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v3.24.3

Note 4 - Long-term Debt | 9 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Debt Disclosure [Text Block] |
4. | Long-term Debt
As of September 30, 2024 and December 31, 2023, long-term debt consisted of obligations under our Senior Credit Facility (as defined below), our 5.875% senior notes due 2026 (the “2026 Notes”), our 7.0% senior notes due 2027 (the “2027 Notes”), our 10.5% senior notes due 2029 (the “2029 Notes”), our 4.75% senior notes due 2030 (the “2030 Notes”) and our 5.375% notes due 2031 (the “2031 Notes”), as follows (in millions):
|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Long-term debt: |  |  |  |  |  |  |  |
2019 Senior Credit Facility: |  |  |  |  |  |  |  |
2019 Term Loan (matures January 2, 2026) |  | $ | - |  |  | $ | 1,190 |
2021 Term Loan (matures December 1, 2028) |  |  | 1,439 |  |  |  | 1,470 |
2024 Term Loan (matures June 4, 2029) |  |  | 499 |  |  |  | - |
2026 Notes (matures July 15, 2026) |  |  | 10 |  |  |  | 700 |
2027 Notes (matures May 15, 2027) |  |  | 671 |  |  |  | 750 |
2029 Notes (matures July 15, 2029) |  |  | 1,250 |  |  |  | - |
2030 Notes (matures October 15, 2030) |  |  | 800 |  |  |  | 800 |
2031 Notes (matures November 15, 2031) |  |  | 1,300 |  |  |  | 1,300 |
Total outstanding principal, including current portion |  |  | 5,969 |  |  |  | 6,210 |
Unamortized deferred loan costs - Senior Credit Facility |  |  | (38 | ) |  |  | (18 | )
Unamortized deferred loan costs - 2026 Notes |  |  | - |  |  |  | (3 | )
Unamortized deferred loan costs - 2027 Notes |  |  | (4 | ) |  |  | (6 | )
Unamortized deferred loan costs - 2029 Notes |  |  | (13 | ) |  |  | - |
Unamortized deferred loan costs - 2030 Notes |  |  | (8 | ) |  |  | (10 | )
Unamortized deferred loan costs - 2031 Notes |  |  | (13 | ) |  |  | (14 | )
Unamortized premium - 2026 Notes |  |  | - |  |  |  | 1 |
Less current portion |  |  | (23 | ) |  |  | (15 | )
Long-term debt, less current portion and deferred financing costs |  | $ | 5,870 |  |  | $ | 6,145 |
Borrowing availability under Revolving Credit Facility |  | $ | 674 |  |  | $ | 494 |
2024 Refinancing Activities. On June 3, 2024, we issued $1.25 billion in aggregate principal amount of 10.5% Senior Secured First Lien Notes due 2029 (the “2029 Notes”) pursuant to an indenture, dated as of June 3, 2024, between us, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent (the “2029 Notes Indenture”). The 2029 Notes were issued at par. Interest in the 2029 Notes accrues from June 3, 2024, and is payable semiannually, on January 15 and July 15 of each year, beginning on January 15, 2025. The net proceeds from the 2029 Notes were used, together with the net proceeds from a $500 million tranche F term loan (the “2024 Term Loan”) and a $150 million draw under our Revolving Credit Facility (as defined below), both under the Senior Credit Facility (as defined below), and cash on hand, to pre-pay our $1.2 billion tranche E 2019 Term Loan under the Senior Credit Facility; repurchase in a tender offer $690 million of face value of our outstanding 5.875% 2026 Notes; and pay all costs and accrued interest in connection with the offering. The 2029 Notes and related guarantees are our senior secured first lien obligations. The 2029 Notes rank:
● | equally in right of payment with all of our existing and future pari passu senior debt; senior in right of payment to all of our existing and future subordinated debt;
● | effectively senior to all of our existing and future unsecured debt or junior lien debt to the extent of the value of the collateral securing the 2029 Notes;
● | effectively subordinated to any existing and future debt that is secured by a lien on any assets not constituting collateral securing the 2029 Notes to the extent of the value of such assets; and
● | structurally subordinated to any existing and future debt and liabilities of our subsidiaries that do not guarantee the 2029 Notes.
