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Debt | 9 Months Ended
--- | ---
Dec. 31, 2016
Debt Disclosure [Abstract] |
Corporate Debt | Total debt of the Company, excluding film obligations and production loans, was as follows as of December 31, 2016 and March 31, 2016:
| December 31, 2016 |  | March 31, 2016
| (Amounts in millions)
Corporate debt: |  |  |
Revolving credit facilities | $ | — |  |  | $ | 161 |
Term Loan A | 1,000 |  |  | — |
Term Loan B | 2,000 |  |  | — |
5.875% Senior Notes | 520 |  |  | — |
5.25% Senior Notes | — |  |  | 225 |
Term Loan Due 2022 | — |  |  | 400 |
Total corporate debt | 3,520 |  |  | 786 |
Convertible senior subordinated notes | 102 |  |  | 102 |
Capital lease obligations | 59 |  |  | — |
Total debt | 3,681 |  |  | 888 |
Unamortized discount and debt issuance costs, net of fair value adjustment on capital lease obligations | (106 | ) |  | (23 | )
Total debt, net | 3,575 |  |  | 865 |
Less current portion | (118 | ) |  | (40 | )
Non-current portion of debt | $ | 3,457 |  |  | $ | 825 |
The following table sets forth future annual contractual principal payment commitments of debt as of December 31, 2016:
|  | Maturity Date |  | Year Ended March 31,
Debt Type |  |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | Thereafter |  | Total
|  |  |  | (Amounts in millions)
Revolving credit facility |  | December 2021 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Term Loan A |  | December 2021 |  | 13 |  |  | 50 |  |  | 55 |  |  | 77 |  |  | 100 |  |  | 705 |  |  | 1,000 |
Term Loan B |  | December 2023 |  | 5 |  |  | 20 |  |  | 20 |  |  | 20 |  |  | 20 |  |  | 1,915 |  |  | 2,000 |
5.875% Senior Notes |  | November 2024 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 520 |  |  | 520 |
Capital lease obligations |  | Various |  | 1 |  |  | 6 |  |  | 6 |  |  | 4 |  |  | 3 |  |  | 39 |  |  | 59 |
Principal amounts of convertible senior subordinated notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
January 2012 4.00% Notes |  | January 2017 |  | 42 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 42 |
April 2013 1.25% Notes |  | April 2018 |  | — |  |  | — |  |  | 60 |  |  | — |  |  | — |  |  | — |  |  | 60 |
|  |  |  | $ | 61 |  |  | $ | 76 |  |  | $ | 141 |  |  | $ | 101 |  |  | $ | 123 |  |  | $ | 3,179 |  |  | 3,681 |
Less aggregate unamortized discount & debt issuance costs, net of fair value adjustment on capital lease obligations |  |  |  |  |  |  |  |  |  |  |  |  |  | (106 | )
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 3,575 |
Senior Credit Facilities Issuance. On December 8, 2016, Lions Gate Entertainment Corp. entered into a credit and guarantee agreement (the "Credit Agreement"), providing for a $1.0 billion five-year revolving credit facility (ii) a $1.0 billion five-year term loan A facility (the "Term Loan A") and (iii) a $2.0 billion seven-year term loan B facility (the "Term Loan B" and together, the "Senior Credit Facilities"). The Term Loan B facility was issued at 99.5%. Revolving Credit Facility Availability of Funds & Commitment Fee. The revolving credit facility provides for borrowings and letters of credit up to an aggregate of $1.0 billion, and at December 31, 2016 there was $1.0 billion available. However, borrowing levels are subject to certain financial covenants as discussed below. There were no letters of credit outstanding at December 31, 2016. The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250% to 0.375% per annum, depending on the achievement of certain leverage ratios, as defined in the credit agreement, on the total revolving credit facility of $1.0 billion less the amount drawn. Maturity Date: •Revolving Credit Facility & Term Loan A: December 8, 2021. •Term Loan B: December 8, 2023. Interest:
• | Revolving Credit Facility & Term Loan A: Initially bears interest at a rate per annum equal to LIBOR plus 2.5% (or an alternative base rate plus 1.5%) margin, subject to possible reductions in the margin of up to 50 basis points (two reductions of 25 basis points each) upon achievement of certain net first lien leverage ratios, as defined in the credit agreement (effective interest rate of 3.19% as of December 31, 2016).
