Corporate Debt

Corporate debt consists of the following (dollars in thousands):



	Successor				Predecessor
	December 31, 2018				December 31, 2017
	Amortized Cost		Weighted- Average Stated Interest Rate ⁽¹⁾		Amortized Cost		Weighted- Average Stated Interest Rate ⁽¹⁾
2018 Term Loan (unpaid principal balance of $961,356 at December 31, 2018)	$	933,402	8.52	%	$	—	—	%
Second Lien Notes (unpaid principal balance of $253,896 at December 31, 2018)	199,816		9.00	%	—		—	%
2013 Term Loan (unpaid principal balance of $1,229,590 at December 31, 2017)	—		—	%	1,214,663		5.31	%
Senior Notes (unpaid principal balance of $538,662 at December 31, 2017)	—		—	%	538,662		7.875	%
Convertible Notes (unpaid principal balance of $242,468 at December 31, 2017)	—		—	%	242,468		4.50	%
Subtotal	1,133,218				1,995,793
Less: Liabilities subject to compromise ⁽²⁾	—				781,130
Total corporate debt	$	1,133,218			$	1,214,663

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(1)	Represents the weighted-average stated interest rate, which may be different from the effective rate, which considers the amortization of discounts and issuance costs.


(2)	Liabilities subject to compromise consists of the Senior Notes and Convertibles Notes at December 31, 2017. Refer to Note 2 for additional information.

The effective interest rate on corporate debt was 10.17%, 5.78% and 6.43% for the period from February 10, 2018 through December 31, 2018, the period from January 1, 2018 through February 9, 2018 and the year ended December 31, 2017, respectively.

The following table provides the contractual maturities (by unpaid principal balance) of corporate debt at December 31, 2018 (in thousands):



	Successor
	Corporate Debt
2019	$	110,100
2020	60,000
2021	60,000
2022	731,256
Thereafter ⁽¹⁾	299,836
Total	$	1,261,192

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(1)	Amount includes projected PIK Interest on the Second Lien Notes of $45.9 million.

2018 Credit Agreement

On February 9, 2018, the Company entered into the 2018 Credit Agreement, which included a $1.2 billion 2018 Term Loan. The 2018 Credit Agreement amended and restated the Company’s 2013 Credit Agreement and was subsequently amended as described below. The 2013 Revolver and issued letters of credit were terminated upon entry into the 2018 Credit Agreement. The Company's obligations under the 2018 Credit Agreement are guaranteed by substantially all of the Company’s subsidiaries and secured by substantially all of the assets of the Company subject to certain exceptions, the most significant of which are the assets of the consolidated Non-Residual Trusts, the residential loans and real estate owned of the Ginnie Mae securitization pools, and advances of the consolidated financing entities that have been recorded on the Company's consolidated balance sheets. Refer to the Consolidated Variable Interest Entities section of Note 5 for additional information.

The 2018 Term Loan bears interest at a rate equal to, at the Company's option (i) LIBOR plus 6.00%, subject to a LIBOR floor of 1.00% or (ii) an alternate base rate plus 5.00% (which interest will be payable (a) with respect to any alternate base rate loan, on the last business day of each March, June, September and December, and (b) with respect to any LIBOR loan, on the last day of the interest period applicable to the borrowing of which such loan is a part). The 2018 Term Loan matures on June 30, 2022. The Company made principal payments on the 2013 Term Loan and 2018 Term Loan totaling $157.6 million during the period from February 10, 2018 through December 31, 2018 and $110.6 million during the period from January 1, 2018 through February 9, 2018. The outstanding principal balance on the 2018 Term Loan was $961.4 million at December 31, 2018. The Company recorded a loss on extinguishment of debt of $4.5 million during the period from February 10, 2018 through December 31, 2018 and $0.9 million during the period from January 1, 2018 through February 9, 2018, due to the write-off of deferred fees and discount on the term loans. The Company is required to make quarterly payments on the 2018 Term Loan in the amounts listed below (in thousands):



	Successor
Repayment Date	Principal Amount
March 2019⁽¹⁾	$	10,000
June 2019	26,700
September 2019	36,700
December 2019	36,700
each March, June, September and December thereafter	15,000

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(1)	As a result of the DHCP Chapter 11 Cases discussed further in Note 31, the Company did not make the quarterly principal payment for March 2019.

In addition to the quarterly installments detailed above, mandatory repayment obligations under the 2018 Credit Agreement include, subject to exceptions, (i) 100% of the net sale proceeds from the sale or other disposition of certain non-core assets of the Company and of certain of the Company’s subsidiaries, (ii) 80% of the net sale proceeds of certain non-ordinary course asset sales and dispositions of certain bulk MSR, (iii) 100% of the net cash proceeds from the issuance of certain indebtedness and (iv) beginning with the fiscal year ending December 31, 2018, 50% of the Company’s excess cash flow as defined in the agreement. The 2018 Credit Agreement allows the Company to prepay, in whole or in part, the Company’s borrowings outstanding thereunder, together with any accrued and unpaid interest, with prior notice and subject to the prepayment premium described below and breakage or redeployment costs.

