DEBT

9 Months Ended

Sep. 30, 2019

Convertible Notes

As of September 30, 2019, the Company had outstanding fixed-rate notes with varying maturities for an undiscounted aggregate principal amount of $870.0 million (collectively the Notes). The Notes are senior subordinated convertible obligations, and interest is payable in arrears, semi-annually. The following table summarizes information regarding the Company’s convertible debt:



	September 30, 2019			December 31, 2018
1.50% senior subordinated convertible notes due in October 2020 (the 2020 Notes)	374,993			374,993
Unamortized discount	(15,780		)	(26,581		)
Unamortized deferred offering costs	(1,359		)	(2,334		)
Convertible Notes due in 2020, net	357,854			346,078

0.599% senior subordinated convertible notes due in August 2024 (the 2024 Notes)	495,000			495,000
Unamortized discount	(6,887		)	(7,946		)
Unamortized deferred offering costs	(2,351		)	(2,715		)
Convertible Notes due in 2024, net	485,762			484,339

Total convertible debt, net	$	843,616		$	830,417

Fair value of fixed rate convertible debt
Convertible Notes due in October 2020⁽¹⁾	384,713			419,722
Convertible Notes due in August 2024 ⁽¹⁾	490,297			491,626
Total fair value of fixed rate convertible debt	$	875,010		$	911,348


(1)	The fair value of the Company’s fixed-rate convertible debt is based on open market trades and is classified as Level 1 in the fair value hierarchy. For additional discussion of fair value measurements, see Note 3 – Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Interest expense on the Company’s convertible debt consisted of the following:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Coupon interest expense	$	2,271	$	3,331	$	6,681	$	9,819
Amortization of debt issuance costs	508		1,008		1,522		3,018
Accretion of discount on convertible notes	4,005		7,792		11,860		23,081
Total interest expense on convertible debt	$	6,784	$	12,131	$	20,063	$	35,918

See Note 12 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for additional information related to the Company’s convertible debt.

Revolving Credit Facility

In October 2018, the Company entered into an unsecured revolving credit facility of up to $200.0 million (the 2018 Credit Facility). The 2018 Credit Facility includes a letter of credit subfacility and a swingline loan subfacility and is intended to finance ongoing working capital needs and for other general corporate purposes. Borrowings under the 2018 Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) the LIBOR rate (except that if LIBOR is less than zero it shall be deemed to be zero for purposes of the 2018 Credit Facility), or LIBOR successor rate, plus an applicable margin ranging from 1.00% to 1.95% per annum, based upon the Company’s net leverage ratio and EBITDA for each of the two most recently ended four-quarter measurement periods, or (b) the Base Rate, generally the prime lending rate, plus an applicable margin ranging from 0.00% to 0.95%, based upon the Company’s net leverage ratio and EBITDA for each of the two most recently ended four-quarter measurement periods. Commitment fees payable on the undrawn amount range from 0.15% to 0.35% per annum based upon the Company’s net leverage ratio and EBITDA for each of the two most recently ended four-quarter measurement periods. The Company’s obligations under the Credit Facility are guaranteed by its direct subsidiary, California Corporate Center Acquisition LLC, and such obligations may in the future be guaranteed from time to time by certain other material domestic subsidiaries. The 2018 Credit Facility matures on October 19, 2021 at which time all outstanding amounts become due and payable, except that if at least $100.0 million aggregate principal amount of the 2020 Notes remain outstanding on August 1, 2020 and certain other conditions have not been met, the Company may be required to repay all amounts borrowed under the 2018 Credit Facility on August 1, 2020. The Company incurred approximately $1.0 million of issuance costs, which will be amortized to Interest Expense over the term of the 2018 Credit Facility. The 2018 Credit Facility contains financial covenants requiring the Company to maintain a minimum interest coverage ratio and a minimum liquidity requirement. As of September 30, 2019, and December 31, 2018, there were no outstanding amounts due on nor any usage of the 2018 Credit Facility. As of September 30, 2019, the Company and certain of its subsidiaries that served as guarantors were in compliance with all covenants.