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Long-Term Debt | 12 Months Ended
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Dec. 31, 2015
Debt Disclosure [Abstract] |
Long-Term Debt | Note 9—Long-term debt:
|  | December 31, |
|  | 2014 |  |  | 2015 |
|  | (In millions) |
Valhi: |  |  |  |  |  |  |  |
Snake River Sugar Company |  | $ | 250.0 |  |  | $ | 250.0 |
Contran credit facility |  |  | 223.7 |  |  |  | 263.8 |
Total Valhi debt |  |  | 473.7 |  |  |  | 513.8 |
Subsidiary debt: |  |  |  |  |  |  |  |
Kronos — |  |  |  |  |  |  |  |
Term loan |  |  | 340.9 |  |  |  | 338.0 |
WCS — |  |  |  |  |  |  |  |
Financing capital lease |  |  | 67.1 |  |  |  | 65.6 |
Tremont — |  |  |  |  |  |  |  |
Promissory note payable |  |  | 17.4 |  |  |  | 17.1 |
BMI — |  |  |  |  |  |  |  |
Bank note payable |  |  | 10.2 |  |  |  | 9.3 |
LandWell — |  |  |  |  |  |  |  |
Note payable to the City of Henderson |  |  | 3.1 |  |  |  | 3.1 |
Other |  |  | 16.6 |  |  |  | 13.6 |
Total subsidiary debt |  |  | 455.3 |  |  |  | 446.7 |
Total debt |  |  | 929.0 |  |  |  | 960.5 |
Less current maturities |  |  | 9.3 |  |  |  | 9.5 |
Total long-term debt |  | $ | 919.7 |  |  | $ | 951.0 |
Valhi—Snake River Sugar Company—Our $250 million in loans from Snake River Sugar Company are collateralized by our interest in The Amalgamated Sugar Company LLC. The loans bear interest at a weighted average fixed interest rate of 9.4% and are due in January 2027. At December 31, 2015, $37.5 million of the loans are recourse to us and the remaining $212.5 million is nonrecourse to us. Under certain conditions, Snake River has the ability to accelerate the maturity of these loans. See Note 4. Contran credit facility—We also have an unsecured revolving credit facility with Contran which, as amended, provides for borrowings from Contran of up to $325 million. The facility, as amended, bears interest at prime plus 1% (4.50% at December 31, 2015), and is due on demand, but in any event no earlier than December 31, 2017. The facility contains no financial covenants or other financial restrictions. Valhi pays an unused commitment fee quarterly to Contran on the available balance (except during periods during which Contran would be a net borrower from Valhi). The average interest rate on the term loan borrowings for the year ended December 31, 2015 was 4.26%. During 2015 we borrowed an additional net $40.1 million and at December 31, 2015 an additional $61.2 million was available for borrowings under the amended facility. Kronos—Term loans— In 2013, Kronos voluntarily repaid its entire $400 million term loan that was issued in June 2012. Kronos prepaid an aggregate $390 million principal amount and recognized a non-cash pre-tax interest charge of $8.9 million in 2013 related to this prepayment consisting of the write-off of unamortized original issue discount costs and deferred financing costs associated with such prepayment. Funds for the aggregate prepayment were provided by $150 million of cash on hand, borrowings of $190 million under a 2013 loan agreement with Contran as described below, $50 million of cash on hand and borrowings of $50 million under its revolving North American credit facility. In February 2014, Kronos entered into a new $350 million term loan. The term loan was issued at 99.5% of the principal amount, or an aggregate of $348.3 million. Kronos used $170 million of the net proceeds of the new term loan to prepay the outstanding principal balance of its note payable to Contran (along with accrued and unpaid interest through the prepayment date), and such note payable was cancelled. The remaining net proceeds of the term loan are available for Kronos’ general corporate purposes. The new term loan:
| — | bears interest, at Kronos’ option, at LIBOR (with LIBOR no less than 1.0%) plus 3.75%, or the base rate, as defined in the agreement, plus 2.75%;
| — | requires quarterly principal repayments of $875,000 which commenced in June 2014, other mandatory principal repayments of formula-determined amounts under specified conditions with all remaining principal balance due in February 2020. Voluntary principal prepayments are permitted at any time;
| — | is collateralized by, among other things, a first priority lien on (i) 100% of the common stock of certain of Kronos’ U.S. wholly-owned subsidiaries, (ii) 65% of the common stock or other ownership interest of Kronos’ Canadian subsidiary (Kronos Canada, Inc.) and certain first-tier European subsidiaries (Kronos Titan GmbH and Kronos Denmark ApS) and (iii) a $395.7 million unsecured promissory note issued by Kronos’ wholly-owned subsidiary, Kronos International, Inc. (KII) to Kronos;
| — | is also collateralized by a second priority lien on all of the U.S. assets which collateralize Kronos’ North American revolving facility, as discussed below;
| — | contains a number of covenants and restrictions which, among other things, restrict Kronos’ ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of Kronos’ assets to, another entity, contains other provisions and restrictive covenants customary in lending transactions of this type (however, there are no ongoing financial maintenance covenants); and
| — | contains customary default provisions, including a default under any of Kronos’ other indebtedness in excess of $50 million.