The 2018 Credit Agreement contains affirmative and negative covenants and representations and warranties customary for financings of this type, including restrictions on liens, dispositions of assets, fundamental changes, dividends, the ability to incur additional indebtedness, investments, transactions with affiliates, modifications of certain agreements, certain restrictions on subsidiaries, issuance of certain equity interests, changes in lines of business, creation of additional subsidiaries and prepayments of other indebtedness, in each case subject to customary exceptions. The 2018 Credit Agreement permits the incurrence of an additional incremental letter of credit facility in an aggregate principal amount at any time outstanding not to exceed $30.0 million. The 2018 Credit Agreement also contains financial covenants requiring compliance with certain asset coverage ratios and, commencing in 2020 as described below, an interest expense coverage ratio and a first lien net leverage ratio.

On March 29, 2018, the Company entered into an amendment to the 2018 Credit Agreement to (i) waive the Company’s compliance with the interest expense coverage ratio covenant and the first lien net leverage ratio covenant until the test period ending March 31, 2020, (ii) require the Company to make additional principal payments from March 29, 2018 to December 31, 2018 in an aggregate amount equal to $30.0 million, which the Company satisfied during the second quarter of 2018, (iii) provide for a one percent prepayment premium in connection with prepayments of the term loans made during the first 18 months after entering into the amendment (for all prepayments of principal other than mandatory amortization payments and the payments described in the foregoing clause (ii)), and (iv) increase the minimum requirement for Asset Coverage Ratio A for all test periods ending on March 31, 2018 through December 31, 2018.

On February 8, 2019, the Company entered into the DHCP RSA with the Consenting Term Lenders holding, as of February 11, 2019, more than 75% of the Term Loans outstanding under the 2018 Credit Agreement. Refer to Note 31 for further information.

Second Lien Notes

On February 9, 2018, pursuant to the terms of the WIMC Prepackaged Plan, the Company issued $250.0 million aggregate principal amount of Second Lien Notes to each holder of a Senior Notes claim on a pro rata basis. The Second Lien Notes pay interest in arrears semi-annually on June 15 and December 15, commencing on June 15, 2018, at a rate of 9.00% per year, and mature December 31, 2024. The Second Lien Notes require payment of interest in cash, except that interest on up to $50.0 million principal amount, at the election of the Company, may be paid by increasing the principal amount of the outstanding notes or by issuing additional notes. The terms of the 2018 Credit Agreement require that the Company exercise such election. The Second Lien Notes are secured on a second-priority basis by substantially all of the Company's assets and are guaranteed by substantially all of the Company's subsidiaries. The Second Lien Notes and the guarantees thereof are subordinated to the prior payment in full of the 2018 Credit Agreement and certain other senior indebtedness (as defined and to the extent set forth in the Second Lien Notes Indenture).

The Company may redeem all or a portion of the Second Lien Notes prior to December 15, 2020 by paying a specified premium, or at any time on or after December 15, 2020 at applicable redemption prices, in each case, plus accrued and unpaid interest. In addition, on or before December 15, 2020, the Company may redeem up to 35% of the aggregate principal amount of the Second Lien Notes with the net proceeds of certain equity offerings at the redemption price of 109.000% of the principal amount of Second Lien Notes redeemed, plus accrued and unpaid interest. If the Company experiences specific kinds of changes of control, the Company must offer to repurchase the Second Lien Notes at 101% of their principal amount, plus accrued and unpaid interest. In addition, if the Second Lien Notes would otherwise constitute “applicable high-yield discount obligations,” at the end of each accrual period ending on or after February 9, 2023, the Company will be required to redeem a portion of the Second Lien Notes. The Second Lien Notes Indenture limits the Company's ability to, among other things, pay dividends and make distributions or repurchase stock; make certain investments; incur additional debt; sell assets; enter into certain transactions with affiliates; create or incur liens; materially change its lines of business; and merge or consolidate or transfer or sell all or substantially all of its assets. The Second Lien Notes Indenture contains certain customary events of default, including the failure to make timely payments on the Second Lien Notes, failure to satisfy certain covenants and specified events of bankruptcy and insolvency.

The Company's Board of Directors elected not to make the approximately $9.0 million cash interest payment due and payable on December 17, 2018 with respect to the Second Lien Notes. The Company had sufficient liquidity on December 17, 2018 to make the interest payment. However, the Board of Directors elected not to make the interest payment as active discussions continued with certain of the Company’s creditors and other parties in interest regarding the Company’s previously announced evaluation of strategic alternatives. Under the Second Lien Notes Indenture, the Company had a 30-day grace period to make the interest payment before such non-payment triggered an event of default under the Second Lien Notes Indenture. The Company’s failure to make the interest payment within 30 days after it was due and payable resulted in an event of default under the Second Lien Notes Indenture effective January 16, 2019. An event of default under the Second Lien Notes Indenture also constitutes an event of default under the 2018 Credit Agreement and certain of the Company's warehouse facility agreements. Refer to Note 31 for further information.

