Debt

Our debt at September 30, 2019 and December 31, 2018, was as follows (in millions):



	September 30, 2019		December 31, 2018
First Lien Term Loans	$	3,175	$	2,976
Senior Unsecured Notes	2,991		3,036
First Lien Notes	2,404		2,400
Project financing, notes payable and other	965		1,264
CCFC Term Loan	969		974
Finance lease obligations	78		105
Revolving facilities	60		30
Subtotal	10,642		10,785
Less: Current maturities	229		637
Total long-term debt	$	10,413	$	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 nine months ended September 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 amount of our Senior Unsecured Notes for $399 million.

First Lien Term Loans

The amounts outstanding under our senior secured First Lien Term Loans are summarized in the table below (in millions):



	September 30, 2019		December 31, 2018
2019 First Lien Term Loan	$	—	$	389
2023 First Lien Term Loans	—		1,059
2024 First Lien Term Loan	1,519		1,528
2026 First Lien Term Loans	1,656		—
Total First Lien Term Loans	$	3,175	$	2,976

On August 12, 2019, we entered into a $750 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 1.50%, or (ii) LIBOR plus 2.50% per annum (with a 0% LIBOR floor) and matures on August 12, 2026. An aggregate amount equal to 0.25% of the aggregate principal amount of the New 2026 First Lien Term Loans 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 0.50% of the aggregate principal amount of the New 2026 First Lien Term Loan, which is structured as original issue discount and recorded approximately $11 million in debt issuance costs during the third quarter of 2019 related to the issuance of our New 2026 First Lien Term Loan. The New 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, together with cash on hand, to repay the remaining 2023 First Lien Term Loans with a maturity date in May 2023 and to repay project debt associated with OMEC. We recorded approximately $12 million in loss on extinguishment of debt during the third quarter of 2019 associated with the repayment.

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.

Senior Unsecured Notes

The amounts outstanding under our Senior Unsecured Notes are summarized in the table below (in millions):



	September 30, 2019		December 31, 2018
2023 Senior Unsecured Notes⁽¹⁾	$	1,229	$	1,227
2024 Senior Unsecured Notes	589		599
2025 Senior Unsecured Notes	1,173		1,210
Total Senior Unsecured Notes	$	2,991	$	3,036

____________

(1)

On October 23, 2019, we announced the commencement of a cash tender offer (the “2023 Offer”) for any and all of our outstanding 2023 Senior Unsecured Notes. The 2023 Offer is being made exclusively pursuant to an offer to purchase dated October 23, 2019 (the “Offer to Purchase”), which sets forth the terms and conditions of the 2023 Offer. Consummation of the 2023 Offer is subject to, and conditioned upon, the satisfaction or waiver of certain conditions described in the Offer to Purchase, and is expected to be completed in the fourth quarter of 2019. We may, in our sole discretion, terminate, extend or amend the 2023 Offer at any time as described in the Offer to Purchase.

During the nine months ended September 30, 2019, we repurchased $48 million in aggregate principal amount 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 Notes

The amounts outstanding under our senior secured First Lien Notes are summarized in the table below (in millions):



	September 30, 2019		December 31, 2018
2022 First Lien Notes⁽¹⁾	$	745	$	743
2024 First Lien Notes⁽¹⁾	487		486
2026 First Lien Notes	1,172		1,171
Total First Lien Notes	$	2,404	$	2,400

____________

(1)

On October 23, 2019, we announced the commencement of cash tender offers (the “Offers”) for any and all of our outstanding 2022 First Lien Notes and 2024 First Lien Notes. The Offers are being made exclusively pursuant to the Offer to Purchase, which sets forth the terms and conditions of the Offers. Consummation of the Offers is subject to, and conditioned upon, the satisfaction or waiver of certain conditions described in the Offer to Purchase, and is expected to be completed in the fourth quarter of 2019. We may, in our sole discretion, terminate, extend or amend the Offers at any time as described in the Offer to Purchase.

Project Financing, Notes Payable and Other

On January 29, 2019, 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 $354 million of Russell City and Los Esteros long-term project debt outstanding at September 30, 2019 to a current liability in a future period. We continue to monitor the bankruptcy proceedings and are assessing our options.

On August 14, 2019, we repaid the project debt associated with OMEC totaling $198 million from the proceeds received from the issuance of our New 2026 First Lien Term Loan (as discussed above), together with cash on hand.

Corporate Revolving Facility and Other Letter of Credit Facilities

The table below represents amounts issued under our letter of credit facilities at September 30, 2019 and December 31, 2018 (in millions):



	September 30, 2019		December 31, 2018
Corporate Revolving Facility⁽¹⁾	$	602	$	693
CDHI⁽²⁾	20		251
Various project financing facilities	199		228
Other corporate facilities⁽³⁾	294		193
Total	$	1,115	$	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. On August 12, 2019, we amended our Corporate Revolving Facility to extend the maturity of $150 million in revolving commitments from June 27, 2020 to March 8, 2023, and to reduce the commitments outstanding by $20 million to approximately $2.0 billion. The entire Corporate Revolving Facility now matures on March 8, 2023.


(2)	Pursuant to the terms and conditions of the CDHI credit agreement, the capacity under the CDHI revolving 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 September 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 September 30, 2019 and December 31, 2018 (in millions):



	September 30, 2019				December 31, 2018
	Fair Value		Carrying Value		Fair Value		Carrying Value
First Lien Term Loans	$	3,232	$	3,175	$	2,877	$	2,976
Senior Unsecured Notes	3,062		2,991		2,803		3,036
First Lien Notes	2,477		2,404		2,299		2,400
Project financing, notes payable and other⁽¹⁾	895		889		1,209		1,188
CCFC Term Loan	983		969		938		974
Revolving facilities	60		60		30		30
Total	$	10,709	$	10,488	$	10,156	$	10,604

____________


(1)	Excludes an agreement that is accounted for as a failed sale-leaseback transaction under U.S. GAAP.

Our First Lien Term Loans, Senior Unsecured Notes, First Lien Notes, CCFC Term Loan and revolving facilities 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.