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Notes Payable and Long-Term Debt | 12 Months Ended
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Aug. 31, 2016
Debt Disclosure [Abstract] |
Notes Payable and Long-Term Debt | Notes Payable and Long-Term Debt Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with our debt covenants as of August 31, 2016. Notes Payable Notes payable as of August 31, 2016 and 2015, consisted of the following:
|  | Weighted-average Interest Rate |  |  |  |
|  | 2016 |  | 2015 |  | 2016 |  | 2015
|  |  |  |  |  | (Dollars in thousands)
Notes payable (a) |  | 1.72% |  | 2.33% |  | $ | 1,803,174 |  |  | $ | 813,717 |
CHS Capital notes payable (b) |  | 1.31% |  | 1.05% |  | 928,305 |  |  | 351,661 |
Total notes payable |  | $ | 2,731,479 |  |  | $ | 1,165,378 |
_______________________________________
(a) | In September 2015, we amended and restated our primary committed line of credit which is a $3.0 billion five-year, unsecured revolving credit facility with a syndication of domestic and international banks that expires in September 2020. The outstanding balance on this facility was $700.0 million as of August 31, 2016. There was no outstanding balance on the predecessor facility as of August 31, 2015. Amounts borrowed under this facility primarily bear interest at base rates (or London Interbank Offered Rates ("LIBOR")) plus applicable margins ranging from 0.00% to 1.45%.
In December 2015, we entered into three bilateral, uncommitted revolving credit facilities with an aggregate capacity of $1.3 billion. As of August 31, 2016, the aggregate capacity is $600 million. Amounts borrowed under these short-term lines are used to fund our working capital and bear interest at base rates (or London Interbank Offered Rates ("LIBOR")) plus applicable margins ranging from 0.25% to 1.00%. As of August 31, 2016, outstanding borrowings under these facilities were $300.0 million. In addition to our primary revolving line of credit, we have a three-year $325.0 million committed revolving pre-export credit facility for CHS Agronegocio Industria e Comercio Ltda ("CHS Agronegocio"), our wholly-owned subsidiary, to provide financing for its working capital needs arising from its purchases and sales of grains, fertilizers and other agricultural products which expires in April 2019. As of August 31, 2016, the outstanding balance under the facility was $260.0 million. As of August 31, 2016, our wholly-owned subsidiaries, CHS Europe S.a.r.l and CHS Agronegocio, had uncommitted lines of credit with $290.1 million outstanding. In addition, our other international subsidiaries had lines of credit with a total of $252.1 million outstanding as of August 31, 2016, of which $27.7 million was collateralized. We have two commercial paper programs with an aggregate capacity of $125.0 million, with two banks participating in our revolving credit facilities. Terms of our credit facilities do not allow them to be used to pay principal under a commercial paper facility. On August 31, 2016 we had no commercial paper outstanding. Miscellaneous short-term notes payable totaled $1.0 million as of August 31, 2016.
(b) | Cofina Funding, LLC ("Cofina Funding"), a wholly-owned subsidiary of CHS Capital, has available credit totaling $850.0 million as of August 31, 2016, under note purchase agreements with various purchasers and through the issuance of short-term notes payable. CHS Capital and CHS Inc. both sell eligible receivables they have originated to Cofina Funding, which are then pledged as collateral under the note purchase agreements. The notes payable issued by Cofina Funding bear interest at variable rates based on commercial paper with a weighted average rate of 1.40% as of August 31, 2016. There were $550.0 million in borrowings by Cofina Funding utilizing the issuance of commercial paper under the note purchase agreements as of August 31, 2016.
CHS Capital has available credit under master participation agreements with numerous counterparties. Borrowings under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging from 1.90% to 2.50% as of August 31, 2016. As of August 31, 2016, the total funding commitment under these agreements was $116.9 million, of which $24.9 million was borrowed. CHS Capital sells loan commitments it has originated to ProPartners Financial ("ProPartners") on a recourse basis. The total capacity for commitments under the ProPartners program is $265.0 million. The total outstanding commitments under the program totaled $183.5 million as of August 31, 2016, of which $122.3 million was borrowed under these commitments with an interest rate of 1.67%. CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and bear interest at variable rates ranging from 0.10% to 0.90% as of August 31, 2016, and are due upon demand. Borrowings under these notes totaled $231.2 million as of August 31, 2016. Long-Term Debt Amounts included in long-term debt on our Consolidated Balance Sheets as of August 31, 2016 and 2015 are presented in the table below.