• | Term Loan B: Initially bears interest at a rate per annum equal to LIBOR (subject to a LIBOR floor of 0.75%) plus 3.00% (or an alternative base rate plus 2.00%) margin (effective interest rate of 3.75% as of December 31, 2016).
Required Principal Payments:
• | Term Loan A: Quarterly principal payments beginning the last day of the first full fiscal quarter ending after December 8, 2016, at quarterly rates of 1.25% for the first and second years, 1.75% for the third year, and 2.50% for the fourth and fifth years, with the balance payable at maturity.
• | Term Loan B: Quarterly principal payments beginning the last day of the first full fiscal quarter ending after December 8, 2016, at a quarterly rate of 0.25%, with the balance payable at maturity.
The Term Loan A and Term Loan B also require mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, and the Term Loan B is subject to additional mandatory repayment from specified percentages of excess cash flow, as defined in the Credit Agreement. Optional Prepayment:
• | Revolving Credit Facility & Term Loan A: The Company may voluntarily prepay the revolving credit facility and Term Loan A at any time without premium or penalty.
• | Term Loan B: The Company may voluntarily prepay the Term Loan B at any time, provided that if prepaid in connection with a Repricing Transaction (as defined in the Credit Agreement) on or before 12 months after the Closing Date (as defined in the Credit Agreement), the Company shall pay to lenders a prepayment premium of 1.0% of the loans prepaid.
Security. The Senior Credit Facilities are guaranteed by the Guarantors (as defined in the Credit Agreement) and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the Credit Agreement), subject to certain exceptions. Covenants. The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the revolving credit facility and the Term Loan A and are tested quarterly. As of December 31, 2016, the Company was in compliance with all applicable covenants. Change in Control. The Company may also be subject to an event of default upon a change in control (as defined in the Credit Agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% of the Company’s common shares. 5.875% Senior Notes Issuance. On October 27, 2016, Lions Gate Entertainment Corp. issued $520 million aggregate principal amount of 5.875% senior notes due 2024 (the "5.875% Senior Notes"). Interest. Bears interest at 5.875% annually. Maturity Date. November 1, 2024. Optional Redemption:
(i) | Prior to November 1, 2019, the 5.875% Senior Notes are redeemable under certain circumstances (as defined in the indenture governing the 5.875% Senior Notes), in whole at any time or in part from time to time, at a price equal to 100% of the principal amount, plus the Applicable Premium (as defined in the indenture governing the 5.875% Senior Notes). The Applicable Premium is the greater of (i) 1.0% of the principal amount redeemed and (ii) the excess of the present value of the redemption amount at November 1, 2019 (see below) of the notes redeemed plus interest through the redemption date (discounted at the treasury rate on the redemption date plus 50 basis points) over the principal amount of the notes redeemed on the redemption date.
(ii) | On and after November 1, 2019, redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date: (i) on or after November 1, 2019 - 104.406%; (ii) on or after November 1, 2020 - 102.938%; (iii) on or after November 1, 2021 - 101.439%; and (iv) on or after November 1, 2022 - 100%.
Security. The 5.875% Senior Notes are guaranteed on an unsubordinated, unsecured basis. Covenants. The 5.875% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations. As of December 31, 2016, the Company was in compliance with all applicable covenants. Change in Control. The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the 5.875% Senior Notes, at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.875% Senior Notes at 100% of their principal amount, plus accrued and unpaid interest, if any to the date of purchase. Debt Redemptions and Repayments The Company used the proceeds of the 5.875% Senior Notes, the Term Loan A, the Term Loan B, and a portion of the revolving credit facility (amounting to $50 million) to finance a portion of the consideration and transaction costs for the Starz Merger (see Note 2) and the associated transactions, including the repayment of all amounts outstanding under Lionsgate's previous senior revolving credit facility, term loan and senior notes and the discharge of Starz's senior notes and repayment of all amounts outstanding under Starz's credit agreement. The details of the debt redemptions and repayments are as follows: Repayment of Lionsgate's Senior Revolving Credit Facility, Term Loan Due 2022 and 5.25% Senior Notes. On December 8, 2016, all outstanding obligations (i.e., $241 million) under Lionsgate's previous $800 million senior revolving credit facility were repaid and the