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Debt | 12 Months Ended
--- | ---
Dec. 31, 2022
Debt Disclosure [Abstract] |
Debt | Debt Long-term Debt Long-term debt, net of an unamortized discount and debt issuance costs, consisted of the following:
| Original Principal |  | Annual Interest Rate |  | Maturity Date |  | December 31, 2022 |  | December 31, 2021
Term Loan Facility, net of unamortized discount(1) | $ | 1,300 |  |  | Variable |  | 3/11/2028 |  | $ | 898 |  |  | $ | 897 |
2022 Term Loan Facility, net of unamortized discount(1) | 400 |  |  | Variable |  | 4/4/2029 |  | 393 |  |  | — |
Senior Notes due 2029 | 1,075 |  |  | 4.63 | % |  | 3/15/2029 |  | 1,075 |  |  | 1,075 |
6.5% Senior Secured Notes due 2025 | 500 |  |  | 6.50 | % |  | 5/1/2025 |  | — |  |  | 500 |
Standard Bank Term Loan Facility(1) | 98 |  |  | Variable |  | 11/11/2026 |  | 77 |  |  | 92 |
Australian Government Loan, net of unamortized discount | N/A |  | N/A |  | 12/31/2036 |  | 1 |  |  | 1 |
MGT Loan(2) | 36 |  |  | Variable |  | Variable |  | 30 |  |  | 33 |
Finance leases |  |  |  |  |  |  | 47 |  |  | 14 |
Long-term debt |  |  |  |  |  |  | 2,521 |  |  | 2,612 |
Less: Long-term debt due within one year |  |  |  |  |  |  | (24) |  |  | (18) |
Debt issuance costs |  |  |  |  |  |  | (33) |  |  | (36) |
Long-term debt, net |  |  |  |  |  |  | $ | 2,464 |  |  | $ | 2,558 |
(1)The average effective interest rate, including impacts of our interest rate swap, for the Term Loan Facility was 4.8% and 5.1% for the year ended December 31, 2022 and 2021, respectively. The average effective interest rate on the Standard Bank Term Loan Facility was 7.2% and 7.3% for the year ended December 31, 2022 and 2021, respectively. The average effective interest rate on the 2022 Term Loan Facility was 5.8% for the year ended December 31, 2022. (2)The MGT loan is a related party debt facility. Average effective interest rate on the MGT loan was 4.4% and 3.1% d uring the year ended December 31, 2022 and 2021, respectively. Refer below for further details. At December 31, 2022, the scheduled maturities of our long-term debt were as follows:
| Total Borrowings
2023 | 20 |
2024 | 21 |
2025 | 22 |
2026 | 63 |
2027 | 6 |
Thereafter | 2,397 |
Total | 2,529 |
Remaining accretion associated with the Term Loan Facility and the 2022 Term Loan Facility | (8) |
Total borrowings | 2,521 |
Long-term Debt Prior Term Loan Facility, Term Loan Facility, Cash Flow Revolver and 2022 Term Loan Facility On September 22, 2017, we entered into a senior secured first lien term loan facility (the “Prior Term Loan Facility”) with the lenders party thereto and Bank of America, N.A., as administrative agent, with a maturity date of September 22, 2024. The Prior Term Loan Facility consisted of a U.S. dollar term facility in an aggregate principal amount of $2.15 billion (the “Term Loans”) with our subsidiary, Tronox Finance LLC (“Tronox Finance”) as the borrower. The Prior Term Loan Facility bore interest at the “Applicable Rate” defined by reference to a grid-pricing matrix that relates to our First Lien Net Leverage Ratio and was issued net of an original issue discount of $11 million. On September 22, 2017, we entered into a global senior secured asset-based syndicated revolving credit facility with Wells Fargo Bank, N.A. (the “Wells Fargo Revolver”). The Wells Fargo Revolver which initially provided us with up to $550 million of revolving credit lines, with an $85 million sublimit for letters of credit, and had a maturity date of September 22, 2022. Our availability of revolving credit loans and letters of credit was subject to a borrowing base. Borrowings bore interest at our option, at either an adjusted London Interbank Offered Rate (“LIBOR”) plus an applicable margin that ranges from 1.25% to 1.75%, or a base rate, which was defined to mean the greatest of (a) the administrative agent’s prime rate, (b) the Federal funds effective rate plus 0.50% and (c) the adjusted LIBOR for a one month period plus 1.00% plus a margin that ranges from 0.25% to 0.75%, in each case, based on the average daily borrowing availability. The Wells Fargo Revolver was terminated during the year ended December 31, 2021 as a result of the Cash Flow Revolver (defined below). In December 2020, the Company made a voluntary prepayment of $200 million on the Prior Term Loan Facility. As a result of the voluntary prepayment, we recorded $2 million in "Loss on extinguishment of debt" within the Consolidated Statement of Income for the year ended December 31, 2020. No prepayment penalties were required as a result of this principal prepayment. On March 11, 2021, Tronox Finance LLC entered into an amendment and restatement of its Prior Term Loan Facility pursuant to which, among other thing, we amended and restated the Prior Term Loan Facility with a new amended and restated first lien credit