v3.19.2

Debt | 6 Months Ended
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Jun. 30, 2019
Debt Disclosure [Abstract] |
Debt | Debt Our debt at June 30, 2019 and December 31, 2018, was as follows (in millions):
| June 30, 2019 |  | December 31, 2018
Senior Unsecured Notes | $ | 2,990 |  |  | $ | 3,036 |
First Lien Term Loans | 2,979 |  |  | 2,976 |
First Lien Notes | 2,402 |  |  | 2,400 |
Project financing, notes payable and other | 1,229 |  |  | 1,264 |
CCFC Term Loan | 971 |  |  | 974 |
Finance lease obligations | 78 |  |  | 105 |
Corporate Revolving Facility | 75 |  |  | 30 |
Subtotal | 10,724 |  |  | 10,785 |
Less: Current maturities | 263 |  |  | 637 |
Total long-term debt | $ | 10,461 |  |  | $ | 10,148 |
Our effective interest rate on our consolidated debt, excluding the effects of capitalized interest and mark-to-market gains (losses) on interest rate hedging instruments, increased to 5.9% for the six months ended June 30, 2019, from 5.7% for the same period in 2018. Since the fourth quarter of 2018, we have cumulatively repurchased $438 million in aggregate principal of our Senior Unsecured Notes for $399 million. Senior Unsecured Notes The amounts outstanding under our Senior Unsecured Notes are summarized in the table below (in millions):
| June 30, 2019 |  | December 31, 2018
2023 Senior Unsecured Notes | $ | 1,228 |  |  | $ | 1,227 |
2024 Senior Unsecured Notes | 589 |  |  | 599 |
2025 Senior Unsecured Notes | 1,173 |  |  | 1,210 |
Total Senior Unsecured Notes | $ | 2,990 |  |  | $ | 3,036 |
During the six months ended June 30, 2019, we repurchased $48 million in aggregate principal of our Senior Unsecured Notes for $44 million. In connection with the repurchases, we recorded approximately $4 million in gain on extinguishment of debt. First Lien Term Loans The amounts outstanding under our senior secured First Lien Term Loans are summarized in the table below (in millions):
| June 30, 2019 |  | December 31, 2018
2019 First Lien Term Loan | $ | — |  |  | $ | 389 |
2023 First Lien Term Loans | 535 |  |  | 1,059 |
2024 First Lien Term Loan | 1,522 |  |  | 1,528 |
2026 First Lien Term Loan | 922 |  |  | — |
Total First Lien Term Loans | $ | 2,979 |  |  | $ | 2,976 |
On April 5, 2019, we entered into a $950 million first lien senior secured term loan which bears interest, at our option, at either (i) the Base Rate, equal to the highest of (a) the Federal Funds Effective Rate plus 0.50% per annum, (b) the Prime Rate or (c) the Eurodollar Rate for a one month interest period plus 1.0% (in each case, as such terms are defined in the credit agreement), plus an applicable margin of 1.75%, or (ii) LIBOR plus 2.75% per annum (with a 0% LIBOR floor) and matures on April 5, 2026. An aggregate amount equal to 0.25% of the aggregate principal amount of the 2026 First Lien Term Loan is payable at the end of each quarter with the remaining balance payable on the maturity date. We paid an upfront fee of an amount equal to 1.0% of the aggregate principal amount of the 2026 First Lien Term Loan, which is structured as original issue discount and recorded approximately $7 million in debt issuance costs during the second quarter of 2019 related to the issuance of our 2026 First Lien Term Loan. The 2026 First Lien Term Loan contains substantially similar covenants, qualifications, exceptions and limitations as our First Lien Term Loans and First Lien Notes. We used the proceeds from our 2026 First Lien Term Loan to repay our 2019 First Lien Term Loan and a portion of our 2023 First Lien Term Loans with a maturity date in January 2023 and recorded approximately $3 million in loss on extinguishment of debt during the second quarter of 2019 associated with the repayment. First Lien Notes The amounts outstanding under our senior secured First Lien Notes are summarized in the table below (in millions):
| June 30, 2019 |  | December 31, 2018
2022 First Lien Notes | $ | 744 |  |  | $ | 743 |
2024 First Lien Notes | 487 |  |  | 486 |
2026 First Lien Notes | 1,171 |  |  | 1,171 |
Total First Lien Notes | $ | 2,402 |  |  | $ | 2,400 |