|  |  | 2016 |  | 2015
|  |  | (Dollars in thousands)
5.59% unsecured term loans from cooperative and other banks, due in equal installments beginning in 2013 through 2018 |  | $ | 45,000 |  |  | $ | 75,000 |
6.18% unsecured notes $400 million face amount, due in equal installments beginning in 2014 through 2018 |  | 160,000 |  |  | 240,000 |
5.60% unsecured notes $60 million face amount, due in equal installments beginning in 2012 through 2018 |  | 13,846 |  |  | 23,077 |
5.78% unsecured notes $50 million face amount, due in equal installments beginning in 2014 through 2018 |  | 20,000 |  |  | 30,000 |
4.00% unsecured notes $100 million face amount, due in equal installments beginning in 2017 through 2021 |  | 100,000 |  |  | 100,000 |
4.08% unsecured notes $130 million face amount, due in 2019 (a) |  | 141,344 |  |  | 132,161 |
4.52% unsecured notes $160 million face amount, due in 2021 (a) |  | 162,633 |  |  | 164,654 |
4.67% unsecured notes $130 million face amount, due in 2023 (a) |  | 138,101 |  |  | 135,422 |
4.39% unsecured notes $152 million face amount, due in 2023 |  | 152,000 |  |  | — |
3.85% unsecured notes $80 million face amount, due in 2025 |  | 80,000 |  |  | 80,000 |
3.80% unsecured notes $100 million face amount, due in 2025 |  | 100,000 |  |  | 100,000 |
4.58% unsecured notes $150 million face amount, due in 2025 |  | 150,000 |  |  | — |
2.25% unsecured term loans from cooperative and other banks, due in 2025 (b) |  | 300,000 |  |  | — |
4.82% unsecured notes $80 million face amount, due in 2026 |  | 80,000 |  |  | 80,000 |
4.69% unsecured notes $58 million face amount, due in 2027 |  | 58,000 |  |  | — |
4.74% unsecured notes $95 million face amount, due in 2028 |  | 95,000 |  |  | — |
4.89% unsecured notes $100 million face amount, due in 2031 |  | 100,000 |  |  | — |
4.71% unsecured notes $100 million face amount, due in 2033 |  | 100,000 |  |  | 100,000 |
5.40% unsecured notes $125 million face amount, due in 2036 |  | 125,000 |  |  | — |
Other notes and contracts with interest rates from 1.30% to 15.25% |  | 76,147 |  |  | 44,909 |
Capital lease obligations |  | 105,708 |  |  | 125,894 |
Total long-term debt |  | 2,302,779 |  |  | 1,431,117 |
Less current portion |  | 214,329 |  |  | 170,309 |
Long-term portion |  | $ | 2,088,450 |  |  | $ | 1,260,808 |
_______________________________________
(a) | We have entered into interest rate swaps designated as fair value hedging relationships with these notes. Changes in the fair value of the swaps are recorded each period with a corresponding adjustment to the carrying value of the debt. See Note 12, Derivative Financial Instruments and Hedging Activities for more information.
(b) | Borrowings are variable under the agreement and bear interest at a base rate (or a LIBO rate) plus an applicable margin.
As of August 31, 2016, the carrying value of our long-term debt approximated its fair value, which is estimated to be $2.1 billion based on quoted market prices of similar debt (a Level 2 fair value measurement based on the classification hierarchy of ASC Topic 820, Fair Value Measurement). We have outstanding interest rate swaps designated as fair value hedges of select portions of our fixed-rate debt. During fiscal 2016, we recorded corresponding fair value adjustments of $9.8 million, which are included in the amounts in the table above. See Note 12, Derivative Financial Instruments and Hedging Activities for additional information. In September 2015, we entered into a ten-year term loan with a syndication of banks. The agreement provides for committed term loans in an amount up to $600.0 million. The full amount was drawn down in January 2016. Amounts drawn under this agreement that are subsequently repaid or prepaid may not be reborrowed. Principal on the term loans is payable in full on September 4, 2025. Borrowings under the agreement bear interest at a base rate (or a LIBO rate) plus an applicable margin, or at a fixed rate of interest determined and quoted by the administrative agent under the agreement in its sole and absolute discretion from time to time. The applicable margin is based on our leverage ratio and ranges between 1.50% and 2.00% for LIBO rate loans and between 0.50% and 1.00% for base rate loans. As of August 31, 2016, $300.0 million was outstanding under this agreement. In January 2016, we consummated a private placement of long-term notes in the aggregate principal amount of $680.0 million with certain accredited investors, which long-term notes are layered into six series which are included in the table above. In June 2016, we amended the ten-year term loan so that $300.0 million of the $600.0 million loan balance possesses a revolving feature, whereby we can pay down and re-advance an amount up to the referenced $300.0 million. The revolving feature matures on September 1, 2017, and the total funded loan balance on that day reverts to a non-revolving term loan. No other material changes were made to the original terms and conditions of the ten-year term loan. Long-term debt outstanding as of August 31, 2016 has aggregate maturities, excluding fair value adjustments and capital leases (see Note 5, Property, Plant and Equipment for a schedule of minimum future lease payments under capital leases), as follows:
| (Dollars in thousands)
2017 | $ | 176,403 |
2018 | 177,539 |
2019 | 150,142 |
2020 | 20,142 |
2021 | 180,142 |
Thereafter | 1,470,384 |
Total | $ | 2,174,752 |
The following table presents the components of interest expense, net for the years ended August 31, 2016, 2015 and 2014. We have previously revised amounts for the year ended August 31, 2014 in this table to include interest expense related to capital lease obligations that were previously accounted for as operating leases. See Note 18, Correction of Immaterial Errors for more information on the nature and amounts of these revisions.
| 2016 |  | 2015 |  | 2014
| (Dollars in thousands)
Interest expense | $ | 144,047 |  |  | $ | 93,152 |  |  | $ | 84,925 |
Interest - purchase of CHS McPherson noncontrolling interests | — |  |  | 34,810 |  |  | 70,843 |
Capitalized interest | (30,343 | ) |  | (57,303 | ) |  | (8,528 | )
Interest income | (38,357 | ) |  | (10,326 | ) |  | (6,987 | )
Interest expense, net | $ | 75,347 |  |  | $ | 60,333 |  |  | $ | 140,253 |

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