XML 226 R17.htm IDEA: XBRL DOCUMENT v3.24.0.1
Derivatives and Hedging
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Derivatives and Hedging
During the second quarter of 2023, Shentel entered into pay fixed (2.90%), receive variable (one-month term SOFR) interest rate swaps totaling $150.0 million of notional principal (the “Swaps”). The Swaps contain monthly payment terms beginning in May 2024, which extend through their maturity dates in June 2026. The Swaps are designated as cash flow hedges, representing 50% of the Company’s expected outstanding debt. The Company uses the Swaps to manage its exposure to interest rate risk for its long-term variable-rate Term Loans.

The table below presents the fair value of the Swaps as well as their classification in the consolidated balance sheets. The fair value of these instruments was estimated using an income approach and observable market inputs (Level 2):
(in thousands)December 31,
2023
Balance sheet line items containing derivative financial instruments:
Prepaid expenses and other$1,443 
Deferred charges and other assets798 
Total fair value of derivatives designated as hedging instruments$2,241 

The Swaps were determined to be highly effective hedges and therefore all change in the fair value of the Swaps was recognized in other comprehensive income. The Company recognized $1.7 million of unrealized gains net of deferred taxes totaling $0.6 million for 2023. Since the Company did not have outstanding interest rate swaps in the prior year period, there were no gains or losses recorded for 2022. Shentel expects to begin reclassifying amounts related to the Swaps from accumulated other comprehensive income to interest expense in May 2024, when the payment periods of the Swaps begin.

The Company previously held interest rate swaps that were designated as cash flow hedges related to variable-rate long-term debt that were settled in connection with the sale the Company’s Wireless assets and operations described in Note 16, Discontinued Operations. Similar to the Company’s current Swaps, these interest rate swaps were used to manage its exposure to interest rate risk. These interest rate swaps were determined to be highly effective hedges their through the settlement dates in 2021. Upon settlement in 2021, the Company reclassified the remaining balance from accumulated other comprehensive income to the Company’s consolidated statements of comprehensive income (loss), resulting in a net gain on interest rate swaps of $4.7 million.