Debt

Components of Debt



(In millions)	2013			2012
Debt payable within one year(1)	$	76.6		$	83.4
Debt payable after one year	$	5.3		$	13.4
Debt Subject to Compromise(2)
Bank borrowings(3)	$	500.0		$	500.0
Accrued interest on bank borrowings	471.0			437.2
Default interest settlement(4)	129.0			—
Drawn letters of credit(5)	26.7			26.5
Accrued interest on drawn letters of credit	11.1			9.6
	$	1,137.8		$	973.3
Full-year weighted average interest rates on total debt	3.6		%	3.5		%

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(1)	Represents borrowings under various lines of credit and other borrowings, primarily by non-U.S. subsidiaries. At December 31, 2013, the fair value of Grace's debt payable within one year not subject to compromise approximated the recorded value of $76.6 million.


(2)	At December 31, 2013, the carrying value of Grace's bank debt subject to compromise plus interest was $1,137.8 million. The estimated fair value of the bank debt approximates the carrying value and is estimated using Level 2 inputs. These amounts were paid in full on February 3, 2014.

(3)

Under bank revolving credit agreements in effect prior to the Filing, Grace could borrow up to $500 million at interest rates based upon the prevailing prime, federal funds and/or Eurodollar rates. Of that amount, $250 million was available under short-term facilities that expired in May 2001, and $250 million was available under a long-term facility that expired in May 2003. As a result of the Filing, Grace was not permitted to make payments under the bank revolving credit agreements, and accordingly, the balance as of the Filing Date was reclassified to debt subject to compromise in the Consolidated Balance Sheets.


(4)	On December 31, 2013, Grace entered into an agreement to settle the final appeal pending in its Chapter 11 bankruptcy with the holders of the company’s pre-petition bank debt (the “Bank Lenders”). The settlement calls for Grace to pay the Bank Lenders $129.0 million, plus interest from December 31, 2013, in addition to the distributions provided in the Joint Plan.


(5)	Amounts drawn on letters of credit pursuant to settled but unpaid claims.

Fair value is determined based on expected future cash flows (discounted at market interest rates), quotes from financial institutions and other appropriate valuation methodologies.

On February 3, 2014, Grace entered into a Credit Agreement (the "Credit Agreement") in connection with its exit financing. The Credit Agreement provides for:


(a)	a $400 million revolving credit facility due in 2019, with interest at LIBOR +175 bps;


(b)	a $700 million term loan due in 2021, with interest at LIBOR +225 bps with a 75 bps floor;


(c)	a €150 million term loan due in 2021 with interest at EURIBOR +250 bps with a 75 bps floor; and


(d)	a $250 million delayed draw term loan facility available for 12 months, with amounts drawn due in 2021, with interest at LIBOR +225 bps with a 75 bps floor.

The term loans will amortize in equal monthly installments in aggregate annual amounts equal to 1.00% of the original principal amount thereof.

The Credit Agreement contains customary affirmative covenants, including, but not limited to (i) maintenance of legal existence and compliance with laws and regulations; (ii) delivery of consolidated financial statements and other information; (iii) payment of taxes; (iv) delivery of notices of defaults and certain other material events; and (v) maintenance of adequate insurance. The Credit Agreement also contains customary negative covenants, including but not limited to restrictions on (i) dividends on, and redemptions of, equity interests and other restricted payments; (ii) liens; (iii) loans and investments; (iv) the sale, transfer or disposition of assets and businesses; (vi) transactions with affiliates; and (vii) a maximum total leverage ratio.

Events of default under the Credit Agreement include, but are not limited to: (i) failure to pay principal, interest, fees or other amounts under the Credit Agreement when due, taking into account any applicable grace period; (ii) any representation or warranty proving to have been incorrect in any material respect when made; (iii) failure to perform or observe covenants or other terms of the Credit Agreement subject to certain grace periods; (iv) a cross-default and cross-acceleration with certain other material debt; (v) bankruptcy events; (vi) certain defaults under ERISA; and (vii) the invalidity or impairment of security interests.

To secure its obligations under the Credit Agreement, the Company has granted security interests in the shares of its Grace-Conn. and Alltech Associates subsidiaries, substantially all of its U.S. non-real estate assets and property, and certain U.S. real estate.

This summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which has been filed with the SEC.