credit agreement was terminated. The previous credit facility bore interest at an alternative base rate, as defined, plus 1.5%, or LIBOR plus 2.5%, as designated by the Company (effective interest rate of 2.94% on borrowings outstanding as of March 31, 2016). On December 8, 2016, the Company redeemed its previous $400 million seven-year term loan due March 2022 (the "Term Loan Due 2022"), which carried interest at a rate of 5.00% per year. In conjunction with the early redemption of the Term Loan Due 2022, the Company paid a prepayment premium of $8 million, or 2.0% on the principal amount prepaid, pursuant to the terms of the agreement governing the Term Loan Due 2022. On December 8, 2016, the Company redeemed in full the $225 million outstanding principal amount of the 5.25% Senior Secured Second-Priority Notes due August 2018 (the "5.25% Senior Notes"), which bore interest at a rate of 5.25% per year. In conjunction with the early redemption of the 5.25% Senior Notes, the Company paid a prepayment premium of $15 million pursuant to the terms of the indenture governing the 5.25% Senior Notes. Accounting for the Repayment of Lionsgate's Senior Revolving Credit Facility: Any fees paid to creditors or third parties related to the issuance of the new revolving credit facility are capitalized and amortized over the term of the new revolving credit facility. To the extent the borrowing capacity, measured as the amount available under the revolving credit facility multiplied by the remaining term, on a creditor by creditor basis, was more than under the previous revolving credit facility, any prior unamortized debt issuance costs are capitalized and amortized over the term of the new revolving credit facility. To the extent the borrowing capacity on a creditor by creditor basis was less than under the previous credit facility the prior unamortized debt issuance costs were written off as a loss on extinguishment of debt in proportion to the decrease in borrowing capacity under the former revolving credit facility. The table below sets forth the applicable costs associated with the issuance and repayment of the senior revolving credit facility:
| Total |  | Amortize Over Life of New Revolving Credit Facility |  | Loss on Extinguishment of Debt
| (Amounts in millions)
Previously incurred unamortized debt issuance costs of senior revolving credit facility | $ | 3 |  |  | $ | 2 |  |  | $ | 1 |
New costs incurred to issue the new revolving credit facility | 20 |  |  | 20 |  |  | — |
Total | $ | 23 |  |  | $ | 22 |  |  | $ | 1 |
Redemption of Lionsgate's Term Loan Due 2022 and 5.25% Senior Notes: In accounting for each contemporaneous issuance of the Term Loan A, the Term Loan B and the 5.875% Senior Notes and redemption of the Term Loan Due 2022 and 5.25% Senior Notes, a portion of the issuance and redemption was considered a modification of terms with creditors who participated in both the new issuances and the redeemed debt, and a portion was considered a debt extinguishment. To the extent a portion of the issuance and redemption was considered a modification, the call premium and any fees or other amounts paid to creditors plus the remaining unamortized debt issuance costs and debt discount on the redeemed debt will be amortized over the life of the new issuance, and to the extent a portion of the issuance and redemption was considered an extinguishment, these costs were expensed as a loss on extinguishment of debt. The new issuance costs paid to third parties related to each issuance were capitalized and will be amortized over the life of the new issuance to the extent the issuance and redemption was considered an extinguishment, and expensed as a loss on extinguishment of debt to the extent considered to be a modification of terms. All costs and expenses associated with new creditors are capitalized and amortized over the life of the new issuance. Deferred financing costs and any debt discount are amortized using the effective interest method. The table below sets forth the applicable costs associated with the issuance of the Term Loan A, the Term Loan B, and the 5.875% Senior Notes and the redemption of the Term Loan Due 2022 and the 5.25% Senior Notes, respectively (as discussed above), and the applicable accounting for such:
| Total |  | Amortize Over Life of 5.875% Senior Notes, Term Loan A and Term Loan B |  | Loss on Extinguishment of Debt
| (Amounts in millions)
Early redemption/ call premium on 5.25% Senior Notes and Term Loan Due 2022 and other fees paid to creditors | $ | 23 |  |  | $ | 11 |  |  | $ | 12 |
Previously incurred unamortized net discount/premium and debt issuance costs of 5.25% Senior Notes and Term Loan Due 2022 | 13 |  |  | 9 |  |  | 4 |
| 36 |  |  | 20 |  |  | 16 |
New costs incurred to issue the 5.875% Senior Notes, Term Loan A and Term Loan B | 92 |  |  | 84 |  |  | 8 |
Total | $ | 128 |  |  | $ | 104 |  |  | $ | 24 |
