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Debt | 12 Months Ended
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Dec. 31, 2019
Debt |
Debt | Note 10 Debt ​ Debt consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of December 31, |
​ |  | 2019 |  | 2018 |
​ | ​ | (In thousands) |
5.00% senior notes due September 2020 (1) | ​ | $ | 282,046 | ​ | $ | 614,748 | ​
4.625% senior notes due September 2021 | ​ |  | 634,588 | ​ |  | 668,347 | ​
5.50% senior notes due January 2023 | ​ |  | 501,003 | ​ |  | 586,000 | ​
5.10% senior notes due September 2023 | ​ |  | 336,810 | ​ |  | 342,923 | ​
0.75% senior exchangeable notes due January 2024 | ​ |  | 472,603 | ​ |  | 450,689 | ​
5.75% senior notes due February 2025 | ​ | ​ | 781,502 | ​ |  | 791,502 | ​
2012 Revolving credit facility (1) | ​ |  | 355,000 | ​ | ​ | 170,000 | ​
2018 Revolving credit facility | ​ |  | — | ​ | ​ | — | ​
Other | ​ |  | — | ​ | ​ | 561 | ​
​ | ​ | ​ | 3,363,552 | ​ | ​ | 3,624,770 | ​
Less: current portion | ​ |  | — | ​ |  | 561 | ​
Less: deferred financing costs | ​ | ​ | 30,332 | ​ | ​ | 38,325 | ​
​ | ​ | $ | 3,333,220 | ​ | $ | 3,585,884 | ​
​
(1) | The 5.00% senior notes due September 2020 and 2012 Revolving Credit Facility have been classified as long-term because we have the ability and intent to repay this obligation utilizing our 2018 Revolving Credit Facility.
​ As of December 31, 2019, the principal amount and maturities of our primary debt for each of the five years after 2019 and thereafter are as follows: ​
​ | ​ | ​ | ​ | ​
​ |  | Paid at Maturity |
​ | ​ | (In thousands) |
2020 | ​ | $ | 637,162 | (1)
2021 | ​ |  | 634,999 | (2)
2022 | ​ |  | — | ​
2023 | ​ |  | 838,281 | (3)
2024 | ​ |  | 575,000 | (4)
Thereafter | ​ |  | 781,502 | (5)
​ | ​ | $ | 3,466,944 | ​
(1) | Represents our 5.00% senior notes due September 2020 and amounts outstanding under our 2012 Revolving Credit Facility due July 2020. Subsequent to the balance sheet through the date of this report, approximately $3.0 million aggregate principal amount of our 5.00% senior notes were repurchased in the open market, aside from the tender offer.
​
(2) | Represents our 4.625% senior notes due September 2021. Approximately $379.7 million aggregate principal amount of our 4.625% senior notes were tendered pursuant to the previously announced offer to purchase and consent solicitation during January 2020 and approximately $5.0 million aggregate principal amount were repurchased in the open market, aside from the tender offer.
​
(3) | Represents our 5.50% senior notes due January 2023 and 5.10% senior notes due September 2023. Approximately $407.7 million aggregate principal amount of our 5.50% senior notes and $165.5 million aggregate principal amount of our 5.10% senior notes were tendered pursuant to the previously announced offer to purchase and consent solicitation during January 2020. Subsequent to the balance sheet through the date of this report, approximately $9.0 million aggregate principal amount of our 5.50% senior notes and $4.2 million aggregate principal amount of our 5.10% senior notes were repurchased in the open market.
​
(4) | Represents our 0.75% senior exchangeable notes due January 2024.
​
(5) | Represents our 5.75% senior notes due February 2025.
