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Debt | 9 Months Ended
--- | ---
Dec. 31, 2017
Debt Disclosure [Abstract] |
Debt | Total debt of the Company, excluding film obligations and production loans, was as follows as of December 31, 2017 and March 31, 2017:
| December 31, 2017 |  | March 31, 2017
| (Amounts in millions)
Corporate debt: |  |  |
Revolving Credit Facility | $ | — |  |  | $ | — |
Term Loan A | 950.0 |  |  | 987.5 |
Term Loan B-1/ Term Loan B(1) | 825.0 |  |  | 1,600.0 |
5.875% Senior Notes | 520.0 |  |  | 520.0 |
Total corporate debt | 2,295.0 |  |  | 3,107.5 |
Convertible senior subordinated notes(2) | 60.0 |  |  | 60.0 |
Capital lease obligations | 52.1 |  |  | 57.7 |
Total debt | 2,407.1 |  |  | 3,225.2 |
Unamortized discount and debt issuance costs, net of fair value adjustment on capital lease obligations | (66.8 | ) |  | (100.3 | )
Total debt, net | 2,340.3 |  |  | 3,124.9 |
Less current portion | (57.3 | ) |  | (77.9 | )
Non-current portion of debt | $ | 2,283.0 |  |  | $ | 3,047.0 |
_____________________
(1) | As of March 31, 2017, amounts were outstanding under the previous Term Loan B facility, as defined below.
(2) | Represents 1.25% convertible senior subordinated notes due April 2018, with a conversion price of $29.19 per share of each Class A voting shares and Class B non-voting shares at December 31, 2017.
Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B-1/Term Loan B) Issuance. On December 8, 2016, Lions Gate Entertainment Corp. entered into a credit and guarantee agreement (the "Credit Agreement"), providing for (i) a $1.0 billion five-year revolving credit facility (the "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"). The Term Loan B facility was issued at 99.5%. Term Loan B Refinancing. As of December 11, 2017, $925.0 million of principal under the Term Loan B remained outstanding, and, in order to reduce the interest rate on the Term Loan B, the Company entered into an Amendment No. 1 (the "Repricing Amendment") to the Credit Agreement (as amended by the Repricing Amendment, the "Amended Credit Agreement"). In connection with the Repricing Amendment, the Company prepaid $25.0 million of principal outstanding under the Term Loan B and repriced the remaining $900.0 million of principal outstanding through the incurrence of a new six-year term loan B-1 facility in aggregate principal amount of $900.0 million (the "Term Loan B-1" and, together with the Revolving Credit Facility and the Term Loan A, the "Senior Credit Facilities"). The Term Loan B-1 bears interest, at the Company's option, at a rate per annum equal to LIBOR (subject to a LIBOR floor of 0.75%) plus 2.25% (or an alternative base rate plus 1.25%) margin. In each case, the applicable margin under the Term Loan B-1 is 0.75% per annum less than the applicable margin under the previously outstanding Term Loan B. No further regular amortization is required with respect to the Term Loan B-1 facility. The restrictive covenants, maturity dates and events of default in the Amended Credit Agreement are unchanged from the provisions in the Credit Agreement. In accounting for the prepayment of the Term Loan B and the issuance of the new Term Loan B-1, a portion of the prepayment and issuance was considered a modification of terms with creditors who participated in both the prepaid debt and the new issuance, and a portion was considered a debt extinguishment. The previously incurred unamortized deferred financing costs and debt discount on the prepaid debt will be amortized over the life of the new issuance, to the extent the prepayment and issuance was considered a modification of terms, and expensed as a loss on extinguishment of debt to the extent considered an extinguishment. The new debt issuances associated with existing creditors whose prior Term Loan B loans were prepaid were considered a modification of terms and therefore the new issuance costs associated with such issuances were expensed as a loss on extinguishment of debt. All costs and expenses associated with new creditors are capitalized and amortized over the life of the new issuance. Debt issuance costs and debt discount are amortized using the effective interest method. The table below sets forth the applicable costs associated with the refinancing of the Term Loan B:
| Total |  | Amortize Over Life of Term Loan B-1 |  | Loss on Extinguishment of Debt
Term Loan B Refinancing: | (Amounts in millions)
Previously incurred unamortized discount and debt issuance costs of Term Loan B | $ | 23.8 |  |  | $ | 20.9 |  |  | $ | 2.9 |
New costs incurred to issue the Term Loan B-1 | 1.6 |  |  | 0.1 |  |  | 1.5 |