Repayment of Starz Credit Facility and Redemption of Starz Senior Notes. On December 8, 2016, all outstanding obligations (i.e., $255 million) under Starz's existing $1.0 billion revolving credit facility that were assumed as part of the Starz Merger were repaid and the credit agreement was terminated. On December 8, 2016, the Company discharged the $675 million outstanding principal amount of the previous Starz senior notes due September 15, 2019 (the "Starz Senior Notes") that were assumed as part of the Starz Merger. In conjunction with the discharge of the Starz Senior Notes, the Company paid a call premium of $8 million. The repayment of the Starz credit facility and discharge of the Starz Senior Notes were accounted for as debt extinguishments, and a loss on extinguishment of debt of $3 million was recorded in the unaudited condensed consolidated statements of operations in the three and nine months ended December 31, 2016 related to these transactions. The following table summarizes the loss on extinguishment of debt recorded in the three and nine months ended December 31, 2016:
| (in millions)
Loss on Extinguishment of Debt |
Senior revolving credit facility | $ | 1 |
Term Loan Due 2022 & 5.25% Senior Notes | 24 |
Starz credit facility & Starz Senior Notes | 3 |
| $ | 28 |
Convertible Senior Subordinated Notes Outstanding Amount and Terms. The following table sets forth the convertible senior subordinated notes outstanding and certain key terms of these notes at December 31, 2016 and March 31, 2016:
|  | Maturity Date |  | Conversion Price Per Share at December 31, 2016 |  | December 31, 2016 |  | March 31, 2016
Convertible Senior Subordinated Notes |  |  |  | Principal |  | Unamortized Discount & Debt Issuance Costs |  | Net Carrying Amount |  | Principal |  | Unamortized Discount & Debt Issuance Costs |  | Net Carrying Amount
|  |  |  |  |  | (Amounts in millions)
January 2012 4.00% Notes |  | January 11, 2017 |  | $10.21 |  | $ | 42 |  |  | $ | — |  |  | $ | 42 |  |  | $ | 42 |  |  | $ | (2 | ) |  | $ | 40 |
April 2013 1.25% Notes |  | April 15, 2018 |  | $29.19 |  | 60 |  |  | — |  |  | 60 |  |  | 60 |  |  | — |  |  | 60 |
|  |  |  |  |  | $ | 102 |  |  | $ | — |  |  | $ | 102 |  |  | $ | 102 |  |  | $ | (2 | ) |  | $ | 100 |
January 2012 4.00% Notes: In January 2012, Lions Gate Entertainment Inc., a subsidiary of the Company, ("LGEI") issued approximately $45 million of 4.00% convertible senior subordinated notes due 2017 (the "January 2012 4.00% Notes"), of which $10 million was allocated to the equity component. April 2013 1.25% Notes: In April 2013, LGEI issued approximately $60 million in aggregate principal amount of 1.25% convertible senior subordinated notes due 2018 (the "April 2013 1.25% Notes"). Conversion Features: The convertible senior subordinated notes are convertible, at any time, into the number of common shares of the Company determined by the principal amount being converted divided by the conversion price, subject to adjustment in certain circumstances, including upon the issuance of dividends. The January 2012 4.00% Notes provide that upon conversion, the Company has the option to deliver, in lieu of common shares, cash or a combination of cash and common shares of the Company. Convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are recorded by separately accounting for the liability and equity component (i.e., conversion feature), thereby reducing the principal amount with a debt discount that is amortized as interest expense over the expected life of the note using the effective interest method. The effective interest rate on the liability component of the January 2012 4.00% Notes is 9.56%. The April 2013 1.25% Notes are convertible only into the Company's common shares and do not carry an option to be settled in cash upon conversion, and accordingly, have been recorded at their principal amount (not reduced by a debt discount for the equity component). Conversions. The following conversions were completed with respect to the Company's convertible senior subordinated notes in the nine months ended December 31, 2015 (none in the nine months ended December 31, 2016). In January 2017, the outstanding principal amount of the January 2012 4.00% Notes was converted; see Subsequent Events Note 20 for further details.
| Nine Months Ended
| December 31,
| 2015
| (Amounts in millions)
April 2009 3.625% Notes |
Principal amount converted | $ | 16 |
Common shares issued upon conversion | 2 |
Weighted average conversion price per share | $ | 8.15 |
Capital Lease Obligations Capital lease obligations represent lease agreements acquired in the Starz Merger (see Note 2), and include a ten-year commercial lease for a building with an imputed annual interest rate of 6.4%, and capital lease arrangements for Starz's transponder capacity that expire from 2018 to 2021 and have imputed annual interest rates ranging from 5.5% to 7.0%.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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