In May 2015 Kronos entered into an amendment to its term loan due in February 2020. As a result of the amendment:
| · | The applicable margin on outstanding LIBOR-based borrowings was reduced from 3.75% to 3.00%, and the applicable margin on outstanding base rate borrowings was reduced from 2.75% to 2.00%; and
| · | A provision was added whereby if we elected to call all or a portion of the outstanding principal balance within six months of completing the amendment (i.e. before November 2015), a 1% call premium of the aggregate principal amount so prepaid would apply. There is no prepayment penalty applicable to any call after November 2015. We made no such call prior to November 2015.
We accounted for such amendment to our term loan as a modification of the terms of the term loan. All other terms of the term loan, including principal repayments, maturity and collateral remain unchanged. We paid a $750,000 refinancing fee in connection with this amendment, which along with the existing unamortized deferred financing costs associated with the term loan are being amortized over the remaining term of the loan. The average interest rate on the term loan borrowings as of and for the year ended December 31, 2015 was 4.0% and 4.29%, respectively. The carrying value of the term loan at December 31, 2015 is stated net of unamortized original issue discount of $1.2 million and debt issuance costs of $4.7 million (at December 31, 2014 the amounts were $1.5 million and $5.0 million). See Note 20. See Note 18 for a discussion of the interest rate swap we entered into in the third quarter of 2015 pursuant to our interest rate risk management strategy. Note payable to Contran—As discussed above, in February 2013 Kronos entered into a promissory note with Contran. This loan from Contran contained terms and conditions similar to the terms and conditions of the prior $400 million term loan, except that the loan from Contran was unsecured and contained no ongoing financial maintenance covenant. The independent members of Kronos’ board of directors approved the terms and conditions of the loan from Contran. In 2013, Kronos borrowed $190 million and subsequently repaid $20 million. In February 2014 Kronos used $170 million of the proceeds from its new term loan and prepaid the remaining balance owed to Contran under this note payable (without penalty), and the note payable to Contran was cancelled. Revolving North American credit facility—In June 2012, Kronos entered into a $125 million revolving bank credit facility which matures in June 2017. Borrowings under the revolving credit facility are available for Kronos’ general corporate purposes. Available borrowings on this facility are based on formula-determined amounts of eligible trade receivables and inventories, as defined in the agreement, of certain of Kronos’ North American subsidiaries less any outstanding letters of credit up to $15 million issued under the facility (with revolving borrowings by Kronos’ Canadian subsidiary limited to $25 million). Any amounts outstanding under the revolving credit facility bear interest, at Kronos’ option, at LIBOR plus a margin ranging from 1.5% to 2.0% or at the applicable base rate, as defined in the agreement, plus a margin ranging from .5% to 1.0%. The credit facility is collateralized by, among other things, a first priority lien on the borrowers’ trade receivables and inventories. The facility contains a number of covenants and restrictions which, among other things, restricts the borrowers’ ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer all or substantially all of their assets to, another entity, contains other provisions and restrictive covenants customary in lending transactions of this type and under certain conditions requires the maintenance of a specified financial covenant (fixed charge coverage ratio, as defined) to be at least 1.1 to 1.0. During 2014, Kronos borrowed $81.0 million and repaid an aggregate of $92.1 million under this facility. Kronos had no borrowings or repayments under this facility during 2015, and at December 31, 2015 Kronos had approximately $68.3 million available for borrowing under this revolving facility. Revolving European credit facility—Kronos’ operating subsidiaries in Germany, Belgium, Norway and Denmark have a €120 million secured revolving bank credit facility that, matures in September 2017. Kronos may denominate borrowings in Euros, Norwegian kroner or U.S. dollars. Outstanding borrowings bear interest at LIBOR plus 1.90%. The facility is collateralized by the accounts receivable and inventories of the borrowers, plus a limited pledge of all of the other assets of the Belgian borrower. The facility contains certain restrictive covenants that, among other things, restrict the ability of the borrowers to incur debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer all or substantially all of the assets to, another entity, and requires the maintenance of certain financial ratios. In addition, the credit facility contains customary cross-default provisions with respect to other debt and obligations of the borrowers, KII and its other subsidiaries. Kronos had no borrowing or repayments under this facility during 2015 and at December 31, 2015, there were no outstanding borrowings under this facility. Kronos’ European credit facility requires the maintenance of certain financial ratios. Kronos’ European revolving credit facility requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to last twelve months earnings before income tax, interest, depreciation and amortization expense (EBITDA) of the borrowers. Based upon the borrowers’ last twelve months EBITDA as of December 31, 2015 and the net debt to EBITDA financial test, Kronos’ borrowing availability at December 30, 2015 is approximately 19% of the credit facility, or €23.1 