On June 4, 2024, we entered into a third amendment to the Fifth Amended and Restated Credit Agreement (the “Third Amendment” and as amended, including by the Third Amendment, the “Senior Credit Facility”), dated as of December 1, 2021. The Third Amendment, among other things, provided for (i) the new $500 million 2024 Term Loan and (ii) increased aggregate commitments under our existing $552.5 million revolving credit facility (the “Revolving Credit Facility”) that matures December 31, 2027 by $127.5 million, and a concurrent termination of the separate commitments under a $72.5 million tranche of revolving commitments that were to mature on December 1, 2026, resulting in aggregate commitments under the Revolving Credit Facility of $680 million. The 2024 Term Loan bears interest, at our option, at either the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin or the Base Rate plus an applicable margin. “Base Rate” is defined as the greatest of (i) the administrative agent’s prime rate, (ii) the overnight federal funds rate plus 0.50% and (iii) Adjusted Term SOFR (as defined in the Senior Credit Facility) for a one-month tenor in effect on such day plus 1.0%. The applicable margin with respect to the 2024 Term Loan is 5.25% for all SOFR borrowings and 4.25% for all Base Rate borrowings. The 2024 Term Loan also requires us to make quarterly principal reductions of $1.25 million beginning September 30, 2024. To the extent all or any portion of the 2024 Term Loan is repaid or prepaid prior to the one year anniversary of the effective date of the Third Amendment, a prepayment fee equal to 1.0% of the amount of the 2024 Term Loan being repaid or prepaid will apply. The Revolving Credit Facility bears interest, at our option, based on SOFR plus 1.75%-2.75% or the Base Rate plus 0.75%-1.75%, in each case based on a first lien leverage ratio (the “First Lien Leverage Ratio”) as set forth in the Senior Credit Facility. The Company is required to pay a commitment fee on the average daily unused portion of the Revolving Credit Facility, which rate may range from 0.375% to 0.5%, based on the First Lien Leverage Ratio. The costs associated with these 2024 refinancing activities totaled $47 million, of which $45 million were capitalized as deferred loan costs, to be amortized over the lives of the respective debt obligations. Our loss from the early extinguishment of debt for these 2024 refinancing activities was $10 million, which was composed of expensing of the remaining $4 million of costs and the write-off of $6 million of unamortized deferred loan costs and premiums related to the debts that were pre-paid. Repurchase of Debt and Subsequent Event. On May 6, 2024, our Board of Directors authorized us to use up to $250 million of available liquidity to repurchase our outstanding indebtedness through December 31, 2025. The extent of such repurchases, including the amount and timing of any repurchases, will depend on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. This repurchase program does not require us to repurchase a minimum amount of debt, and it may be modified, suspended or terminated at any time without prior notice. During the nine-months ended September 30, 2024, we used $72 million of cash to repurchase and retire $79 million of the face value of our outstanding 2027 Notes on the open market, resulting in a $6 million gain from early extinguishment of debt. In addition, during the three and nine-months ended September 30, 2024, we used $14 million of cash to repurchase and retire $15 million of the face value of our 2021 Term Loans on the open market, resulting in a $1 million gain from early extinguishment of debt. At September 30, 2024, we were obligated to repurchase an additional $7 million of face value of our 2021 Term Loans on the open market for $6 million, and this transaction will be completed later in the fourth quarter of 2024, using cash on hand. On September 25, 2024, we entered into an agreement with a lender to purchase a portion of our 2021 Term Loans. As a result of this agreement, the lender has purchased $32 million of the face value of our outstanding 2021 Term Loans for $30 million, under this plan. We plan to repurchase and retire these portions of our 2021 Term Loan later in the fourth quarter of 2024 using cash on hand. Interest Rate Caps. On February 23, 2023, we entered into two interest rate caps pursuant to an International Swaps and Derivatives Association Master Agreement (the “ISDA Master Agreement”) with two counterparties, Wells Fargo Bank, NA and Truist Bank, respectively. On June 25, 2024, we amended the notional amount of the interest rate caps in order to better match the outstanding amounts of the related outstanding indebtedness. At September 30, 2024, the caps had a combined notional value of approximately $2 billion and mature on December 31, 2025. The interest rate caps protect us against adverse fluctuations in interest rates by reducing our exposure to variability in cash flows on a portion