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Debt | 9 Months Ended
--- | ---
Sep. 30, 2015
Debt |
Debt | 8. Debt The following table summarizes the long-term debt of the Company:
|  | September 30, |  | December 31, |  | September 30, |
|  | 2015 |  | 2014 |  | 2014 |
Secured Credit Agreement: |  |  |  |  |  |  |  |  |  |
Revolving Credit Facility: |  |  |  |  |  |  |  |  |  |
Revolving Loans |  | $ | 220 |  | $ | — |  | $ | — |
Term Loans: |  |  |  |  |  |  |  |  |  |
Term Loan A |  |  | 1,546 |  |  |  |  |  |  |
Term Loan A (€279 million at September 30, 2015) |  |  | 309 |  |  |  |  |  |  |
Term Loan B |  |  | 563 |  |  |  |  |  |  |
Previous Secured Credit Agreement: |  |  |  |  |  |  |  |  |  |
Revolving Credit Facility: |  |  |  |  |  |  |  |  |  |
Revolving Loans |  |  |  |  |  |  |  |  | 60 |
Term Loans: |  |  |  |  |  |  |  |  |  |
Term Loan B (USD tranche) |  |  |  |  |  | 404 |  |  | 404 |
Term Loan C (CAD tranche) |  |  |  |  |  | 70 |  |  | 73 |
Term Loan D (EURO tranche) |  |  |  |  |  | 103 |  |  | 108 |
Senior Notes: |  |  |  |  |  |  |  |  |  |
3.00%, Exchangeable, due 2015 |  |  |  |  |  | 18 |  |  | 614 |
7.375%, due 2016 |  |  |  |  |  | 594 |  |  | 592 |
6.75%, due 2020 (€500 million) |  |  | 557 |  |  | 603 |  |  | 629 |
4.875%, due 2021 (€330 million) |  |  | 367 |  |  | 397 |  |  | 415 |
5.00%, due 2022 |  |  | 494 |  |  | 493 |  |  |  |
5.875%, due 2023 |  |  | 679 |  |  |  |  |  |  |
5.375%, due 2025 |  |  | 296 |  |  | 295 |  |  |  |
6.375%, due 2025 |  |  | 293 |  |  |  |  |  |  |
Senior Debentures: |  |  |  |  |  |  |  |  |  |
7.80%, due 2018 |  |  | 250 |  |  | 249 |  |  | 249 |
Capital Leases |  |  | 60 |  |  | 63 |  |  | 61 |
Other |  |  | 32 |  |  | 29 |  |  | 19 |
Total long-term debt |  |  | 5,666 |  |  | 3,318 |  |  | 3,224 |
Less amounts due within one year |  |  | 57 |  |  | 361 |  |  | 805 |
Long-term debt |  | $ | 5,609 |  | $ | 2,957 |  | $ | 2,419 |
On April 22, 2015, certain of the Company’s subsidiaries entered into a new Senior Secured Credit Facility (the “Agreement”), which amended and restated the previous credit agreement (the “Previous Agreement”). The proceeds from the Agreement were used to repay all outstanding amounts under the Previous Agreement and the 7.375% senior notes due 2016. For the nine months ended September 2015, the Company recorded $42 million of additional interest charges for note repurchase premiums and the related write-off of unamortized finance fees. In connection with the closing of the Vitro Acquisition on September 1, 2015 (see Note 15), the Company entered into Amendment No. 2 (“Amendment No. 2”) to the Agreement, which provided for additional incremental availability under the incremental dollar cap in the Agreement of up to $1,250 million. In addition, in connection with the closing of the Vitro Acquisition, on September 1, 2015, the Company entered into the First Incremental Amendment to the Agreement (the “Incremental Amendment”) pursuant to which the Company incurred $1,250 million of senior secured incremental term loan facilities, comprised of (i) a $675 million term loan A facility (the “incremental term loan A facility”) on substantially the same terms and conditions (including as to maturity) as the term loan A facility in the Agreement and (ii) a $575 million term loan B facility (the “incremental term loan B facility”) maturing seven years after the closing of the Vitro Acquisition using its incremental capacity under the Agreement. At September 30, 2015, the Agreement, as amended by Amendment No. 2 and the Incremental Amendment (the “Amended Agreement”), includes a $300 million USD revolving credit facility, a $600 million multicurrency revolving credit facility, a $1,575 million term loan A facility ($1,546 million net of debt issuance costs), and a €279 million term loan A facility ($309 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020. The Amended Agreement also includes a $575 million term loan B facility ($563 million net of debt issuance costs) with a final maturity date of September 1, 2022. At September 30, 2015, the Company had unused credit of $641 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at September 30, 2015 was 2.26%. The Amended Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain liens, make certain investments, become liable under contingent obligations in certain defined instances only, make restricted payments, make certain asset sales within guidelines and limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations. The Amended Agreement also contains one financial maintenance covenant, a Leverage Ratio, that requires the Company not to exceed a ratio of 4.0x calculated by dividing consolidated total debt, less cash and cash equivalents, by consolidated EBITDA, as defined in the Amended Agreement. The maximum Leverage Ratio is subject to an increase of 0.5x for the four fiscal quarters following the consummation of certain qualifying acquisitions as defined in the Amended Agreement. In connection with the Vitro Acquisition on September 1, 2015, the Company elected to increase such maximum Leverage Ratio to 4.5x for the four fiscal quarters ending June 30, 2016. The Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Leverage Ratio to exceed the specified maximum. Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement. In such an event, the Company could not request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable. If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of September 30, 2015, the Company was in compliance with all covenants and restrictions in the Amended Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions. The interest rates on borrowings under the Amended Agreement are, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Amended Agreement, plus an applicable margin. The applicable margin for the term loan A facility and the revolving credit facility is linked to the Company’s Leverage Ratio and ranges from 1.25% to 1.75% for Eurocurrency Rate loans and from 0.25% to 0.75% for Base Rate loans. In addition, a fee is payable on the revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Leverage Ratio. The applicable margin for the term loan B facility is 2.75% for Eurocurrency Rate loans and 1.75% for Base Rate loans. The incremental term loan B facility is subject to a LIBOR floor of 0.75%. Borrowings under the Amended Agreement are secured by substantially all of the assets, excluding real estate and certain other excluded assets, of certain of the Company’s domestic subsidiaries and certain foreign subsidiaries. Borrowings are also secured by a pledge of intercompany debt and equity investments in certain of the Company’s domestic subsidiaries and, in the case of foreign borrowings, of stock of certain foreign subsidiaries. All borrowings under the Amended Agreement are guaranteed by certain domestic subsidiaries of the Company for the term of the Amended Agreement. Also, in connection with the Vitro Acquisition, during August 2015, the Company issued senior notes with a face value of $700 million that bear interest at 5.875% and are due August 15, 2023 (the “Senior Notes due 2023”) and senior notes with a face value of $300 million that bear interest at 6.375% and are due August 15, 2025 (together with the Senior Notes due 2023, the “2015 Senior Notes”). The 2015 Senior Notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds from the 2015 Senior Notes, after deducting the debt discount and debt issuance costs, totaled approximately $972 million and were used to finance, in part, the Vitro Acquisition. During December 2014, the Company issued senior notes with a face value of $500 million that bear interest at 5.00% and are due January 15, 2022 (the “Senior Notes due 2022”). The Company also issued senior notes with a face value of $300 million that bear interest at 5.375% and are due January 15, 2025 (together with the Senior Notes due 2022, the “2014 Senior Notes”). The 2014 Senior Notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds from the 2014 Senior Notes, after deducting debt issuance costs, totaled approximately $790 million and were used to purchase $611 million aggregate principal amount of the Company’s 3.00% 2015 Exchangeable Senior Notes. The remaining balance of the Exchangeable Senior Notes was repaid in the second quarter of 2015. The Company has a €215 million European accounts receivable securitization program, which extends through September 2016, subject to periodic renewal of backup credit lines. Information related to the Company’s accounts receivable securitization program is as follows:
|  | September 30, |  | December 31, |  | September 30, |  |
|  | 2015 |  | 2014 |  | 2014 |  |
Balance (included in short-term loans) |  | $ | 173 |  | $ | 122 |  | $ | 242 |  |
Weighted average interest rate |  |  | 1.11 | % |  | 1.41 | % |  | 0.57 | % |
The carrying amounts reported for the accounts receivable securitization program, and certain long-term debt obligations subject to frequently redetermined interest rates, approximate fair value. Fair values for the Company’s significant fixed rate debt obligations are based on published market quotations, and are classified as Level 1 in the fair value hierarchy. Fair values at September 30, 2015 of the Company’s significant fixed rate debt obligations are as follows:
|  | Principal |  | Indicated |  |  |
|  | Amount |  | Market Price |  | Fair Value |
Senior Notes: |  |  |  |  |  |  |  |  |  |
6.75%, due 2020 (€500 million) |  | $ | 563 |  | $ | 114.56 |  | $ | 645 |
4.875%, due 2021 (€330 million) |  |  | 371 |  |  | 105.38 |  |  | 391 |
5.00%, due 2022 |  |  | 500 |  |  | 95.00 |  |  | 475 |
5.875%, due 2023 |  |  | 700 |  |  | 100.75 |  |  | 705 |
5.375%, due 2025 |  |  | 300 |  |  | 96.75 |  |  | 290 |
6.375%, due 2025 |  |  | 300 |  |  | 100.75 |  |  | 302 |
Senior Debentures: |  |  |  |  |  |  |  |  |  |
7.80%, due 2018 |  |  | 250 |  |  | 109.78 |  |  | 274 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 + Details
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