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LONG-TERM DEBT AND LEASE FINANCING OBLIGATION | 12 Months Ended
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Dec. 31, 2013
LONG-TERM DEBT AND LEASE FINANCING OBLIGATION |
LONG-TERM DEBT AND LEASE FINANCING OBLIGATION | 8. LONG-TERM DEBT AND LEASE FINANCING OBLIGATION As of December 31, 2013 and 2012, our long-term debt consisted of the following:
|  |  |  | December 31, |
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(In millions) |  | Maturity Date |  | 2013 |  | 2012 |
4.625 Notes |  | February 15, 2021 |  | $ | 688.0 |  | $ | - |
4.875 Notes |  | May 15, 2023 |  |  | 450.0 |  |  | - |
Term Loan (net of $2.4 million debt issuance costs) |  | January 28, 2017 |  |  | 194.8 |  |  | - |
ABL revolver |  | January 28, 2018 |  |  | - |  |  | - |
9 percent notes |  | Redeemed |  |  | - |  |  | 448.1 |
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Total debt |  |  |  | $ | 1,332.8 |  | $ | 448.1 |
Less current portion of long-term debt |  |  |  |  | (2.8 | ) |  | - |
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Long-term debt, net |  |  |  | $ | 1,330.0 |  | $ | 448.1 |
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Transactions Financing In connection with the Transactions, we assumed certain debt obligations and entered into certain new debt arrangements as follows: 4.625 Notes The Company and certain of its subsidiaries guaranteed $688.0 million aggregate principal amount of senior unsecured notes due 2021 bearing interest at a rate of 4.625 percent per annum (the "4.625 Notes") that were initially issued by a PPG subsidiary in connection with the Transactions. Interest on the 4.625 Notes is payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2013. The 4.625 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and by the Company's existing and future domestic subsidiaries, other than certain excluded subsidiaries. The proceeds from the 4.625 Notes retired a $688.0 million bridge loan for which we incurred $11.0 million related to financing fees that are included in "Loss on redemption and other debt costs" in our consolidated statements of income for the year ended December 31, 2013. Term Loan The Company also guaranteed a $279.0 million term loan due 2017 originally made to the PPG subsidiary with which we merged in the Transactions (the "Term Loan"). The Term Loan bears interest at a rate equal to (at the Company's election): (i) the Base Rate (as defined in the Term Loan agreement and subject to a 2 percent floor) plus 1.50 percent per annum; or (ii) the reserve adjusted Eurodollar Rate (as defined in the Term Loan and subject to a 1 percent floor) plus 2.50 percent per annum. At December 31, 2013, the interest rate on outstanding borrowings under the Term Loan was 3.50 percent per annum. At December 31, 2013, the effective interest rate, inclusive of amortization of deferred debt issuance cost, was 4.0 percent. Obligations under the Term Loan are fully and unconditionally guaranteed, on a senior secured basis, by the Company and its existing and future domestic subsidiaries, other than certain excluded subsidiaries and are secured by all the assets of the Company and the subsidiary guarantors. During the year ended December 31, 2013, we repaid approximately $81.8 million of the outstanding balance of the Term Loan. In connection with the repayment, we expensed approximately $1.4 million of deferred financing fees, which is included in "Loss on redemption and other debt costs" in our consolidated statements of income. ABL Revolver The Company refinanced its asset-based revolving credit facility (the "ABL Revolver") increasing the revolver commitment from $300.0 million to $500.0 million. At the Company's election, with respect to United States borrowings under the ABL Revolver, the ABL Revolver bears interest at a rate equal to either: (i) the higher of certain United States index rates; or (ii) three-month London Interbank Offered Rate ("LIBOR"), in each case, plus an applicable margin based on the Company's utilization under the ABL Revolver. At the election of the Company, with respect to Canadian borrowings under the ABL Revolver, the ABL Revolver will bear interest at a rate equal to either: (i) the higher of certain Canadian index rates; or (ii) three-month LIBOR, in each case, plus an applicable margin based on the Company's utilization under the ABL Revolver. At December 31, 2013, we had no outstanding balance on our ABL Revolver and our availability was approximately $420.2 million, net of outstanding letters of credit totaling $79.8 million. The ABL Revolver is fully and unconditionally guaranteed, on a senior secured basis, by each of the Company's existing and subsequently acquired or organized direct or indirect domestic subsidiaries (other than certain excluded subsidiaries). Canadian borrowing obligations under the ABL Revolver are unconditionally guaranteed by each of the Company's existing and subsequently acquired or organized direct or indirect domestic and Canadian subsidiaries (other than certain excluded subsidiaries). All obligations under the ABL Revolver, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the Company's assets and the assets of the subsidiary guarantors. The 4.625 Notes indenture, the Term Loan credit agreement and the ABL Revolver credit agreement each contain customary covenants, including certain