agreement dated as of September 22, 2017 (as amended through and including March 11, 2021) with a syndicate of lenders and HSBC Bank USA, National Association, as administrative agent and collateral agent. The new amended and restated first lien credit agreement provides the Company with (a) a new seven-year term loan facility ("Term Loan Facility") in an aggregate principal amount of $1.3 billion and (b) new five-year cash flow revolving facility (the "Cash Flow Revolver") providing initial revolving commitments of $350 million and a sublimit of $125 million for letters of credit. The maturity date on the Term Loan Facility and the Cash Flow Revolver is March 11, 2028 and March 11, 2026, respectively. The Term Loan Facility shall bear interest at either the base rate or an adjusted LIBOR rate, in each case plus an applicable margin. The applicable margin in respect of the Term Loan Facility is either 1.50% or 1.25%, for base rate loans, or 2.50% or 2.25%, for adjusted LIBOR rate loans, in each case determined based on, initially the passage of time, and thereafter upon the Company’s first lien net leverage ratio at the applicable time. Interest is payable on the Term Loan Facility on the last business of each March, June, September and December. Based on our first lien net leverage ratio, the applicable margin under the Term Loan Facility as of December 31, 2022 was LIBOR plus a margin of 2.25%. The Cash Flow Revolver shall bear interest at either the base rate or adjusted LIBOR rate, in each case plus an applicable margin. The applicable margin in respect of the Cash Flow Revolver is either 1.25%, 1.00% or 0.75% for base rate loans, or 2.25%, 2.00% or 1.75%, for adjusted LIBOR Rate Loans, in each case determined based on, initially the passage of time, and thereafter upon the Company’s first lien net leverage ratio at the applicable time. The Term Loan Facility requires the Borrower to pay customary agency fees. In connection with entering into the Term Loan Facility, the Company terminated all remaining commitments and repaid all obligations under its Prior Term Loan Facility and Wells Fargo Revolver. Additionally, we repaid $313 million of the principal under the Prior Term Loan Facility with cash on hand. Commencing June 30, 2021, the Cash Flow Revolver contains a springing financial covenant when a loan amount is drawn exceeding 35% of the Cash Flow Revolver. In this instance, the first lien net leverage ratio shall not exceed 4.75x at quarter end testing period. As a result of this transaction in accordance with ASC 470, we recognized approximately $4 million in "Loss on Extinguishment of Debt" recorded in the Consolidated Statement of Income for the year ended December 31, 2021. Additionally, during the year ended December 31, 2021, the Company made several voluntary prepayments totaling $398 million on the Term Loan Facility. As a result, we recognized approximately $9 million in "Loss on Extinguishment of Debt" recorded in the Consolidated Statement of Income for the year ended December 31, 2021. During the year ended December 31, 2022, we drew down $133 million on our Cash Flow Revolver and repaid $103 million as of December 31, 2022. As of December 31, 2022, there was $30 million outstanding revolving credit loans (recorded within "Short-term debt" on the Consolidated Balance Sheet) under the Cash Flow Revolver and $20 million of issued and undrawn letters of credit under the Cash Flow Revolver. Additionally, in connection with the sale of the Hawkins Point Plant (refer to Note 18 - Commitments & Contingencies for further details), in December 2022, a $50 million undrawn letter of credit was issued as a bi-lateral, stand-alone arrangement. Debt issuance costs associated with the Cash Flow Revolver of $2 million were included in “Other long-term assets” in the Consolidated Balance Sheets at December 31, 2022 and are being amortized over the life of the Cash Flow Revolver. The average effective interest rate on the Cash Flow Revolver was 5.1% for the year ended December 31, 2022. On April 4, 2022, Tronox Finance LLC (the "Borrower"), the Borrower's indirect parent company, Tronox Holdings plc (the "Company"), certain of the Company's subsidiaries, the incremental term lender party thereto, and HSBC Bank USA. National Association, as Administrative Agent and Collateral Agent, entered into Amendment No. 1 to the Amended and Restated First Lien Credit Agreement (the "Amendment"). The Amendment provides the Borrower with a new seven-year incremental term loan facility (the "2022 Term Loan Facility" and, the loans thereunder, the "2022 Incremental Term Loans") under its credit agreement in an aggregate initial principal amount of $400 million. The obligations of the Borrower under the 2022 Term Loan Facility are guaranteed and secured by the same guarantees and liens under the existing