LONG-TERM DEBT

Long-term debt consisted of the following:



	March 31, 2013		December 31, 2012
Combined Credit Agreements	$	433,475	$	388,150
Senior notes due 2015, net of unamortized discount	436,060		435,851
Senior notes due 2016, net of unamortized discount	580,566		579,795
Senior notes due 2019, net of unamortized discount	292,772		292,622
Senior subordinated notes due 2016	350,000		350,000
Total debt	2,092,873		2,046,418
Unamortized deferred gain-terminated interest rate swaps	15,446		16,788
Current portion of long-term debt	—		—
Long-term debt	$	2,108,319	$	2,063,206

Credit Facilities

The Combined Credit Agreements’ global borrowing base was $850 million and the global letter of credit capacity was $240 million as of March 31, 2013. At March 31, 2013, we had $372.5 million available under the Combined Credit Agreements.

We amended our Combined Credit Agreements in April 2013, which amendment provided for certain changes to the Combined Credit Agreements, including the following:


•	Permit the sale and transfer of a 25% interest in Quicksilver’s Barnett Shale assets to TGBR


•	Reduce the global borrowing base to $350 million from $850 million, including a reduction due to the Tokyo Gas Transaction


•	Reduce the minimum required interest coverage ratio to the following:



Period	Interest Coverage Ratio	Period	Interest Coverage Ratio
Q2 2013	1.25	Q1 2015	1.10
Q3 2013	1.25	Q2 2015	1.15
Q4 2013	1.25	Q3 2015	1.15
Q1 2014	1.20	Q4 2015	1.20
Q2 2014	1.15	Q1 2016	1.50
Q3 2014	1.10	Q2 2016	2.00
Q4 2014	1.10


•	Permit up to $800 million of second lien debt, subject to customary intercreditor terms


•	Permit redemption of existing notes or permitted additional debt with the proceeds from certain asset sales and permitted second lien debt, provided utilization under the global borrowing base after giving effect to such transactions is less than 75% and compliance with other customary conditions


•	Reduce the maximum senior secured debt leverage ratio to 2.0 and exclude permitted second lien debt from the senior secured debt definition


•	Increase the applicable margin by 0.75% for each type of loan and issued letters of credit


•	Increase the minimum mortgage properties requirement to 87.5% from 80% of proved hydrocarbon interests evaluated in the then most recent reserve report.

In April 2013, we received net cash proceeds of $463.4 million for the sale of 25% of the company's Barnett Shale assets to TGBR. The proceeds were used to reduce outstanding borrowings under the Combined Credit Agreements by approximately $250 million, with the remainder retained in cash.

Indenture Restrictions

We have an incurrence test under our indentures that requires EBITDA to exceed interest expense by 2.25 times. At March 31, 2013, we did not meet this test and, as a result, we are limited in our ability to, among other things, incur additional debt, except for specific baskets. We do retain, however, the ability to utilize the full borrowing capacity under our Combined Credit Agreements and to refinance existing debt. Not meeting this ratio does not represent an event of default under our indentures. We are presently unable to predict when or if we will meet the incurrence test.

Summary of All Outstanding Debt

The following table summarizes certain significant aspects of our long-term debt outstanding at March 31, 2013.



	Priority on Collateral and Structural Seniority ⁽¹⁾
	Highest priority				Lowest priority
	Equal priority	Equal Priority
	Combined Credit Agreements	2015 Senior Notes	2016 Senior Notes	2019 Senior Notes	Senior Subordinated Notes
Principal amount ⁽²⁾	$850 million	$438 million	$591 million	$298 million	$350 million
Scheduled maturity date	September 6, 2016	August 1, 2015	January 1, 2016	August 15, 2019	April 1, 2016
Interest rate on outstanding borrowings at March 31, 2013 ⁽³⁾	3.28%	8.25%	11.75%	9.125%	7.125%
Base interest rate options ^{(4) (5)}	LIBOR, ABR, CDOR	N/A	N/A	N/A	N/A
Financial covenants ⁽⁶⁾	- Minimum current ratio of 1.0 - Minimum EBITDA to cash interest expense ratio of 1.5 - Maximum senior secured debt leverage ratio of 2.5	N/A	N/A	N/A	N/A
Significant restrictive covenants ⁽⁶⁾	- Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions - Limitations on derivatives	- Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions	- Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions	- Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions	- Incurrence of debt - Incurrence of liens -Payment of dividends - Equity purchases - Asset sales - Affiliate transactions
Optional redemption ⁽⁶⁾	Any time	August 1, 2012: 103.875 2013: 101.938 2014: par	July 1, 2013: 105.875 2014: 102.938 2015: par	August 15, 2014: 104.563 2015: 103.042 2016: 101.521 2017: par	April 1, 2013: 101.188 2014: par
Make-whole redemption ⁽⁶⁾	N/A	N/A	Callable prior to July 1, 2013 at make-whole call price of Treasury +50 bps	Callable prior to August 15, 2014 at make-whole call price of Treasury +50 bps	N/A
Change of control ⁽⁶⁾	Event of default	Put at 101% of principal plus accrued interest	Put at 101% of principal plus accrued interest	Put at 101% of principal plus accrued interest	Put at 101% of principal plus accrued interest
Estimated fair value ⁽⁷⁾	$433.5 million	$430.3 million	$601 million	$274.9 million	$294.4 million

