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Long-term Obligations | 12 Months Ended
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Dec. 31, 2016
Debt Disclosure [Abstract] |
Long-term Obligations | 13. Long-term Obligations Long-term debt consists of the following (in thousands):
|  | December 31,
|  | 2016 |  | 2015
HC2 |  |  |  |
11.0% Senior Secured Notes, due in 2019 (1) |  | $ | 307,000 |  |  | $ | 307,000 |
HC22 |  |  |  |
11.0% Senior Secured Bridge Note, due in 2019 (2) |  | 35,000 |  |  | — |
GMSL |  |  |  |
Notes payable and revolving lines of credit, various maturity dates |  | 17,522 |  |  | — |
LIBOR plus 3.65% Notes, due in 2019 |  | 3,026 |  |  | 5,260 |
Obligations under capital leases |  | 49,717 |  |  | 52,697 |
DBMG |  |  |  |
LIBOR plus 4.0% Notes, due in 2018 and 2019 |  | 9,439 |  |  | 14,378 |
SHE Line of Credit |  | — |  |  | 1,600 |
LIBOR plus 3.0% Line of Credit |  | — |  |  | — |
ANG |  |  |  |
5.5% Term Loan, due in 2018 |  | 501 |  |  | 660 |
LIBOR plus 3.0% Notes, due in 2023 (3) |  | 6,496 |  |  | — |
4.7% Notes, due in 2023 (3) |  | 4,439 |  |  | — |
4.3% Notes, due in 2022 (3) |  | 2,408 |  |  | — |
4.25% Seller Note, due in 2022 |  | 2,796 |  |  | — |
Other |  | 75 |  |  | 19 |
Total |  | 438,419 |  |  | 381,614 |
Issuance discount or premium and deferred financing costs, net |  | (9,923 | ) |  | (9,738 | )
Total long-term obligations |  | $ | 428,496 |  |  | $ | 371,876 |
(1) In January 2017, the Company issued $55.0 million in aggregate principal amount of additional notes under the 11.0% Notes Indenture. (2) In January 2017, we used a portion of the proceeds from our issuance of $55.0 million in aggregate principal amount of 11.0% Notes to repay the 11.0% Bridge note. (3) These loans have been consolidated and refinanced by ANG in January 2017. The aggregate principal balance outstanding shall bear fixed interest annually equal to 4.5%, due in 2022. Aggregate capital lease and debt payments are as follows (in thousands):
|  | Capital Leases |  | Debt |  | Total
2017 |  | $ | 6,639 |  |  | $ | 80,823 |  |  | $ | 87,462 |
2018 |  | 9,563 |  |  | 42,622 |  |  | 52,185 |
2019 |  | 9,431 |  |  | 347,715 |  |  | 357,146 |
2020 |  | 9,437 |  |  | 4,825 |  |  | 14,262 |
2021 |  | 9,431 |  |  | 4,350 |  |  | 13,781 |
Thereafter |  | 17,244 |  |  | 13,269 |  |  | 30,513 |
Total minimum principal & interest payments |  | 61,745 |  |  | 493,604 |  |  | 555,349 |
Less: Amount representing interest |  | (12,028 | ) |  | (104,902 | ) |  | (116,930 | )
Total aggregate capital lease and debt payments |  | $ | 49,717 |  |  | $ | 388,702 |  |  | $ | 438,419 |
The interest rates on the capital leases range from approximately 4% to 10.4%. 11.0% Notes On November 20, 2014, HC2 issued $250.0 million in aggregate principal amount of 11.0% Senior Secured Notes due 2019 (the “November 2014 Notes”). The November 2014 Notes were issued at a price of 99.05% of principal amount, which resulted in a discount of $2.4 million. The net proceeds from the issuance of the November 2014 Notes were used to repay a senior secured credit facility, which had provided for a twelve-month, floating interest rate term loan of $214 million and a delayed draw term loan of $36 million, entered into in connection with the Company's acquisition of GMSL. On March 26, 2015, HC2 issued an additional $50.0 million in aggregate principal amount of 11.0% Senior Secured Notes due 2019 (the “March 2015 Notes”). The March 2015 Notes were issued at a price of 100.5% of principal amount, plus accrued interest from November 20, 2014, which resulted in a premium of $0.3 million. On August 5, 2015, HC2 issued an additional $5.0 million aggregate principal amount of its 11.0% Senior Secured Notes due 2019 (the “August 2015 Notes”). The August 2015 Notes were issued in consideration for a release of claims by holders of the Preferred Stock discussed below (see Note 19. Equity for additional information). On December 24, 2015, the Company issued an additional $2.0 million aggregate principal amount of its 11.0% Senior Secured Notes due 2019. All of the 11.0% Senior Secured Notes due 2019 (collectively, the "11.0% Notes") were issued under an indenture dated November 20, 2014, by and among HC2, the guarantors party thereto and U.S. Bank National Association, a national banking association (“U.S. Bank”), as trustee (the “11.0% Notes Indenture”). On December 16, 2016, HC2 Holdings 2, Inc. (‘‘HC2 2’’), a wholly-owned subsidiary, issued a $35.0 million aggregate principal 11.0% bridge note (the "11.0% Bridge Note") due December 1, 2019, under the same terms as the 11.0% Senior Secured Notes, to Jefferies LLC in a private placement. The 11.0% Bridge Note is guaranteed by HC2 and each of the other guarantors of the 11.0% Notes and ranks pari passu to, and is equally and ratably secured with HC2's existing 11.0% Notes. In January 2017, we used a portion of the proceeds from the issuance of $55.0 million in aggregate principal amount of additional 11.0% Notes to repay this 11.0% Bridge Note. Refer to Note 26. Subsequent Events for further details. Maturity and Interest. The 