May 15, 2021, the Company may redeem the 2026 Euro Notes (i) in whole or in part, at an amount equal to 100% of the aggregate principal amount plus a specified “make-whole” premium, and (ii) on one or more occasions, up to 35% of the aggregate principal amount of the notes, with the net cash proceeds of one or more equity offerings at a price equal to 104% of the principal amounts of such notes, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. The guarantees of the 2026 Euro Notes will rank equally with all other senior indebtedness of the guarantors. The 2026 Euro Notes rank equally in right of payment to all of the Company’s existing and future unsecured unsubordinated debt and are senior in right of payment to all of its existing and future debt that is, by its terms, expressly subordinated in right of payment to the 2026 Euro Notes. The 2026 Euro Notes are subordinated to indebtedness under the Senior Secured Credit Facilities, as well as any future secured debt to the extent of the value of the assets securing such debt, and are structurally subordinated to the liabilities of any non-guarantor subsidiaries. The Company received net proceeds of €445 from the offering of the 2026 Euro Notes, which, together with cash on hand, were used to purchase or redeem, as the case may be, all of the outstanding 2023 Euro Notes and a $250 aggregate principal amount of the 2023 Dollar Notes pursuant to the Tender Offers (defined below) and the redemption of the 2023 Euro Notes, as well as pay for any fees and expenses in connection therewith. In connection with the concurrent redemption of the 2023 Euro Notes and issuance of the 2026 Euro Notes, the Company incurred a loss on extinguishment of $35 for the year ended December 31, 2018. 2023 Notes Tender Offers and Redemption of the 2023 Euro Notes On May 21, 2018, the Company commenced two all-cash tender offers to purchase: (i) up to $250 of the outstanding 2023 Dollar Notes, for a purchase price of $1,052.50 per $1,000.00 of principal amount through an early tender deadline of June 4, 2018, and $1,022.50 per $1,000.00 of principal amount thereafter, through June 18, 2018, the tender expiration date, plus any accrued and unpaid interest thereon (the “Dollar Tender Offer”); and, (ii) any and all of the outstanding 2023 Euro Notes (collectively, the “2023 Notes”), for a purchase price of €1,048.75 per €1,000.00 of principal amount through an early tender deadline of June 4, 2018, and €1,018.75 per €1,000.00 of principal amount thereafter, through June 18, 2018, the tender expiration date, plus any accrued and unpaid interest thereon (the “Euro Tender Offer”) (collectively, the “Tender Offers”). The Company completed the Dollar Tender Offer on June 6, 2018 for an aggregate purchase price of $264, inclusive of an early participation premium of $13 and accrued interest of $1. The Company completed the Euro Tender Offer on June 8, 2018 for an aggregate purchase price of €310, inclusive of an early participation premium of €14 and accrued interest of €1. In connection with the Euro Tender Offer, the Company received consents from the holders of a majority of the aggregate principal amount of the 2023 Euro Notes to amend certain provisions of the indenture governing the 2023 Euro Notes, thereby allowing the Company to call and redeem the remaining 2023 Euro Notes outstanding upon two business days’ notice to the noteholders. On June 8, 2018, the Company completed the redemption of the remaining outstanding 2023 Euro Notes that were not purchased pursuant to the Euro Tender Offer. The Tender Offers and the redemption of the 2023 Euro Notes were funded with the proceeds from the offering of the 2026 Euro Notes and cash on hand. Accounts Receivable Securitization Facility On July 12, 2019, the Company, through a wholly-owned special purpose entity (“SPE”), executed an agreement with a bank for an accounts receivable securitization facility (“Securitization Facility”) for the purpose of enhancing the Company’s liquidity. Under the Securitization Facility, certain of the Company’s subsidiaries will sell their accounts receivable to the SPE, which is a non-guarantor subsidiary. In turn, the SPE may transfer undivided ownership interests in such receivables to the bank in exchange for cash. The Securitization Facility permits the SPE to borrow up to a total of $125, with an option to increase to $200. The bank has a first priority security interest in all receivables held by the SPE, and the SPE has not granted a security interest to anyone else. At December 31, 2019, receivables held by the SPE totaled $176. Because the SPE maintains effective control