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Debt
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt

NOTE 6: DEBT

The Company’s outstanding debt consisted of the following as of the dates presented:

 

 

September 30, 2024

 

 

December 31, 2023

 

 

 

(in millions)

 

Short-term debt:

 

 

 

 

 

 

Term Loan B Facility

 

$

5

 

 

$

—

 

Total short-term debt

 

$

5

 

 

$

—

 

 

 

 

 

 

 

 

Long-term debt:

 

 

 

 

 

 

Term Loan B Facility due 2031

 

$

495

 

 

$

—

 

0.25% Convertible 2026 Senior Notes due 2026

 

 

345

 

 

 

345

 

7.00% 2025 Senior Notes due 2025

 

 

—

 

 

 

500

 

Unamortized Debt Issuance Costs

 

 

(8

)

 

 

(6

)

Total long-term debt

 

$

832

 

 

$

839

 

Credit Agreement

We are party to a credit agreement with a group of lenders initially entered into in June 2015 and, amended and restated in June 2023 (the “Credit Agreement”), which, among other things, provides for a $500 million secured revolving credit facility (the “Credit Facility”). The Credit Facility has a maturity date of June 29, 2028 (unless, on any date that is 91 days prior to the final scheduled maturity date in respect of any indebtedness outstanding under certain “specified debt,” the aggregate outstanding principal amount of such specified debt is $200 million or more, then the maturity date will be such business day). On July 8, 2024, the Company entered into the First Amendment to its Credit Agreement (the “Amended Credit Agreement”), which implements the Term Loan B Facility (discussed below); and among other things:

•
Does not change the aggregate amount of revolving commitments available at $500 million related to our Credit Facility;
•
Makes certain adjustments to the definition of “Consolidated EBITDA”;
•
Increases the Available Amount by the portion of excess cash flow and asset sale, casualty and condemnation mandatory prepayments declined by lenders under the Term Loan B Facility, which may be used to make restricted payments and investments;
•
Adds a separate dollar basket not to exceed the greater of $195 million and 50% of Consolidated EBITDA for capital leases and purchase money debt;
•
Adds a separate “ratio debt” basket for additional indebtedness up to 3.5 times pro forma Total Net Leverage Ratio, subject to certain customary limitations; and
•
Adds customary extension and modification and refinancing facility provisions.

The Amended Credit Agreement includes certain customary restrictions on the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, grant additional liens, and make investments, acquisitions, dispositions, distributions, and other payments, with certain exceptions as more specifically described in the Amended Credit Agreement. The Amended Credit Agreement contains customary events of default and modifies the cross-default provision so that the Term Loan B Facility includes a customary cross-acceleration event of default with the Credit Facility under the Amended Credit Agreement. If an event of default occurs and is continuing, then, among other things, the lenders under the Credit Facility and/or the Term Loan B Facility, as applicable, may declare any outstanding Credit Facility and/or Term Loan B Facility obligations, as applicable, under the Amended Credit Agreement to be immediately due and payable and exercise their rights and remedies against the collateral. The obligations under the Amended Credit Agreement are secured by substantially all assets, whether personal, tangible or intangible, of the Company and the Subsidiary Loan Parties as granted under the Security Documents. Any term not otherwise defined herein shall have the meaning ascribed to it in the Amended Credit Agreement.

Credit Facility

As of September 30, 2024 and December 31, 2023, we had no outstanding borrowings under the Credit Facility. The Credit Facility also includes $15 million of borrowing capacity available for letters of credit and $40 million for swing-line borrowings on same-day notice. As of September 30, 2024 and December 31, 2023, we had issued $3 million and $4 million, respectively, of undrawn standby letters of credit under the Credit Facility. For the three months ended September 30, 2024 and 2023, and the nine months ended September 30, 2023, total interest expense and commitment fees on our Credit Facility was not material, while during the nine months ended September 30, 2024, we recorded total interest expense and commitment fees on the Credit Facility of $1

million to interest expense on our unaudited condensed consolidated statement of operations. The Amended Credit Agreement, among other things, requires us to maintain a maximum total net leverage ratio of 4.5 to 1.0 solely in respect to the Credit Facility and contains certain customary affirmative and negative covenants and events of default, including a change of control.