11.0% Notes and the 11.0% Bridge Note mature on December 1, 2019. The 11.0% Notes and the 11.0% Bridge Note accrue interest at a rate of 11.0% per year. Interest on the 11.0% Notes and the Bridge Note is paid semi-annually on December 1st and June 1st of each year. Ranking. The 11.0% Notes and the 11.0% Bridge Note and the guarantees thereof are HC2’s and certain of its direct and indirect domestic subsidiaries’ (the “Subsidiary Guarantors”) general senior secured obligations. The 11.0% Notes and the 11.0% Bridge Note and the guarantees thereof rank: (i) senior in right of payment to all of HC2’s and the Subsidiary Guarantors’ future subordinated debt; (ii) equal in right of payment with all of HC2’s and the Subsidiary Guarantors’ existing and future senior debt and effectively senior to all of the Company's unsecured debt to the extent of the value of the collateral; and (iii) effectively subordinated to all liabilities of its non-guarantor subsidiaries. Collateral. The 11.0% Notes and the 11.0% Bridge Note and the guarantees thereof are collateralized on a first-priority basis by substantially all of HC2’s assets and the assets of the Subsidiary Guarantors (except for certain “Excluded Assets,” and subject to certain “Permitted Liens,” each as defined in the 11.0% Notes Indenture). The 11.0% Notes Indenture and the 11.0% Bridge Note permit the Company, under specified circumstances, to incur additional debt that could equally and ratably share in the collateral. The amount of such debt is limited by the covenants contained in the 11.0% Notes Indenture and the 11.0% Bridge Note. Certain Covenants. The 11.0% Notes Indenture and the 11.0% Bridge Note contain covenants limiting, among other things, the ability of HC2 and, in certain cases, HC2’s subsidiaries, to incur additional indebtedness or issue certain types of redeemable equity interests; create liens; engage in sale-leaseback transactions; pay dividends; make distributions in respect of capital stock and make certain other restricted payments; sell assets; engage in transactions with affiliates; or consolidate or merge with, or sell substantially all of its assets to, another person. These covenants are subject to a number of important exceptions and qualifications. HC2 is also required to maintain compliance with certain financial tests, including minimum liquidity and collateral coverage ratios. As of December 31, 2016, HC2 was in compliance with these covenants. Redemption Premiums. On or after December 1, 2016 and until November 30, 2017, HC2 may redeem the 11.0% Notes at a redemption price equal to 108.25% and on or after December 1, 2017 until November 30, 2018 at a redemption price equal to 105.50% of the principal amount plus accrued and unpaid interest. Beginning December 1, 2018, HC2 may redeem the 11.0% Notes at a redemption price equal to 100.00% plus accrued and unpaid interest. HC2 is required to make an offer to purchase the 11.0% Notes upon a change of control at a purchase price equal to 101% of the principal amount of the 11.0% Notes on the date of purchase plus accrued and unpaid interest. The 11.0% Bridge Note may be redeemed at any time at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest. DBMG Credit Facilities DBMG entered into a Credit and Security Agreement (“DBMG Facility”) with Wells Fargo Credit, Inc. (“Wells Fargo”), pursuant to which Wells Fargo initially agreed to advance up to a maximum amount of $50.0 million to DBMG, including up to $5.0 million of letters of credit. On January 23, 2015, DBMG entered into an amendment to the DBMG Facility, pursuant to which Wells Fargo agreed to increase the maximum amount of the DBMG Facility that could be used to issue letters of credit from $5.0 million to $14.5 million. The DBMG Facility, as amended, has a floating interest rate of LIBOR plus 3.0% (3.63% at December 31, 2016) and requires monthly interest payments. As of December 31, 2016 and December 31, 2015, DBMG had $0.0 million in outstanding letters of credit issued under the facility, of which $0 has been drawn. The DBMG Facility is secured by a first priority, perfected security interest in all of DBMG’s and its present and future subsidiaries' assets, excluding real estate, and a second priority, perfected security interest in all of DBMG’s real estate. The security agreements pursuant to which DBMG’s assets are pledged prohibit any further pledge of such assets without the written consent of the bank. The DBMG Facility contains various restrictive covenants. At December 31, 2016, DBMG was in compliance with these covenants. On May 6, 2014, DBMG entered into an amendment to the DBMG Facility, pursuant to which Wells Fargo extended the maturity date of the DBMG Facility to April 30, 2019, lowered the interest rate charged in connection with borrowings under the DBMG Facility and allowed for the issuance of additional loans in the form of notes totaling up to $5.0 million, secured by its real estate as a separate tranche under the DBMG Facility (“Real Estate Term Advance”). At December 31, 2016 and December 31, 2015, DBMG had borrowed $3.4 million and $4.0 million, respectively, under