​ Nabors Delaware’s various fixed rate debt securities comprised of our 5.00%, 4.625%, 5.50% and 5.10% and 5.75% senior unsecured notes are fully and unconditionally guaranteed by us. The notes rank equal in right of payment to all of Nabors Delaware’s existing and future senior unsubordinated debt. The notes rank senior in right of payment to all of Nabors Delaware’s existing and future senior subordinated and subordinated debt. Our guarantee of the notes is unsecured and ranks equal in right of payment to all of our unsecured and unsubordinated indebtedness from time to time outstanding. The notes are subject to redemption by Nabors Delaware, in whole or in part, at any time generally at a redemption price equal to the greater of (i) 100% of the principal amount of the notes then outstanding to be redeemed; or (ii) the sum of the present values of the remaining scheduled payments of principal and interest, determined in the manner set forth in the applicable indenture. In the event of a change in control triggering event, as defined in the indenture, the holders of notes may require Nabors Delaware to purchase all or any part of each note in cash equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the date of purchase, except to the extent Nabors Delaware has exercised its right to redeem the notes. The notes have customary covenants, including limitations on the incurrence of liens and entering into sale and leaseback transactions as well as customary events of default. ​ During 2019, 2018 and 2017, we repurchased $468.3 million, $873.0 million, and $367.9 million aggregate principal amount of our senior unsecured notes for approximately $461.1 million, $906.5 million and $381.7 million, respectively, in cash, reflecting principal, accrued and unpaid interest. In connection with such repurchases, during 2019 we recognized a net gain of approximately $11.5 million. During 2018 and 2017 we recognized net losses of approximately $5.3 million and $16.0 million, respectively, which represents the premiums paid in connection with these repurchases or redemptions. These amounts are included in impairments and other charges in our consolidated statement of income (loss). ​ In January 2020, Nabors completed a private placement offering of $600.0 million aggregate principal amount of senior guaranteed notes due 2026 (the “2026 Notes”) and $400.0 million in aggregate principal amount of senior guaranteed notes due 2028 (the “2028 Notes” and, together with the 2026 Notes, the “notes”). The 2026 and 2028 Notes will bear interest at an annual rate of 7.25% and 7.50%, respectively. The notes are fully and unconditionally guaranteed by certain of Nabors’ indirect wholly-owned subsidiaries. The proceeds from this offering were used primarily to repurchase $952.9 million aggregate principal amount, for a net premium of $2.7 million (excluding accrued interest) certain of Nabors Delaware’s senior notes that were tendered pursuant to the previously announced offer to purchase and consent solicitation. The aggregate principal amount repurchased included approximately $407.7 million of our 5.50% senior notes due 2023, $379.7 million of our 4.625% senior notes due 2021 and $165.5 million of our 5.10% senior notes due 2023. The remaining proceeds were used to pay for transactional fees and for general corporate purposes, including the repayment of other debt. We also repurchased in the open market, aside from the tender offer, approximately $21.2 million aggregate principal amount of our various senior notes. ​ 0.75% Senior Exchangeable Notes Due January 2024 ​ In January 2017, Nabors Delaware issued $575.0 million in aggregate principal amount of 0.75% exchangeable senior unsecured notes due 2024, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a rate of 0.75% per year payable semiannually on January 15 and July 15 of each year, beginning on July 15, 2017. The exchangeable notes are bifurcated for accounting purposes into debt and equity components of $411.2 million and $163.8 million, respectively, based on the relative fair value at the issuance date. Debt issuance costs of $9.6 million and equity issuance costs of $3.9 million were capitalized in connection with the issuance of these notes in long-term debt and netted against the proceeds allocated to the equity component, respectively, in our consolidated balance sheet. The debt issuance costs are being amortized through January 2024. ​ The exchangeable notes are exchangeable, under certain conditions, at an initial exchange rate of 39.75 common shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an initial exchange price of approximately $25.16 per common share). Upon any exchange, Nabors Delaware will settle its exchange obligation in cash, common shares of Nabors, or a combination of cash and common shares, at our election. ​ In connection with the pricing of the notes, we entered into privately negotiated capped call transactions which are expected to reduce potential dilution to common shares and/or offset potential cash payments required to be made in excess of the principal amount upon any exchange of notes. Such reduction and/or offset is subject to a cap representing a price per share of $31.45, an approximately 75.0% premium over our share price of $17.97 as of the pricing date of the transaction. The capped call meets the definition of a derivative under ASC 815, Derivatives and Hedging, as it has an underlying (the Company’s share price), a notional amount (the number of underlying shares to be purchased per option), an initial net investment less (by more than a nominal amount) than the amount that would have to be paid to own the underlying and provides for a default net share settlement (but could also be settled in cash at the election of the Company). However, the capped call meets the derivative scope exception under ASC 815 for instruments indexed to the Company’s own stock and classified in shareholders’ equity and therefore was initially recorded in equity. Until such time as the Company elects a settlement method for the exchangeable notes, the capped call transaction will continue to be accounted for as equity. At conversion, if the Company elects to partially settle the notes in cash in excess of the principal amount, or fully in cash, the capped call will be subject to mark to market through earnings as a derivative until such settlement is paid. ​ The net proceeds from the offering of the exchangeable notes were used to prepay the remaining balance of our unsecured term loan originally scheduled to mature in 2020, as well as