credit agreement of the Term Loan Facility (as discussed above). The 2022 Incremental Term Loans are a separate class of loans under the credit agreement, and if the Borrower elects to make an optional prepayment under the credit agreement or is required to make a mandatory prepayment under the credit agreement, the Borrower, may, in each case, select which class or classes of loans to prepay. The 2022 Incremental Term Loans will amortize in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the 2022 Incremental Term Loans commencing with the second full fiscal quarter after the effective date of the 2022 Incremental Term Loan Facility. The final maturity of the 2022 Incremental Term Loans will occur on the seventh anniversary of the effective date of the 2022 Incremental Term Loan Facility. The 2022 Incremental Term Loan Facility permits amendments thereto whereby individual lenders may extend the maturity date of their outstanding loans upon the Borrower's request without the consent of any other lender, so long as certain conditions are met. The 2022 Incremental Term Loans shall bear interest, at the Borrower's option, at either the base or the SOFR rate, in each case plus an applicable margin. The applicable margin in respect of the 2022 Incremental Loans is 2.25% per annum, for base rate loans, or 3.25% per annum, for SOFR rate loans. The 2022 Incremental Term Loans have an interest rate floor of 0.50%. As of December 31, 2022, the applicable margin under the 2022 Term Loan Facility was 3.25%. The 2022 Incremental Term Loan Facility contains the same negative covenants applicable to the term loans outstanding under the Existing Credit Agreement immediately prior to the effectiveness of the Amendment, which covenants, subject to certain limitations, thresholds and exceptions, limit the Company and its restricted subsidiaries to (among other restrictions): incur indebtedness; grant liens; pay dividends and make subsidiary and certain other distributions; sell assets; make investments; enter into transactions with affiliates; and make certain modifications to material documents (including organizational documents). The proceeds of the 2022 Incremental Term Loans were used on April 4, 2022, along with cash on hand, to redeem all outstanding 6.5% Senior Secured Notes due 2025 issued by Tronox Incorporated under the Indenture dated as of May 1, 2020 with Wilmington Trust, National Association, as Trustee and Collateral Agent and to pay transaction related costs and expenses. As a result of this transaction, we recognized approximately $21 million, including a call premium of $18 million, in "Loss on extinguishment of debt" on the Consolidated Statement of Income for the year ended December 31, 2022. As of December 31, 2022, the total outstanding principal balance is $397 million, of which $4 million is recorded within "Current portion of long-term debt" on the Consolidated Balance Sheet. Senior Notes due 2025 On September 22, 2017, Tronox Finance plc, issued 5.75% senior notes due 2025 for an aggregate principal amount of $450 million (the “Senior Notes due 2025”), which notes were issued under an indenture dated September 22, 2017 (the “2025 Indenture”). The 2025 Indenture and the Senior Notes due 2025 provided among other things, that the Senior Notes due 2025 were senior unsecured obligations of Tronox Finance plc and were guaranteed on a senior and unsecured basis by us and certain of our other subsidiaries. The Senior Notes due 2025 were not registered under the Securities Act, and were not offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. Interest was payable on April 1 and October 1 of each year beginning on April 1, 2018 until their maturity date of October 1, 2025. The terms of the 2025 Indenture, among other things, limited, in certain circumstances, the ability of us and certain of our subsidiaries to: incur secured indebtedness, engage in certain sale-leaseback transactions and merge, consolidate or sell substantially all of our assets. The terms of the 2025 Indenture also included certain limitations on our non-guarantor subsidiaries incurring indebtedness. During the year ended December 31, 2021, we paid the outstanding balance of $450 million on the Senior Notes due 2025 as a result of the issuance of the Senior Notes due 2029 as defined and discussed below. Senior Notes due 2026 On April 6, 2018, Tronox Incorporated issued 6.5% Senior Notes due 2026 for an aggregate principal amount of $615 million (“Senior Notes due 2026”). The 2026 Indenture and the Senior Notes due 2026 provided, among other things, that the Senior Notes due 2026 were senior unsecured obligations of Tronox Incorporated and were guaranteed on a senior and unsecured basis by us and certain of our other subsidiaries. The Senior Notes due 2026 were not registered under the Securities Act and were not offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. Interest was payable on April 15 and October 15 of each year beginning on October 15, 2018 until their maturity date of April 15, 2026. The terms of the 2026 Indenture, among other things, limited, in certain circumstances, our and certain of our subsidiaries ability to: incur secured indebtedness; engage in certain sale-leaseback transactions; and merge, consolidate or sell substantially all of our assets. The terms of the 2026 Indenture also included certain limitations on our non-guarantor subsidiaries incurring indebtedness. The proceeds of the offering were used to fund the redemption of our Senior Notes due 2022. During the year ended December 31, 2021, we paid the outstanding balance of $615 million on the Senior Notes due 2026 as a result of the issuance of the Senior Notes due 2029 as defined and discussed below. Senior Notes due 2029 On March 15, 2021, Tronox Incorporated closed an offering of $1,075 million aggregate principal amount of its 4.625% senior notes due 2029 (the "Senior Notes due 2029"). The notes were offered at par and issued under an indenture dated as of March 15, 2021 among the Company and certain of the Company's restricted subsidiaries as guarantors and Wilmington Trust, National Association. The Senior Notes due 2029 provide, among other thing, that the Senior Notes due 2029 are guaranteed by the Company and certain of the Company's restricted subsidiaries, subject to certain exceptions. The Senior Notes due 2029 and related guarantees are the senior obligations of the Company and the guarantors. The Senior Notes due 2029 have not been registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration requirements. The terms of the indenture, among other things, limit, in certain circumstances, the ability of the Company and its restricted subsidiaries to: incur secured indebtedness, incur indebtedness at a non-guarantor subsidiary, engage in certain sale-leaseback transactions and merge, consolidate or sell substantially all of their assets. Interest is payable on the Senior Notes due 2029 on March 15 and September 15 of each year beginning on September 15, 2021 until their maturity date of March 15, 2029. During the year ended December 31, 2021, the Company repaid the outstanding principal balance of $615 million and $450 million on its Senior Notes due 2026 and its Senior Notes due 2025, respectively. As a result of this transaction, we recorded $52 million of debt extinguishment costs, including call premiums of $21 million and $19 million on the Senior Notes due 2026 and Senior Notes due 2025, respectively, in "Loss on Extinguishment of Debt" on the Consolidated Statement of Income for the year ended December 31, 2021. 6.5% Senior Secured Notes due 2025 On May 1, 2020, Tronox Incorporated, a wholly-owned indirect subsidiary of the Company, issued 6.5% senior secured notes due 2025 for an aggregate principal amount of $500 million (the "6.5% Senior Secured Notes due 2025"), which were issued under an indenture dated May 1, 2020. A portion of the proceeds of this debt offering was utilized to repay the $200 million of the Company's outstanding borrowings under its Wells Fargo, Standard Bank, and Emirates revolvers which were originally borrowed during the first quarter of 2020. During the year ended December 31, 2022, we paid the outstanding balance of $500 million on the 6.5% Senior Secured Notes due 2025 utilizing the proceeds of the 2022 Term Loan Facility (discussed above), along with cash on hand. In connection with such redemption, all security interests and liens granted to Wilmington Trust, National Association, as Trustee and Collateral Agent, were automatically terminated and discharged. Prior Standard Bank Term Loan Facility On March 25, 2019, our South African subsidiaries, Tronox KZN Sands Proprietary Limited and Tronox Mineral Sands Proprietary Limited, entered into the Prior Standard Bank Term Loan Facility with a maturity date of March 25, 2024. The Term Loan Facility consisted of (i) an aggregate principal amount of R2.6 billion (“Amortizing Loan”, approximately $153 million at the December 31, 2022 exchange rate), the principal of which was to be paid back at 5 percent per quarter over the five year term of the loan, and (ii) an aggregate principal amount of R600 million (“Bullet Loan”), the principal of which was to be paid back at the maturity date of the Prior Standard Bank Term Loan Facility. During the third quarter of 2019, we repaid the outstanding balance on the Bullet Loan. The Amortizing Loan bore interest at JIBAR plus 260 basis points when net leverage of the South African subsidiaries was less than 1.5 and JIBAR plus 285 points when net leverage was greater than 1.5. During the year ended December 31, 2021, we made several voluntary prepayments totaling R1,040 million (approximately $69 million) on the Prior Standard Bank Term Loan Facility. No prepayment penalties were required as a result of this principal prepayment. Additionally, during the year ended December 31, 2021, we repaid the remaining outstanding balance of R390 million (approximately $26 million) of the Prior Standard Bank Term Loan Facility and entered into an amendment and restatement with Standard Bank as is discussed below. Standard Bank Term Loan Facility and Revolving Credit Facility On October 1, 2021, Tronox Minerals Sands Proprietary Limited, a wholly-owned subsidiary of the Company, entered into an amendment and restatement of a new credit facility with Standard Bank. The new credit facility provides the Company with (a) a new five-year term loan facility in an aggregate principal amount of R1.5 billion (approximately $98 million) (the "Standard Bank Term Loan Facility") and (b) a new three-year revolving credit facility (the "Standard Bank Revolving Credit Facility") providing initial revolving commitments of R1.0 billion (approximately $59 million at the December 31, 2022 exchange rate). The maturity date on the Standard Bank Term Loan Facility and the Standard Bank Revolving Credit Facility is November 11, 2026 and October 1, 2024, respectively. The Standard Bank Term Loan Facility has a delayed draw feature up to thirty business days from the effective date of the executed credit agreement. Mandatory capital repayments of R37.5 million (approximately $2 million at the December 31, 2022 exchange rate) are scheduled quarterly with the first mandatory repayment starting in December 2021. Both the Standard Bank Term Loan Facility and the Standard Bank Revolving Credit Facility shall bear interest at an adjusted JIBAR rate plus an applicable margin. The applicable margin on the Standard Bank Term Loan Facility is 2.35%. The applicable margin on the Standard Bank Revolving Credit Facility is based upon average credit utilization during any interest period. If the revolving credit facility utilization is less than 33%, less than 66% but greater than 33%, or greater than 66%, the applicable margin is 2.10%, 2.25%, and 2.40%, respectively. The Standard Bank Revolving Credit Facility requires the borrower to pay customary agency fees. Interest is payable on the Standard Bank Term Loan Facility on each of March 31, June 30, September 30 and December 31, and the final maturity date pursuant to the agreement. Interest is payable on the Standard Bank Revolving Credit Facility on the last day of the applicable interest period pursuant to the agreement. Pursuant to the credit agreement, on November 11, 2021, the Company drew down the total outstanding principal balance of R1.5 billion (approximately $98 million) on the Standard Bank Term Loan Facility. As of December 31, 2022, the total outstanding principal balance is R1.3 billion (approximately $77 million at the December 31, 2022 exchange rate), of which R150 million (approximately $9 million at the December 31, 2022 exchange rate) is recorded within "Current portion of long-term debt" on the Consolidated Balance Sheet. Tikon Loan We maintained a working capital debt agreement in China (“Tikon Loan”) that matured in May of 2021. The Tikon Loan bore interest based on an official lending basis rate per annum as announced and published by the People’s Bank of China plus a 7% premium. During the year ended December 31, 2021, we repaid the remaining outstanding principal balance of CNY 111 million (approximately $17 million). No prepayment penalties were required as a result of these principal prepayments. Australian Government Loan We maintain an interest-free loan with the Australian government (“Australian Government Loan”) that is subject to renewal every 5 years and is contingent on renewal of our Australind site leases with final maturity in December 2036. The loan balance due upon maturity is AUD 6 million (approximately $4 million at the December 31, 2022 exchange rate). At December 31, 2022, the discounted value on the Australian Government Loan was approximately AUD 2 million (approximately $1 million at the December 31, 2022 exchange rate). MGT Loan On December 17, 2020, we completed our agreement with Cristal to acquire certain assets co-located at our Yanbu facility which produce metal grade TiCl4 (“MGT”) in exchange for a $36 million note payable. Repayment of the note payable is based on a fixed U.S. dollar per metric ton quantity of MGT delivered by us to Advanced Metal Industries Cluster and Toho Titanium Metal Co. Ltd (ATTM) over time and therefore the ultimate maturity date is variable in nature. If ATTM fails to purchase MGT from us under certain contractually agreed upon conditions, then at our election we may terminate the MGT supply agreement with ATTM and will no longer owe any amount under the loan agreement with Cristal. We currently