Debt and Financing Obligations

12 Months Ended

Dec. 31, 2020

12. Debt and Financing Obligations

Total debt and financing obligations consisted of the following:


	December 31,
	2020		2019
	(Dollars in millions)
7.50 percent senior notes, due 2025 ("2025 Senior Notes")	$	587.3	$	650.0
$400.0 revolving credit facility, due 2024 ("Revolving Facility")	88.3		143.3
5.35 percent financing obligation, due 2024	14.9		7.2
Total borrowings	$	690.5	$	800.5
Original issue discount	(3.3)		(4.3)
Debt issuance costs	(10.3)		(13.3)
Total debt and financing obligation	$	676.9	$	782.9
Less: current portion of long-term debt and financing obligation	3.0		2.9
Total long-term debt and financing obligation	$	673.9	$	780.0

2025 Senior Notes

The 2025 Senior Notes were the senior unsecured obligations of the Partnership. On August 5, 2019, SunCoke entered into a supplemental indenture relating to the 2025 Senior Notes, pursuant to which SunCoke has provided a full and unconditional parent guarantee of these obligations. As of January 1, 2020, the Partnership merged with and into Finance Corp., at which time the 2025 Senior Notes became the senior unsecured obligations of Finance Corp, which is a wholly-owned subsidiary of the Company. Subsequently, Finance Corp and SunCoke entered into a supplemental indenture relating to the 2025 Senior Notes to acknowledge the merger and clarify certain terms of the indenture. Interest on the 2025 Senior Notes is payable semi-annually in cash in arrears on June 15 and December 15 of each year.

The Company may redeem some or all of the 2025 Senior Notes at specified redemption prices plus accrued and unpaid interest, if any, to the redemption date. On or after June 15, 2020, the Company also may redeem up to 35 percent of the 2025 Senior Notes at a price equal to 105.6 percent of the principal amount, plus accrued and unpaid interest, if any, to the redemption date. Beginning June 15, 2021, the premium on the redemption price will decrease by 1.9 percent on an annual basis through June 15, 2023. On or after June 15, 2023 the redemption price will equal 100 percent of the principal amount. During 2020, the Company repurchased $62.7 million face value of outstanding 2025 Senior Notes in the open market for $55.9 million of cash payments, resulting in a gain on extinguishment of debt on the Consolidated Statements of Operations of $5.7 million, net of the write-off of unamortized debt issuance costs and original issue discount.

The Company is obligated to offer to purchase all or a portion of the 2025 Senior Notes at a price of (a) 101 percent of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase, upon the occurrence of certain change of control events and (b) 100 percent of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase, upon the occurrence of certain asset dispositions. These restrictions and prohibitions are subject to certain qualifications and exceptions set forth in the Indenture, including without limitation, reinvestment rights with respect to the proceeds of asset dispositions.

The 2025 Senior Notes contain covenants that, among other things, limit the Company's ability and the ability of certain subsidiaries to (i) incur indebtedness, (ii) pay dividends or make other distributions, (ii) prepay, redeem or repurchase certain subordinated debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates, (viii) enter into agreements restricting the ability of subsidiaries to pay dividends and (ix) consolidate or merge.

Revolving Facility

The proceeds of any borrowings made under the Revolving Facility can be used to finance working capital needs, acquisitions, capital expenditures and for other general corporate purposes. The obligations under the credit agreement are guaranteed by certain of the Company’s subsidiaries and secured by liens on substantially all of the Company’s and the guarantors’ assets pursuant to a guarantee and collateral agreement.

As of December 31, 2020, the Revolving Facility had letters of credit outstanding of $11.8 million and $88.3 million outstanding balance, leaving $299.9 million available. Additionally, the Company has certain letters of credit totaling $11.5 million, which do not reduce the Revolving Facility's available balance. Commitment fees are based on the unused portion of the Revolving Facility at a rate of 0.25 percent.

Borrowings under the Revolving Facility bear interest, at SunCoke’s option, at either (i) a rate per annum equal to either the adjusted Eurodollar Rate, which currently is the London Interbank Offered Rate (“LIBOR”) plus 2.0 percent or (ii) an alternate base rate (“ABR”) plus 1.0 percent. The spread is subject to change based on SunCoke's consolidated leverage ratio, as defined in the credit agreement. The weighted-average interest rate for borrowings outstanding under the Revolving Facility was 2.6 percent during 2020.

Financing Obligation

The Company has sale-leaseback arrangements related to certain coke and logistics equipment. The arrangements have an initial period of 48 months beginning December 2020, and an early buyout option after 36 months to purchase the equipment at a fixed rate. The arrangements are accounted for as financing transactions, resulting in financing obligations on the Consolidated Balance Sheets.

Covenants

Under the terms of the Revolving Facility, the Company is subject to a maximum consolidated leverage ratio of 4.50:1.00 and a minimum consolidated interest coverage ratio of 2.50:1.00. The Company's debt agreements contains other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions including our ability to pay a dividend or repurchase our stock.

If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Revolving Facility could be declared immediately due and payable. The Company has a cross default provision that applies to our indebtedness having a principal amount in excess of $35 million.

As of December 31, 2020, the Company was in compliance with all debt covenants. We do not anticipate violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing.

Maturities

As of December 31, 2020, the combined aggregate amount of maturities for long-term borrowings for each of the next five years is as follows:


	(Dollars in millions)
2021	$	3.0
2022	3.2
2023	3.3
2024	93.7
2025	587.3
2026-Thereafter	—
Total	$	690.5