to pay the cost of the capped call transactions. The remaining net proceeds from the offering were allocated for general corporate purposes, including to repurchase or repay other indebtedness. ​ 2018 Revolving Credit Facility ​ On December 13, 2019, Nabors Delaware and Nabors Drilling Canada Limited (‘‘Nabors Canada’’ and together with Nabors Delaware, the ‘‘Borrowers’’) entered into Amendment No. 2 (the ‘‘Second Amendment’’) to the existing credit agreement dated October 11, 2018 (as amended, including such amendment, the “2018 Revolving Credit Facility”) by and among the Borrowers, the Guarantors identified therein, HSBC Bank Canada, as the Canadian lender (the ‘‘Canadian Lender’’) the issuing banks and other lenders party thereto (the ‘‘US Lenders’’ and, together with the Canadian Lender, the ‘‘Lenders’’) and Citibank, N.A., as administrative agent solely for the U.S. Lenders. Changes to the 2018 Credit Agreement resulting from the Second Amendment include, without limitation, the following: ​
| ● | Reduction of commitments of the US Lenders to $981.6 million and the commitment of the Canadian Lender to $32.0 million;
| ● | Replacement of the net debt/capitalization covenant with a covenant to maintain net funded debt at no greater than 5.5 x EBITDA (as defined in the Second Amendment);
| ● | Maintaining the asset coverage ratio; provided that such ratio is measured only against the commitments under the 2018 Credit Agreement, plus debt incurred under the $100.0 million general indebtedness basket;
| ● | Reductions of $50.0 million to each of the general lien and general indebtedness baskets;
| ● | Addition of ability to incur upstream structurally-subordinated guaranteed indebtedness, subject to financial covenants;
| ● | Addition of ability to repay up to $150.0 million of Nabors Delaware’s notes due February 2025, subject to satisfaction of certain conditions; and
| ● | Addition of cure provisions
​ The 2018 Revolving Credit Facility has a borrowing capacity of $1.0136 billion and is fully and unconditionally guaranteed by Nabors and certain of its wholly owned subsidiaries. The 2018 Revolving Credit Facility matures at the earlier of (a) October 11, 2023 or (b) July 19, 2022, if any of Nabors Delaware’s existing 5.50% senior notes due January 2023 remain outstanding as of such date. Certain lenders have committed to provide Nabors Delaware an aggregate principal amount of $981.6 million under the 2018 Revolving Credit Facility, which may be drawn in U.S. dollars, and HSBC Bank Canada has committed to provide Nabors Canada an aggregate principal amount of $32 million in U.S. dollar equivalent, which can be drawn upon in either U.S. or Canadian dollars. The 2018 Revolving Credit Facility contains certain affirmative and negative covenants, including a financial covenant requiring Nabors to maintain a net funded debt to EBITDA (as defined in the Second Amendment) at no greater than 5.5 times EBITDA. Additionally, during any period in which Nabors Delaware fails to maintain an investment grade rating from at least two ratings agencies, the guarantors under the facility and their respective subsidiaries will be required to maintain an asset to debt coverage ratio (as defined in the 2018 Revolving Credit Facility) of at least 2.50:1. As of the date of this report, we had no borrowings outstanding under our 2018 Revolving Credit Facility. In order to make any future borrowings under the 2018 Revolving Credit Facility, Nabors and certain of its wholly owned subsidiaries are subject to compliance with the conditions and covenants contained therein, including compliance with applicable financial ratios. ​ As of the date of this report, we were in compliance with all covenants under the 2018 Revolving Credit Facility. If we fail to perform our obligations under the covenants, including financial covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facilities could be declared immediately due and payable. We expect to remain in compliance with all covenants under the 2018 Revolving Credit Facility during the twelve month period following the date of this report based on our current operational and financial projections. However, we can make no assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable. ​ 2012 Revolving Credit Facility ​ On October 11, 2018, Nabors Delaware entered into Amendment No. 3 to its existing credit agreement dated November 29, 2012 (as amended, including such amendment, the “2012 Revolving Credit Facility”), among itself, Nabors, Nabors Canada, HSBC Bank Canada, the other lenders party thereto, Citibank, N.A., and Wilmington Trust, National Association, as successor administrative agent (the “Amendment”). The Amendment, among other things, provides for Citibank, N.A.’s resignation as administrative agent and the appointment of Wilmington Trust, National Association as administrative agent, reduces the overall commitments available to $666.25 million and provides for certain lenders to exit the facility in order to become lenders under the 2018 Revolving Credit Facility. As of December 31, 2019, we had $355.0 million in borrowings outstanding under this facility. The weighted average interest rate on borrowings during the year ended December 31, 2019 was 3.71%. Availability under the 2012 Revolving Credit Facility is subject to a covenant not to exceed a net funded debt to capital ratio of 0.60:1. As of December 31, 2019 our net funded debt to capital ratio was 0.59:1. The 2012 Revolving Credit Facility expires in July 2020, or if we fail to comply with the net funded debt to capital covenant, the 2012 Revolving Credit Facility could be terminated earlier than July 2020. However, at such time as the 2012 Revolving Credit Facility becomes unavailable, we have the ability and intent to refinance the outstanding balance utilizing the 2018 Revolving Credit Facility, which has approximately $1.0 billion of available capacity as of December 31, 2019. ​ Short-Term Borrowings ​ We had 18 letter-of-credit facilities with various banks as of December 31, 2019. Availability and borrowings under our letter-of-credit facilities are as follows: ​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |
​ | ​ | 2019 |
​ | ​ | (In thousands) |
Credit available | ​ | $ | 890,902 | ​
Less: Letters of credit outstanding, inclusive of financial and performance guarantees | ​ |  | 146,788 | ​
Remaining availability | ​ | $ | 744,114 | ​
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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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