estimate the ultimate maturity to be between approximately five to six years, subject to actual future MGT production levels. The interest rate is based on the Saudi Arabian Interbank Offered Rate (“SAIBOR”) plus a premium. As of December 31, 2022, the outstanding balance of the note payable was $30 million, of which $7 million is expected to be paid within the next twelve months (recorded within "Long-term debt due within one year" on our Consolidated Balance Sheet). Refer to Note 22 for further information on the MGT transaction. Short-term Debt Cash Flow Revolver For a description of the Cash Flow Revolver, see details above under "Prior Term Loan Facility, Term Loan Facility, Cash Flow Revolver and 2022 Term Loan Facility". Standard Bank Revolving Credit Facility For a description of the Standard Bank Revolving Credit Facility, see details above under "Standard Bank Term Loan Facility and Revolving Credit Facility". Emirates Revolver We maintain a revolving credit facility with Emirates NBD PJSC. In March 2022, the Company entered into an amendment to extend the maturity date of the Emirates Revolver from March 31, 2022 to March 31, 2023. Under the Emirates Revolver, we have the ability to borrow up to approximately $60 million. The revolver is secured by inventory and trade receivables of Tronox Pigment UK Ltd. Under the terms of the revolver, for U.S. dollar borrowings the interest rate is LIBOR plus 2.25% while the interest rate for Euro borrowings is Euribor plus 2.25%. There were no borrowings outstanding under this revolver at December 31, 2022. SABB Credit Facility On October 16, 2019, our KSA subsidiary entered into a short-term working capital facility with the Saudi British Bank (“SABB Facility”) for an amount up to SAR 70 million (approximately $19 million). The SABB Facility bears interest at the Saudi Inter Bank Offered Rate plus 180 basis points on outstanding balances. In March 2020, the Company borrowed SAR 50 million (or approximately $13 million) under the SABB Facility and subsequently repaid the outstanding balances. There is no borrowing outstanding under this facility at December 31, 2022. In December 2022, the Company extended the maturity date of the SABB Credit Facility from November 30, 2022 to November 30, 2023. Itaù Unibanco S.A. Credit Facility On November 1, 2022, our Brazilian subsidiary entered into a working capital facility with Itaù Unibanco S.A. in Brazil for an amount up to 30 million BRL (approximately $6 million at the December 31, 2022 exchange rate). There is no maturity date under this facility until written notice is given. The facility bears interest at the Bolsa do Basil reference rate on outstanding balances. There is no borrowings outstanding under this facility at December 31, 2022. In January and February 2023, we drew down an aggregate amount of approximately $118 million on several of our short-term facilities. Insurance premium financing In August 2022, the Company entered into a $21 million insurance premium financing agreement with a third-party financing company. The balance will be repaid in monthly installments over 10 months at a 5% fixed annual interest rate. As of December 31, 2022, the financing balance was $10 million and is recorded in "Short-term debt" in the Consolidated Balance Sheet. Debt Covenants At December 31, 2022, we are in compliance with all financial covenants in our debt facilities. Interest and Debt Expense, Net Interest and debt expense, net in the Consolidated Statements of Income consisted of the following:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Interest on debt | $ | 132 |  |  | $ | 148 |  |  | $ | 174 |
Amortization of deferred debt issuance costs and discounts on debt | 8 |  |  | 11 |  |  | 10 |
Capitalized interest | (17) |  |  | (7) |  |  | (2) |
Interest on capital leases and letters of credit and commitments | 2 |  |  | 5 |  |  | 7 |
Total interest and debt expense, net | $ | 125 |  |  | $ | 157 |  |  | $ | 189 |
In connection with obtaining debt, we incurred debt issuance costs, which are being amortized through the respective maturity dates using the effective interest method for our long-term debt and on a straight-line basis for our Cash Flow Revolver. At December 31, 2022 and December 31, 2021, we had deferred debt issuance costs of $2 million and $2 million, respectively, related to the Cash Flow Revolver, which is recorded in “Other long-term assets” in the Consolidated Balance Sheets. At December 31, 2022 and December 31, 2021, we had debt discount of $8 million and $5 million, respectively, and debt issuance costs of $33 million and $36 million, respectively, primarily related to our term loans and senior notes, which were recorded as a direct reduction of the carrying value of the long-term debt in the Consolidated Balance Sheets.

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