the Real Estate Term Advance. The Real Estate Term Advance has a five year amortization period requiring monthly principal payments and a final balloon payment at maturity. The Real Estate Term Advance has a floating interest rate of LIBOR plus 4.0% and requires monthly interest payments. On October 21, 2014, DBMG further amended the DBMG Facility to allow for the issuance of additional loans in the form of notes of up to $10.0 million, secured by its machinery and equipment (“Real Estate Term Advance (M&E)”) and the issuance of a note payable of up to $5.0 million, secured by its real estate (“Real Estate (2) Term Advance (Working Capital)”), each as separate tranches of debt under the DBMG Facility. The Real Estate Term Advance (M&E) and Real Estate Term Advance (Working Capital) have a five year amortization period requiring monthly principal payments and a final balloon payment at maturity. The Real Estate Term Advance (M&E) and Real Estate (2) Term Advance (Working Capital) have a floating interest rate of LIBOR plus 4.0% and require monthly interest payments. At December 31, 2016 and 2015, there was $6.1 million and $8.1 million, respectively, outstanding under the Real Estate Term Advance (M&E) and $0.0 million and $2.2 million, respectively, outstanding under the Real Estate Term Advance (Working Capital). GMSL Credit Facility GMSL established a $20.0 million term loan with DVB Bank in January 2014 (the “GMSL Facility”). The GMSL Facility has a 4.5 year term and bears interest at the rate of USD LIBOR plus 3.65% rate. As of December 31, 2016 and 2015, $3.0 million and $5.3 million, respectively, remained outstanding under the GMSL Facility. The GMSL Facility contains various restrictive covenants. At December 31, 2016, GMSL was in compliance with these covenants. CWind Credit Facilities GMSL acquired CWind in February 2016 and assumed liability for all of CWind's outstanding loans. CWind currently maintains 14 notes payable related to its vessels, with maturities ranging between 2020 and 2024 and interest rates varying between 7.10% and 7.62%. The initial aggregate principle amount outstanding under all 14 notes was GBP 18.1 million. As of December 31, 2016, the outstanding aggregate principal amount of the notes was GBP 14.2 million. CWind also has two revolving lines of credit, one based in the UK and one based in Germany with an aggregate capacity of GBP 1.5 million and an interest rate of 2.0% over Barclays' Base Rate of 0.3%. As of December 31, 2016 CWind had borrowings outstanding under the UK and German lines of credit of GBP 0.2 million and EUR 0.3 million, respectively. GMSL Capital Leases GMSL is a party to two leases to finance the use of two vessels: the Innovator (the “Innovator Lease”) and the Cable Retriever (the “Cable Lease,” and together with the Innovator Lease, the “GMSL Leases”). The Innovator Lease was restructured effective May 31, 2016, extending the lease to 2025. The principal amount thereunder bears interest at the rate of approximately 10.4%. The Cable Lease expires in 2023. The principal amount thereunder bears interest at the rate of approximately 4.0%. As of December 31, 2016 and December 31, 2015, $49.7 million and $52.7 million, respectively, in aggregate principal amount remained outstanding under the GMSL Leases. ANG Term Loan ANG established a term loan with Signature Financial in October 2013. This term loan has a five year term and bears interest at the rate of 5.5% per annum. As of December 31, 2016 and December 31, 2015, $0.5 million and $0.7 million, respectively, remained outstanding under this term loan. On June 13, 2016, ANG entered into a delayed draw term note for $6.5 million with Pioneer Savings Bank (“Pioneer”). The note includes an interest only provision for the first year and will mature on July 1, 2023. After the first year, the note will amortize on a straight-line basis. The interest rate on this loan is LIBOR plus 3.0% for the first year and a fixed rate of 4.3% thereafter. The agreement with Pioneer also includes a revolving demand note for $1.0 million with an annual renewal provision and interest at monthly LIBOR plus 3.0%. As of December 31, 2016, $6.5 million remained outstanding under the revolving demand note. On August 5, 2016, ANG entered into a six year seller note for $3.0 million with the seller of a station, maturing on February 1, 2022. The interest rate on this seller note is a fixed rate of 4.25%. Interest was pre-paid for the first month of the loan. As of December 31, 2016, $2.8 million remained outstanding under this seller note. On September 19, 2016 ANG entered into a term note for $2.5 million with Pioneer. The note will mature on October 1, 2022. The interest rate on this loan is 4.3%. As of December 31, 2016 $2.4 million remained outstanding under this term note. On December 12, 2016 ANG entered into a term note for $4.5 million with Pioneer. The note will mature on January 1, 2023. The interest rate on this loan is 4.7%. As of December 31, 2016, $4.4 million remained outstanding under this term note.

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