Project Financing, Notes Payable and Other On January 29, 2019, Pacific Gas and Electric Company (“PG&E”) and PG&E Corporation each filed voluntary petitions for relief under Chapter 11. Our power plants that sell energy and energy-related products to PG&E through PPAs, include Russell City Energy Center and Los Esteros Critical Energy Facility. Since the bankruptcy filing, we have received all material payments under the PPAs, either directly or through the application of collateral. As a result of PG&E’s bankruptcy, we are currently unable to make distributions from our Russell City and Los Esteros projects in accordance with the terms of the project debt agreements associated with each related project. In July 2019, we executed forbearance agreements associated with the Russell City and Los Esteros project debt agreements, under which the lenders have agreed to forbear enforcement of their rights and remedies, including the ability to accelerate the repayment of borrowings outstanding, otherwise arising because PG&E did not assume our PPAs during the first 180 days of PG&E’s bankruptcy proceeding. The forbearance agreements are effective for rolling 90-day periods, so long as we continue to meet certain conditions, including that the PPAs have not been rejected and there are no other defaults under the project debt agreements or the forbearance agreements. We may be required to reclassify $362 million of Russell City and Los Esteros long-term project debt outstanding at June 30, 2019 to a current liability in a future period. We continue to monitor the bankruptcy proceedings and are assessing our options. In the event that the exercise of the OMEC put option is not rescinded, the OMEC project debt will become payable on November 3, 2019. See Note 5 for further information related to the OMEC put option. Corporate Revolving Facility and Other Letter of Credit Facilities The table below represents amounts issued under our letter of credit facilities at June 30, 2019 and December 31, 2018 (in millions):
| June 30, 2019 |  | December 31, 2018
Corporate Revolving Facility(1) | $ | 585 |  |  | $ | 693 |
CDHI(2) | 30 |  |  | 251 |
Various project financing facilities | 227 |  |  | 228 |
Other corporate facilities(3) | 293 |  |  | 193 |
Total | $ | 1,135 |  |  | $ | 1,365 |
____________
(1) | The Corporate Revolving Facility represents our primary revolving facility. On April 5, 2019, we amended our Corporate Revolving Facility to increase the capacity by approximately $330 million from $1.69 billion to approximately $2.02 billion.
(2) | Pursuant to the terms and conditions of the CDHI credit agreement, the capacity under the CDHI letter of credit facility was reduced to $125 million on June 28, 2019. The decrease in capacity did not have a material effect on our liquidity as alternative sources of liquidity are available.
(3) | We have three unsecured letter of credit facilities with two third-party financial institutions totaling approximately $300 million at June 30, 2019.
Fair Value of Debt We record our debt instruments based on contractual terms, net of any applicable premium or discount and debt issuance costs. The following table details the fair values and carrying values of our debt instruments at June 30, 2019 and December 31, 2018 (in millions):
| June 30, 2019 |  | December 31, 2018
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
Senior Unsecured Notes | $ | 3,011 |  |  | $ | 2,990 |  |  | $ | 2,803 |  |  | $ | 3,036 |
First Lien Term Loans | 3,013 |  |  | 2,979 |  |  | 2,877 |  |  | 2,976 |
First Lien Notes | 2,462 |  |  | 2,402 |  |  | 2,299 |  |  | 2,400 |
Project financing, notes payable and other(1) | 1,136 |  |  | 1,153 |  |  | 1,209 |  |  | 1,188 |
CCFC Term Loan | 980 |  |  | 971 |  |  | 938 |  |  | 974 |
Corporate Revolving Facility | 75 |  |  | 75 |  |  | 30 |  |  | 30 |
Total | $ | 10,677 |  |  | $ | 10,570 |  |  | $ | 10,156 |  |  | $ | 10,604 |
____________
(1) | Excludes an agreement that is accounted for as a failed sale-leaseback transaction under U.S. GAAP.
Our Senior Unsecured Notes, First Lien Term Loans, First Lien Notes, CCFC Term Loan and Corporate Revolving Facility are categorized as level 2 within the fair value hierarchy. Our project financing, notes payable and other debt instruments are categorized as level 3 within the fair value hierarchy. We do not have any debt instruments with fair value measurements categorized as level 1 within the fair value hierarchy.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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