In connection with the Amended Credit Agreement, we incurred lender fees and other debt financing costs of $1 million under the Credit Facility. These costs were capitalized as deferred financing costs in other long-term assets on our unaudited consolidated balance sheet as of September 30, 2024. As of September 30, 2024, the Company had $4 million remaining in deferred financing costs in connection with the Credit Facility. These costs will be amortized over the remaining term of the Credit Facility, using the effective interest rate method, and recorded to interest expense on our unaudited condensed consolidated statement of operations.

Term Loan B Facility

On July 8, 2024, under the Amended Credit Agreement, the Company issued a $500 million Term Loan B Facility maturing July 8, 2031, with an interest rate based on secured overnight financing rate ("SOFR") plus 2.75%. On July 15, 2024, the Company used these borrowed funds to fully redeem its outstanding $500 million, 2025 Senior Notes. As of September 30, 2024, the interest rate on the Term Loan B Facility was 7.60% and the weighted-average interest rate on the Term Loan B Facility was 8.06% for the three months ended September 30, 2024. The Term Loan B Facility was offered at 99.75% of par and is required to be paid down at 1.00% of the aggregate principal amount per year, repayable in quarterly installments on the last day of each calendar quarter, commencing December 31, 2024, equal to 0.25% of the original principal amount with the balance due on the maturity date. The Term Loan B Facility has no financial covenants.

In connection with the issuance of the Term Loan B Facility, we incurred $7 million of debt issuance costs, comprised of the initial purchasers’ discount, lender fees, and other debt financing costs. These debt issuance costs will be amortized over the remaining term of the Term Loan B Facility, using the effective interest rate method, and recorded to interest expense on our unaudited condensed consolidated statement of operations. As of September 30, 2024, unpaid interest on the Term Loan B Facility was not material and $10 million was recorded as interest expense on our unaudited condensed consolidated statements of operations during both the three and nine months ended September 30, 2024.

2025 Senior Notes

On July 15, 2024, as noted above, the Company redeemed all $500 million aggregate principal amount of the Company’s outstanding 2025 Senior Notes, in addition to the settlement of accrued and unpaid interest. As a result, we recognized a loss on extinguishment of debt of $2 million, which primarily consisted of a non-cash write-off of unamortized debt issuance costs, and is included in Other income (expense), net on our unaudited condensed consolidated statements of operations during both the three and nine months ended September 30, 2024.

As of December 31, 2023, unpaid interest of $16 million related to the 2025 Senior Notes, was included in accrued expenses and other current liabilities on our unaudited condensed consolidated balance sheet. During the three and nine months ended September 30, 2024, we recorded $1 million and $19 million of interest expense, respectively, while during the three and nine months ended September 30, 2023, we recorded $9 million and $26 million of interest expense, respectively, on our unaudited condensed consolidated statements of operations.

2026 Senior Notes

During the three and nine months ended September 30, 2024 and 2023, our effective interest rate, including debt issuance costs, was approximately 0.35% and 0.40%, respectively, and total interest expense incurred from the 2026 Senior Notes was not material during the three months ended September 30, 2024 and 2023, while this amount was $1 million during both the nine months ended September 30, 2024 and 2023. As of September 30, 2024 and December 31, 2023, unpaid interest on the 2026 Senior Notes was not material.

Capped Call Transactions

In connection with the issuance of the 2026 Senior Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers of the 2026 Senior Notes and/or their respective affiliates and/or other financial institutions at a cost of approximately $35 million.

The Capped Calls are considered indexed to our own stock and are considered equity classified under GAAP, and therefore included as a reduction to additional paid-in-capital within stockholders’ equity on the unaudited condensed consolidated balance

sheets as of both September 30, 2024 and December 31, 2023. The Capped Calls are not accounted for as derivatives and their fair value is not remeasured each reporting period.

Refer to “Note 8: Debt” in the notes to consolidated financial statements in Item 8 of our 2023 Annual Report, for additional information pertaining to redemption, conversion, repurchase features, and other terms regarding the Credit Facility, 2025 Senior Notes, 2026 Senior Notes and Capped Calls.