Pre-Emergence from WIMC Reorganization Proceedings

2013 Credit Agreement

At December 31, 2017, the Company had a 2013 Term Loan in the original principal amount of $1.5 billion and unpaid principal balance amount of $1.2 billion. The Company also had a 2013 Revolver with a maximum availability of $20.0 million at December 31, 2017, and with $19.5 million outstanding in issued LOCs reducing the amount available on the 2013 Revolver, the Company had $0.5 million in available capacity. The Company's obligations under the 2013 Secured Credit Facilities were guaranteed by substantially all of its subsidiaries and secured by substantially all of its assets subject to certain exceptions, the most significant of which were the assets of the consolidated Residual and Non-Residual Trusts, the residential loans and real estate owned of the Ginnie Mae securitization pools, and advances of the consolidated financing entities that were recorded on the consolidated balance sheets.

The 2013 Term Loan paid interest quarterly commencing in the first quarter of 2014, at a rate of 1-month LIBOR plus 3.75% per annum, subject to a LIBOR floor of 1.00%. The 2013 Term Loan was scheduled to mature on December 18, 2020, at which time the remainder of the principal would become due and payable in full. The commitment fee on the unused portion of the 2013 Revolver was 0.50% per year.

During the year ended December 31, 2017, in accordance with 2013 Credit Agreement and related amendments, as well as the Term Loan RSA and related amendments, the Company made principal payments on the 2013 Term Loan totaling $186.9 million, resulting in a loss on extinguishment of debt of $1.8 million, due to the write-off of deferred financing fees and discount.

During the period from January 1, 2018 through February 9, 2018, in accordance with 2013 Credit Agreement and related amendments, as well as the Term Loan RSA and related amendments, the Company made principal payments on the 2013 Term Loan totaling $73.1 million and in accordance with the 2018 Credit Agreement, upon the WIMC Effective Date, the Company made an additional principal payment totaling $37.5 million.

On February 9, 2018, as a result of the WIMC Prepackaged Plan, the Company entered into the 2018 Credit Agreement, which amended the terms of the 2013 Credit Agreement. Refer to the 2018 Credit Agreement section above for additional information.

Senior Notes

In December 2013, the Company completed the sale of $575.0 million aggregate principal amount of Senior Notes. The Senior Notes paid interest semi-annually on June 15 and December 15, commencing on June 15, 2014, at a rate of 7.875% per annum, and were scheduled to mature on December 15, 2021. The outstanding principal balance of the Senior Notes was $538.7 million at December 31, 2017. At December 31, 2017, the outstanding balance of Senior Notes and related accrued interest of $19.4 million was included in liabilities subject to compromise on the consolidated balance sheets. On February 9, 2018, upon the WIMC Effective Date of the WIMC Prepackaged Plan, the Senior Notes were canceled and each holder of a Senior Notes claim received its pro rata share of (a) Second Lien Notes and (b) Mandatorily Convertible Preferred Stock. Refer to the 2018 Credit Agreement section above and Note 25 for additional information.

During the fourth quarter of 2017, the remaining unamortized deferred financing fees on the Senior Notes of $7.5 million were written off and included as an expense within reorganization items on the consolidated statements of comprehensive income (loss).

Convertible Notes

In October 2012, the Company closed on a registered underwritten public offering of $290 million aggregate principal amount of Convertible Notes. The Convertible Notes pay interest semi-annually on May 1 and November 1, commencing on May 1, 2013, at a rate of 4.50% per annum, and were scheduled to mature on November 1, 2019. The outstanding principal balance of the Convertible Notes was $242.5 million at December 31, 2017.

At December 31, 2017, the outstanding balance of Convertible Notes and related accrued interest of $6.4 million were included in liabilities subject to compromise on the consolidated balance sheets. On February 9, 2018, upon the WIMC Effective Date of the WIMC Prepackaged Plan, the Convertible Notes were canceled and each holder of a Convertible Notes claim received common stock and warrants. Refer to Note 25 for additional information.

During the year ended December 31, 2017, the Company recorded $21.0 million in interest expense related to its Convertible Notes, which included $10.1 million in amortization of discount. The effective interest rate of the liability component of the Convertible Notes, which includes the amortization of discount and debt issuance costs, was 10.0% for the year ended December 31, 2017.

During the fourth quarter of 2017, the remaining unamortized discount on the Convertible Notes of $24.6 million and remaining unamortized deferred financing fees on the Convertible Notes of $2.3 million were written off and included as an expense within reorganization items on the consolidated statements of comprehensive income (loss).