⁽¹⁾

Borrowings under the Amended and Restated U.S. Credit Facility are guaranteed by certain of Quicksilver’s domestic subsidiaries and are secured by 100% of the equity interests of each of Cowtown Pipeline Management, Inc., Cowtown Pipeline Funding, Inc., Cowtown Gas Processing L.P., Cowtown Pipeline L.P., Barnett Shale Operating LLC, Silver Stream Pipeline Company LLC, Quicksilver Production Partners Operating Ltd., QPP Parent LLC and QPP Holdings LLC (collectively, the “Domestic Pledged Equity”), 65% of the equity interests of Quicksilver Resources Canada Inc. (“Quicksilver Canada”) (on a ratable basis with borrowings under the Amended and Restated Canadian Credit Facility) and the majority of Quicksilver's domestic proved oil and gas properties and related assets, (the “Domestic Pledged Property”). Borrowings under the Amended and Restated Canadian Credit Facility are guaranteed by Quicksilver and certain of its domestic subsidiaries and are secured by the Domestic Pledged Equity, the Domestic Pledged Property, 100% of the equity interests of Quicksilver Canada (65% of which is on a ratable basis with the borrowings under the Amended and Restated U.S. Credit Facility) and any Canadian restricted subsidiaries, under the Amended and Restated Canadian Credit Facility and the majority of Quicksilver Canada's oil and gas properties and related assets. The other debt presented is based upon structural seniority and priority of payment.


⁽²⁾	The principal amount for the Combined Credit Agreements represents the global borrowing base as of March 31, 2013.


⁽³⁾	Represents the weighted average borrowing rate payable to lenders.

⁽⁴⁾

As of March 31, 2013, amounts outstanding under the Amended and Restated U.S. Credit Facility bear interest, at our election, at (i) adjusted LIBOR (as defined in the Amended and Restated U.S. Credit Facility) plus an applicable margin between 2.00% to 3.00%, (ii) ABR (as defined in the Amended and Restated U.S. Credit Facility), which is the greatest of (a) the prime rate announced by JPMorgan, (b) the federal funds rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00%, plus, in each case under scenario (ii), an applicable margin between 1.00% to 2.00%. We also pay a per annum fee on the LC Exposure (as defined in the Amended and Restated U.S. Credit Facility) of all letters of credit issued under the Amended and Restated U.S. Credit Facility equal to the applicable margin, with respect to adjusted LIBOR loans, and a commitment fee on the unused availability under the Amended and Restated U.S. Credit Facility of 0.50%.

⁽⁵⁾

As of March 31, 2013, amounts outstanding under the Amended and Restated Canadian Credit Facility bear interest, at our election, at (i) the CDOR Rate (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 2.00% and 3.00%, (ii) the Canadian Prime Rate (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 1.00% and 2.00%, (iii) the U.S. Prime Rate (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 1.00% and 2.00% and (iv) adjusted LIBOR (as defined in the Amended and Restated Canadian Credit Facility) plus an applicable margin between 2.00% to 3.00%. We pay a per annum fee on the LC Exposure (as defined in the Amended and Restated Canadian Credit Facility) of all letters of credit issued under the Amended and Restated Canadian Credit Facility equal to the applicable margin, with respect to adjusted LIBOR loans, and a commitment fee on the unused availability under the Amended and Restated Canadian Credit Facility of 0.50%.


⁽⁶⁾	The information presented in this table is qualified in all respects by reference to the full text of the covenants, provisions and related definitions contained in the documents governing the various components of our debt.


⁽⁷⁾	The estimated fair value is determined using market quotations based on recent trade activity for fixed rate obligations (“Level 2” inputs). We consider debt with variable interest rates to have a fair value equal to its carrying value (“Level 1” input).