over the accounts receivable, transfers of the ownership interests to the bank do not meet the criteria to account for the transfers as true sales. As a result, the Company accounted for the transfers under the Securitization Facility as collateralized borrowings. Cash received from the bank is a short-term obligation of the Company, which is fully-collateralized by all receivables held by the SPE. The Securitization Facility is subject to interest charges against both the amount of outstanding borrowings and the amount of available but undrawn commitments. The Securitization Facility bears a variable interest rate on outstanding borrowings and a fixed commitment fee on the average daily undrawn amount. During the year ended December 31, 2019, the weighted average interest rate on the outstanding borrowings under the Securitization Facility was 2.0%. Borrowings under the Securitization Facility are classified in its consolidated balance sheets as a component of its current liabilities due to the short-term nature of the obligation. Borrowings and repayments under the Securitization Facility amounted to $128 and $18, respectively. Net borrowings of $110 remained outstanding as of December 31, 2019. Other During the third quarter of 2019, the Company entered into a financing arrangement, by which an external financing company funded certain of the Company’s annual insurance premiums for $11. During the year ended December 31, 2019, the Company made payments of $5 to the financing company, and the remaining $6 is to be repaid within the next twelve months. Maturities The Company has required quarterly principal payments related to the Senior Secured Credit Facilities equivalent to 1.00% per annum through December 2024, with the balance due at maturity. Also, following the end of each fiscal year commencing on the year ended December 31, 2019, on an annual basis, the Company is required to make additional principal payments depending on leverage levels, as defined in the amended and restated credit agreement, equivalent to up to 50% of excess cash flows based on certain leverage targets with step-downs to 25% and 0% as actual leverage decreases to below a 3.50 to 1.00 leverage target. The following table sets forth the Company’s debt principal maturities for the next five years and thereafter.
|  | Year Ended |
|  | December 31, |
2020 |  | $ | 122 |
2021 |  |  | 13 |
2022 |  |  | 13 |
2023 |  |  | 921 |
2024 |  |  | 13 |
Thereafter (1) |  |  | 2,954 |
Total principal maturities on debt |  | $ | 4,036 |
| (1) | The Senior Secured Credit Facilities are subject to a springing maturity in the event that the senior unsecured notes due in May 2023 are not redeemed, repaid, modified, and/or refinanced within the 91-day period prior to their maturity date
Debt Fair Value The following table sets forth the estimated fair values of the Company’s senior debt issues, which are based on quotes received from third-party brokers, and are classified as Level 2 financial instruments in the fair value hierarchy. The carrying value of the Securitization Facility approximates its fair value based on its short-term nature and maturity.
|  | December 31, 2019 |  |  | December 31, 2018 |
|  | Carrying Value |  |  | Fair Value |  |  | Carrying Value |  |  | Fair Value |
Senior secured term loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tranche B-2 U.S. dollar term loan due May 2025 |  | $ | 884 |  |  | $ | 865 |  |  | $ | 893 |  |  | $ | 862 |
Tranche B-2 euro term loan due May 2025 (€344 at December 31, 2019 and €347 at December 31, 2018) |  |  | 383 |  |  |  | 378 |  |  |  | 396 |  |  |  | 394 |
Senior unsecured notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
6.625% due May 2023 |  |  | 908 |  |  |  | 917 |  |  |  | 908 |  |  |  | 918 |
7.000% due May 2025 |  |  | 750 |  |  |  | 755 |  |  |  | 750 |  |  |  | 761 |
4.000% due May 2026 (€450 at December 31, 2019 and 2018) |  |  | 501 |  |  |  | 455 |  |  |  | 513 |  |  |  | 487 |
5.375% due May 2027 |  |  | 500 |  |  |  | 450 |  |  |  | 500 |  |  |  | 454 |
Securitization Facility |  |  | 110 |  |  |  | 110 |  |  |  | — |  |  |  | — |
Total senior debt |  |  | 4,036 |  |  | $ | 3,930 |  |  |  | 3,960 |  |  | $ | 3,876 |
Less: Unamortized issue discounts |  |  | (8 | ) |  |  |  |  |  |  | (10 | ) |  |  |  |
Less: Unamortized debt issuance costs |  |  | (28 | ) |  |  |  |  |  |  | (35 | ) |  |  |  |
Total senior debt, net |  | $ | 4,000 |  |  |  |  |  |  | $ | 3,915 |  |  |  |  |

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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 + Details
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