million ($25.3 million). Canada—In December 2011, Kronos’ Canadian subsidiary entered into an agreement with an economic development agency of the Province of Quebec, Canada pursuant to which we may borrow up to Cdn. $4.5 million through December 31, 2015 (no additional amounts are expected to be borrowed under this facility). Borrowings may only be used to fund capital improvements at its Canadian plant and are limited to a specified percentage of such capital improvements. Borrowings are non-interest bearing, with equal monthly payments commencing in 2018. The agreement contains certain restrictive covenants, which, among other things, restricts the subsidiary’s ability to sell assets or enter into mergers, and requires Kronos’ subsidiary to maintain certain financial ratios and maintain specified levels of employment. At December 31, 2015, Kronos had Cdn. $4.5 million (USD $3.3 million) outstanding under this agreement. Prior to December 31, 2014, Kronos’ Canadian subsidiary had an aggregate of Cdn. $7.9 million of letters of credit outstanding issued by a bank its behalf. These letters of credit were issued in connection with the appeal of a Canadian income tax assessment discussed in Note 12. Upon the successful completion of the appeal in 2014, such letters of credit were cancelled, and an equivalent amount of restricted cash deposits which had been collateralizing such letters of credit, classified as noncurrent restricted cash, were released. WCS—Financing capital lease—Prior to 2013, WCS closed under a Sale and Purchase Agreement with the County of Andrews, Texas whereby WCS sold certain real and personal property constituting a substantial portion of its property and equipment (“Transferred Assets”) to the County for gross proceeds of $75 million. WCS used the net proceeds received under the Agreement to finance the construction of its Federal and Texas Compact LLRW disposal facilities. As a condition under the Agreement, WCS also concurrently entered into a Lease Agreement (“Lease”) with the County pursuant to which WCS agreed to lease the Transferred Assets back from the County for a period of 25 years. The Lease requires monthly rental payments payable through August 2035, and during the Lease term WCS is responsible for all costs associated with the use, occupancy, possession and operation of the Transferred Assets. Under the terms of the Agreement, WCS was also required to pay all of the County’s costs associated with the transactions, and the proceeds WCS received from the County upon closing under the Sale and Purchase Agreement were net of the County’s cost, which aggregated approximately $2.6 million At the end of the Lease term, title to the Transferred Assets automatically reverts back to WCS without further payment obligation. Prior to the end of the Lease term, WCS may, at its option, terminate the Lease early upon payment of specified amounts to the County, at which time the Transferred Assets would also revert back to WCS. For financial reporting purposes, we have accounted for these transactions in tandem as a financing capital lease, in which we continue to recognize the Transferred Assets on our Consolidated Balance Sheet and our rental payments due under the Lease are accounted for as debt. The capital lease has an effective interest rate of approximately 7.0%. At the inception of the Lease, WCS was required to prepay to the County an amount ($6.2 million) equal to its aggregate lease rentals due to the County in the final year of the Lease, the County will hold the funds as a prepaid deposit. The deposit serves as collateral for WCS’ performance under the Lease and is included in our other noncurrent assets. See Notes 7 and 16. Other. Tremont’s promissory note payable is discussed in Notes 3 and 16. In January 2013, BMI entered into an $11.9 million bank note payable to Meadows Bank. The proceeds of the note were used to refinance previously outstanding debt obligations. The note requires monthly installments of $.1 million through the maturity date in January 2025. The note bears interest at a variable rate equal to the prime rate with a floor of 3.25% and a ceiling of 9.0%. The note is secured by certain real property. In addition we are required to maintain cash collateral of $750,000 with the lender, which collateral is classified as noncurrent restricted cash in our Consolidated Balance Sheets. At December 31, 2015 the note had an outstanding balance of $9.4 million and is stated net of debt issuance costs of $.1 million. The interest rate as of and for the year ended December 31, 2015 was 3.50% and 3.25%, respectively. In May 2012, LandWell entered into a $3.9 million promissory note payable to the City of Henderson, Nevada. The note requires semi-annual principal payments of $250,000 payable solely from cash received from certain specified revenue sources with any remaining unpaid balance due in October 2020, see Note 17. The loan bears interest at a 3% fixed rate. Due to the uncertainty in timing of the cash to be received from the specified revenue sources, the outstanding balance of $3.1 million is deemed to be maturing in 2020. Aggregate maturities of long-term debt at December 31, 2015 Aggregate maturities of debt at December 31, 2015 are presented in the table below.
Years ending December 31, |  |  | Amount |
|  | (In millions) |
Gross amounts due each year: |  |  |  |
2016 |  | $ | 14.7 |
2017 |  |  | 276.3 |
2018 |  |  | 12.7 |
2019 |  |  | 12.3 |
2020 |  |  | 341.8 |
2021 and thereafter |  |  | 366.0 |
Subtotal |  |  | 1,023.8 |
Less amounts representing interest on capital leases, original issue discount and debt issuance costs |  |  | 63.3 |
Total long-term debt |  | $ | 960.5 |
We are in compliance with all of our debt covenants at December 31, 2015.

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