of our variable-rate debt. The interest rate caps are designated as cash flow hedges of our risk of changes in our cash flows attributable to changes in 1-month SOFR on our outstanding variable-rate debt in accordance with ASC 815. We elected to apply the optional expedient in ASC 848, Reference Rate Reform, that enabled us to consider the amended swaps a continuation of the existing contracts. As a result, the transition did not have an impact on our hedge accounting or a material impact to our financial statements. The interest rate caps, as amended, effectively limit the annual interest charged on our 2021 Term Loan and our 2024 Term Loan to a maximum of 1-month Term SOFR of 4.96% and 5.047%. We are required to pay aggregate fees in connection with the interest rate caps of approximately $34 million that is due and payable at maturity on December 31, 2025. On the initial designation date, we recognized an asset and corresponding liability for the deferred premium payable equal to $34 million. The asset is amortized into interest expense straight-line over the term of the hedging relationship. At September 30, 2024 and December 31, 2023, the recorded value of the asset was $15 million and $24 million, net of accumulated amortization, respectively. At September 30, 2024 and December 31, 2023, the fair value of the derivative liability was $32 million and $23 million, respectively. We present the deferred premium, the asset, and the fair value of the derivative, net within other non-current liabilities in our condensed consolidated balance sheets. The ISDA Master Agreement, together with its related schedules, contain customary representations, warranties and covenants. The interest rate caps were not entered into for speculative trading purposes. Changes in the fair value of the interest rate caps are reported as a component of other comprehensive income. Actual gains and losses are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and are presented in the same income statement line item as the earnings effect of the hedged transaction. Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings and are presented in the same line of the income statement for the hedged item. We recognized $9 million and $7 million, respectively, of amortization expense for the asset during the nine-months ended September 30, 2024 and 2023, which is included as a component of cash flows from operating activities in our condensed consolidated statements of cash flows. Cash flows received from the counterparties pursuant to the interest rate caps are included as components of cash flows from financing activities in our condensed consolidated statements of cash flows. During the nine-months ended September 30, 2024 and 2023, we received $6 million and $2 million, respectively, of cash payments from the counterparties that we reclassified as reductions of interest expense from the interest rate caps in our condensed consolidated statements of operations. For all of our interest bearing obligations, we made interest payments of approximately $257 million and $284 million during the nine-months ended September 30, 2024 and 2023, respectively. During the nine-months ended September 30, 2024 and 2023, we capitalized $1 million and $20 million of interest payments, respectively, related to the Assembly Atlanta project. As of September 30, 2024, the aggregate minimum principal maturities of our long term debt for the remainder of 2024 and the succeeding 5 years were as follows (in millions):
|  | Minimum Principal Maturities |
Year |  | Senior Credit Facility |  |  | 2026 Notes |  |  | 2027 Notes |  |  | 2029 Notes |  |  | 2030 Notes |  |  | 2031 Notes |  |  | Total |
Remainder of 2024 |  | $ | 8 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 8 |
2025 |  |  | 20 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 20 |
2026 |  |  | 20 |  |  |  | 10 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 30 |
2027 |  |  | 20 |  |  |  | - |  |  |  | 671 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 691 |
2028 |  |  | 1,399 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,399 |
2029 |  |  | 471 |  |  |  | - |  |  |  | - |  |  |  | 1,250 |  |  |  | - |  |  |  | - |  |  |  | 1,721 |
Thereafter |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 800 |  |  |  | 1,300 |  |  |  | 2,100 |
Total |  | $ | 1,938 |  |  | $ | 10 |  |  | $ | 671 |  |  | $ | 1,250 |  |  | $ | 800 |  |  | $ | 1,300 |  |  | $ | 5,969 |
As of September 30, 2024, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or to the guarantor subsidiaries. The Senior Credit Facility contains affirmative and restrictive covenants with which we must comply. The 2026 Notes, the 2027 Notes, the 2029 Notes, the 2030 Notes and the 2031 Notes also include covenants with which we must comply.

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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/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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