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Long-Term Debt | 12 Months Ended
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Dec. 31, 2016
Debt Disclosure [Abstract] |
Long-Term Debt | Note 9—Long-term debt:
|  | December 31, |
|  | 2015 |  |  | 2016 |
|  | (In millions) |
Valhi: |  |  |  |  |  |  |  |
Snake River Sugar Company |  | $ | 250.0 |  |  | $ | 250.0 |
Contran credit facility |  |  | 263.8 |  |  |  | 278.9 |
Total Valhi debt |  |  | 513.8 |  |  |  | 528.9 |
Subsidiary debt: |  |  |  |  |  |  |  |
Kronos — |  |  |  |  |  |  |  |
Term loan |  |  | 338.0 |  |  |  | 335.9 |
WCS — |  |  |  |  |  |  |  |
Financing capital lease |  |  | 65.6 |  |  |  | 64.0 |
Tremont — |  |  |  |  |  |  |  |
Promissory note payable |  |  | 17.1 |  |  |  | 14.5 |
BMI — |  |  |  |  |  |  |  |
Bank note payable |  |  | 9.3 |  |  |  | 8.4 |
LandWell — |  |  |  |  |  |  |  |
Note payable to the City of Henderson |  |  | 3.1 |  |  |  | 2.9 |
Other |  |  | 13.6 |  |  |  | 10.4 |
Total subsidiary debt |  |  | 446.7 |  |  |  | 436.1 |
Total debt |  |  | 960.5 |  |  |  | 965.0 |
Less current maturities |  |  | 9.5 |  |  |  | 7.8 |
Total long-term debt |  | $ | 951.0 |  |  | $ | 957.2 |
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, 2016, $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 6. 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% (4.75% at December 31, 2016), and is due on demand, but in any event no earlier than December 31, 2018. 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, 2016 was 4.5%. During 2016 we borrowed an additional net $15.1 million and at December 31, 2016 an additional $46.1 million was available for borrowings under the amended facility. Kronos—Term loans— 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 term loan, as amended in May 2015:
| • | bears interest, at our option, at LIBOR (with LIBOR no less than 1.0%) plus 3.00%, or the base rate, as defined in the agreement, plus 2.00%;
| • | 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 our U.S. wholly-owned subsidiaries, (ii) 65% of the common stock or other ownership interest of our 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 our wholly-owned subsidiary, Kronos International, Inc. (KII) to us;
| • | is also collateralized by a second priority lien on all of the U.S. assets which collateralize our North American revolving facility, as discussed below;
| • | contains a number of covenants and restrictions which, among other things, restrict our ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of our assets to, another entity and 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 our other indebtedness in excess of $50 million.
Prior to the May 2015 amendment to the term loan, the applicable margin on outstanding LIBOR-based borrowings was 3.75%, and the applicable margin on outstanding base rate borrowings was 2.75%. All other terms of the term loan, including principal repayments, maturity and collateral remain unchanged. We accounted for such amendment to our term loan as a modification of the terms of the term loan. 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, 2016 was 4.0%. The carrying value of the term loan at December 31, 2016 is stated net of unamortized original issue discount of $.9 million and debt issuance costs of $3.6 million (at December 31, 2015 the amounts were $1.2 million and $4.7 million). See Note 19 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. Revolving North American credit facility—In June 2012, Kronos entered into a $125 million revolving bank credit facility. As amended in January 2017, the facility matures the earlier of (i) January 30, 2022 or (ii) 90 days prior to the maturity date of our term loan (or the maturity date of any new term loan constituting a permitted refinancing of the existing term loan). Based on February 2020 maturity date of our existing term loan, the maturity date of the North American credit facility is currently November 2019. 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. Kronos had no borrowings or repayments under this facility during 2015. During 2016, Kronos borrowed $266.2 million and repaid $266.2 million under this facility, and at December 31, 2016 Kronos had approximately $74.8 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. We expect to extend the maturity date of this facility on or prior to its maturity date. 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 2016 and at December 31, 2016, 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, 2016 and the net debt to EBITDA financial test, Kronos’ borrowing availability at December 31, 2016 is approximately 47% of the credit facility, or €55.8 million ($58.5 million). WCS—Financing capital lease—Prior to 2014, 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 A ssets 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 17. Other. Prior to 2014, and in conjunction with the acquisition of a controlling interest of our Real Estate Management and Development Segment, Tremont issued a $19.1 million promissory note with the seller, Nevada Environmental Response Trust (“NERT”). The note bears interest at 3% per annum, with interest payable annually and all principal due in December 2023. The promissory note is collateralized by the BMI and LandWell interests acquired as well as the real property acquired from NERT as part of the transaction. The note may be prepaid at any time, without penalty. We must make mandatory prepayments on the note in specified amounts whenever we receive distributions from BMI or LandWell, or in the event we sell any of the real property acquired. We made principal prepayments of $.3 million during 2015 and $2.6 million during 2016, under the terms of the note. Prior to 2014, 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, 2016 the note had an outstanding balance of $8.5 million and is stated net of debt issuance costs of $.1 million. The interest rate as of and for the year ended December 31, 2016 was 3.75% and 3.5%, respectively. In February 2017, a wholly-owned subsidiary of BMI entered into a $20.5 million loan agreement with Western Alliance Bank. The proceeds were used to refinance the $8.5 million outstanding bank note payable to Meadows Bank and to finance improvements to BMI’s water delivery system. The agreement requires semi-annual payments of principal and interest on June 1 and December 1 aggregating $1.9 million annually beginning on June 1, 2017 through the maturity date in June 2032 (except during 2017 which calls for prorated aggregate principal and interest payments of $1.6 million). The agreement bears interest at 5.34% and is secured by certain real property, including the water delivery system, and revenue streams under the City of Henderson water contract. Debt issuance costs are expected to be approximately $1 million. Prior to 2014, 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 18. 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 $2.9 million is deemed to be maturing in 2020. Aggregate maturities of long-term debt at December 31, 2016 Aggregate maturities of debt at December 31, 2016 are presented in the table below.
Years ending December 31, |  |  | Amount |
|  | (In millions) |
Gross amounts due each year: |  |  |  |
2017 |  | $ | 12.6 |
2018 |  |  | 291.6 |
2019 |  |  | 12.3 |
2020 |  |  | 338.8 |
2021 |  |  | 11.8 |
2022 and thereafter |  |  | 354.6 |
Subtotal |  |  | 1,021.7 |
Less amounts representing interest on capital leases, original issue discount and debt issuance costs |  |  | 56.7 |
Total long-term debt |  | $ | 965.0 |
We are in compliance with all of our debt covenants at December 31, 2016.

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