Debt

Debt consists of the following:



	September 30, 2015			December 31, 2014
URNA and subsidiaries debt:
Accounts Receivable Securitization Facility (1)	$	594		$	548
$2.5 billion ABL Facility (2)	1,829			1,304
5 ³/₄ percent Senior Secured Notes (3)	—			750
7 ³/₈ percent Senior Notes	750			750
8³/₈ percent Senior Subordinated Notes (3)	—			750
8¹/₄ percent Senior Notes (4)	315			687
7 ⁵/₈ percent Senior Notes	1,325			1,325
6¹/₈ percent Senior Notes	949			951
4 ⁵/₈ percent Senior Secured Notes (5)	1,000			—
5 ³/₄ percent Senior Notes	850			850
5 ¹/₂ percent Senior Notes (6)	800			—
Capital leases	95			105
Total URNA and subsidiaries debt	8,507			8,020
Holdings:
4 percent Convertible Senior Notes (7)	8			32
Total debt	8,515			8,052
Less short-term portion (8)	(639		)	(618		)
Total long-term debt	$	7,876		$	7,434

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(1)

In September 2015, the accounts receivable securitization facility was amended, primarily to increase the facility size and to extend the maturity date which may be further extended on a 364-day basis by mutual agreement with the purchasers under the accounts receivable securitization facility. The size of the facility was increased to $625. The amended facility expires on August 30, 2016. At September 30, 2015, $21 was available under our accounts receivable securitization facility. The interest rate applicable to the accounts receivable securitization facility was 0.8 percent at September 30, 2015. During the nine months ended September 30, 2015, the monthly average amount outstanding under the accounts receivable securitization facility was $490, and the weighted-average interest rate thereon was 0.8 percent. The maximum month-end amount outstanding under the accounts receivable securitization facility during the nine months ended September 30, 2015 was $594. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves, exceeds the outstanding loans. As of September 30, 2015, there were $614 of receivables, net of applicable reserves, in the collateral pool.

(2)

At September 30, 2015, $622 was available under our ABL facility, net of $49 of letters of credit. The interest rate applicable to the ABL facility was 1.8 percent at September 30, 2015. During the nine months ended September 30, 2015, the monthly average amount outstanding under the ABL facility was $1.4 billion, and the weighted-average interest rate thereon was 1.9 percent. The maximum month-end amount outstanding under the ABL facility during the nine months ended September 30, 2015 was $1.8 billion. In March 2015, the ABL facility was amended, primarily to increase the facility size and to extend the maturity date. The size of the facility was increased to $2.5 billion. All amounts borrowed under the ABL facility must be repaid on or before March 2020.


(3)	In April 2015, we redeemed all of our 5 ³/₄ percent Senior Secured Notes and 8³/₈ percent Senior Subordinated Notes. Upon redemption, we recognized an aggregate loss of $106 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the notes.


(4)	In April 2015, we redeemed $350 principal amount of our 8¹/₄ percent Senior Notes. Upon redemption, we recognized a loss of $15 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

(5)

In March 2015, URNA issued $1.0 billion aggregate principal amount of 4 ⁵/₈ percent Senior Secured Notes (the “4 ⁵/₈ percent Notes”) which are due July 15, 2023. The net proceeds from issuance were approximately $990 (after deducting offering expenses). The 4 ⁵/₈ percent Notes are guaranteed by Holdings and certain domestic subsidiaries of URNA and are secured on a second-priority basis by liens on substantially all of URNA’s and the guarantors’ assets that secure the ABL facility, subject to certain exceptions. The 4 ⁵/₈ percent Notes may be redeemed on or after July 15, 2018, at specified redemption prices that range from 103.469 percent in 2018, to 100 percent in 2021 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 4 ⁵/₈ percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. The indenture also includes covenants relating to the grant of and maintenance of liens for the benefit of the notes collateral agent. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4 ⁵/₈ percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

(6)

In March 2015, URNA issued $800 aggregate principal amount of 5 ¹/₂ percent Senior Notes (the “5 ¹/₂ percent Notes”) which are due July 15, 2025. The net proceeds from the issuance were approximately $792 (after deducting offering expenses). The 5 ¹/₂ percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5 ¹/₂ percent Notes may be redeemed on or after July 15, 2020, at specified redemption prices that range from 102.75 percent in 2020, to 100 percent in 2023 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 5 ¹/₂ percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 ¹/₂ percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.


(7)	During the nine months ended September 30, 2015, $26 of our 4 percent Convertible Senior Notes were redeemed. We recognized a loss of approximately $1 in interest expense, net upon redemption. The loss represented the difference between the net carrying amount and the fair value of the debt component of the notes. The 4 percent Convertible Senior Notes are due November 15, 2015.


(8)	As of September 30, 2015, our short-term debt primarily reflects $594 of borrowings under our accounts receivable securitization facility.

Convertible Note Hedge Transactions

In connection with the November 2009 issuance of $173 aggregate principal amount of 4 percent Convertible Senior Notes, Holdings entered into convertible note hedge transactions with option counterparties. The convertible note hedge transactions cost $26, and decreased additional paid-in capital by $17, net of taxes, in our accompanying condensed consolidated statements of stockholders’ equity. The convertible note hedge transactions cover, subject to anti-dilution adjustments, 0.7 million shares of our common stock. The convertible note hedge transactions are intended to reduce, subject to a limit, the potential dilution with respect to our common stock upon conversion of the 4 percent Convertible Senior Notes. The effect of the convertible note hedge transactions is to increase the effective conversion price to $15.56 per share, equal to an approximately 75 percent premium over the $8.89 closing price of our common stock at issuance. The effective conversion price is subject to change in certain circumstances. In the event the market value of our common stock exceeds the effective conversion price per share, the settlement amount received from such transactions will only partially offset the potential dilution. For example, if, at the time of exercise of the conversion right, the price of our common stock was $65.00 per share, assuming an effective conversion price of $15.56 per share, on a net basis, we would issue 0.5 million shares. The 4 percent Convertible Senior Notes are due November 15, 2015.

Loan Covenants and Compliance

As of September 30, 2015, we were in compliance with the covenants and other provisions of the ABL facility, the accounts receivable securitization facility and the senior notes. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

The only financial covenant which currently exists under the ABL facility relates to the fixed charge coverage ratio. As of September 30, 2015, specified availability under the ABL facility exceeded the required threshold and, as a result, this maintenance covenant is inapplicable. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.