Total | $ | 25.4 |  |  | $ | 21.0 |  |  | $ | 4.4 |
Other Voluntary Prepayments. In addition to the prepayments in connection with the Repricing Amendment described above, during the three and nine months ended December 31, 2017, the Company made other voluntary prepayments totaling $75.0 million and $740.0 million, respectively, in principal outstanding under the Term Loan B-1/Term Loan B, together with accrued and unpaid interest with respect to such principal amounts. In connection with these prepayments, the Company recorded a loss on extinguishment of debt in the three and nine months ended December 31, 2017 amounting to $1.8 million and $19.8 million, respectively associated with the write-off of deferred financing costs. The following table sets forth the loss on extinguishment of debt recorded in the three and nine months ended December 31, 2017:
| Three Months Ended |  | Nine Months Ended
| December 31, 2017
| (Amounts in millions)
Loss on Extinguishment of Debt |  |  |
Term Loan B refinancing | $ | 4.4 |  |  | $ | 4.4 |
Other voluntary prepayments of Term Loan B/Term Loan B-1 | 1.8 |  |  | 19.8 |
| $ | 6.2 |  |  | $ | 24.2 |
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, 2017 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, 2017. 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 Amended 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-1: December 8, 2023. Interest:
• | Revolving Credit Facility & Term Loan A: Initially bore interest at a rate per annum equal to LIBOR plus 2.5% (or an alternative base rate plus 1.5%) margin. The margin is subject to reductions 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 Amended Credit Agreement. The margin as of December 31, 2017 is 2.0% (effective interest rate of 3.56% as of December 31, 2017).
• | Term Loan B-1: As of December 11, 2017, pursuant to the Amended Credit Agreement described above, the Term Loan B-1 bears interest at a rate per annum equal to LIBOR (subject to a LIBOR floor of 0.75%) plus 2.25% (or an alternative base rate plus 1.25%) margin (effective interest rate of 3.81% as of December 31, 2017). The previous Term Loan B bore 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.
Required Principal Payments:
• | Term Loan A: Quarterly principal payments which began 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-1: As of December 11, 2017, pursuant to the Amended Credit Agreement described above and due to voluntary prepayments that were made on the Term Loan B, there are no further required principal payments under the Term Loan B-1 facility. The previous Term Loan B required quarterly principal payments which began 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-1 also require mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, and the Term Loan B-1 is subject to additional mandatory repayment from specified percentages of excess cash flow, as defined in the Amended 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-1: The Company may voluntarily prepay the Term Loan B-1 at any time, provided that if prepaid in connection with a Repricing Transaction (as defined in the Amended Credit Agreement) on or before six months after December 11, 2017, 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 Amended Credit Agreement) and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the Amended 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, 2017, 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 Amended 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 $520.0 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, 2017, 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. Interest Expense The table below sets forth the composition of the Company’s interest expense for the three and nine months ended December 31, 2017 and 2016:
| Three Months Ended |  | Nine Months Ended
| December 31, |  | December 31,
| 2017 |  | 2016 |  | 2017 |  | 2016
| (Amounts in millions)
Interest expense |  |  |  |  |  |  |
Cash interest | $ | 28.3 |  |  | $ | 24.0 |  |  | $ | 94.7 |  |  | $ | 50.4 |
Amortization of debt discount and financing costs | 3.6 |  |  | 3.4 |  |  | 11.0 |  |  | 8.1 |
| 31.9 |  |  | 27.4 |  |  | 105.7 |  |  | 58.5 |
Interest on dissenting shareholders' liability (see Note 2) | 14.4 |  |  | — |  |  | 41.6 |  |  | — |
Total interest expense | $ | 46.3 |  |  | $ | 27.4 |  |  | $ | 147.3 |  |  | $ | 58.5 |

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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 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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