restrictions on the Company and its subsidiaries ability to pay dividends. These covenants are subject to certain exceptions and qualifications. Under the ABL Revolver, cash dividend payments in an aggregate amount not to exceed $150 million in any fiscal year may be made if both borrowing availability under the ABL Revolver would have exceeded $75 million at all times during the thirty days immediately preceding the dividend payment and our consolidated fixed charge coverage ratio (as defined in the definitive documentation governing the ABL Revolver) is equal to or exceeds 1.00 to 1.00, each on a pro forma basis after giving effect to the proposed dividend payment. In addition, under the ABL Revolver, additional cash dividend payments may be made if both borrowing availability under the ABL Revolver then exceeds $100 million and our consolidated fixed charge coverage ratio (as defined in the definitive documentation governing the ABL Revolver) is equal to or exceeds 1.10 to 1.00, each on a pro forma basis after giving effect to the proposed cash dividend payment. In connection with the issuance of the 4.625 Notes, we entered into a registration rights agreement, pursuant to which we and the guarantors agreed to use our commercially reasonable efforts to file an exchange offer registration statement registering exchange notes. We will be required to pay additional interest if such registration statement is not declared effective by the SEC within 560 calendar days following the closing of the 4.625 Notes offering. 4.875 Notes Issuance and 9 Percent Notes Redemption In February 2013 we retired our then outstanding 9 percent notes with the proceeds of a new debt issuance. Additional information about those transactions is as follows: 4.875 Notes Issuance On February 1, 2013, we issued $450.0 million in aggregate principal amount of senior unsecured notes due 2023 which bear interest at a rate of 4.875 percent per annum (the "4.875 Notes"). Interest on the 4.875 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2013. The 4.875 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and future domestic subsidiaries, other than certain excluded subsidiaries. The 4.875 Notes indenture contains customary covenants, including certain restrictions on the Company and its subsidiaries ability to pay dividends. These covenants are subject to certain exceptions and qualifications. In connection with the issuance of the 4.875 Notes, we entered into a registration rights agreement, pursuant to which we and the guarantors agreed to use our commercially reasonable efforts to file an exchange offer registration statement registering exchange notes. We will be required to pay additional interest if such registration statement is not declared effective by the SEC within 560 calendar days following the closing of the 4.875 Notes offering. 9 Percent Notes Tender Offer and Redemption We used the net proceeds from the offering of the 4.875 Notes, together with cash on hand, to fund the repurchase of our 9 percent senior secured notes due 2017 (the "9 percent notes") in a tender offer and related consent solicitation (the "Tender Offer") for an aggregate tender price of $502.3 million including a make whole payment of $55.4 million. We accounted for the repurchase of the 9 percent notes as an extinguishment. In addition, we expensed approximately $8.5 million of deferred financing fees and incurred charges of $2.2 million associated with the Tender Offer. These costs are included in "Loss on redemption and other debt costs" in our consolidated statements of income. Cash Interest Cash payments for interest during the years ended December 31, 2013, 2012 and 2011 were $76.3 million, $55.8 million and $63.4 million, respectively. Lease Financing Obligation As of December 31, 2013 and 2012, we had a lease financing obligation of $104.7 million and $112.3 million, respectively. The change from the December 31, 2012 balance is due to the change in the Canadian dollar exchange rate for the period ended December 31, 2013. The lease financing obligation is the result of the sale and concurrent leaseback of certain land and buildings in Canada in 2007 for a term of ten years. In connection with this transaction, a collateralized letter of credit was issued in favor of the buyer-lessor resulting in the transaction being recorded as a financing transaction rather than a sale for GAAP purposes. As a result, the land, building and related accounts continue to be recognized in the consolidated balance sheets. The amount of the collateralized letter of credit was $3.8 million and $5.9 million as of December 31, 2013 and 2012, respectively. We are not obligated to repay the lease financing obligation amount of $104.7 million. Our obligation is for the future minimum lease payments under the terms of the related lease agreements. The future minimum lease payments under the terms of the related lease agreements as of December 31, 2013 are $7.3 million in 2014, $7.6 million in 2015, $7.6 million in 2016, and $1.9 million in 2017, the final year of the lease agreements. The change in the future minimum lease payments from such amounts disclosed as of December 31, 2012 is due to current period payments and the change in the Canadian dollar exchange rate as of December 31, 2013.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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