Debt and Credit Lines

Amounts Due Banks

Amounts due banks consist of the following debt obligations that are due within the next twelve months:



	November 30,
	2016		2015
	(Dollars in millions)
Capital lease obligations	$	.7	$	.5
$350 million Term Loan B – current portion (interest at 5.25%)	3.5		—
$200 million Term Loan B – current portion (interest at 4.25%)	—		2.0
Total	$	4.2	$	2.5

The Company maintains borrowing facilities at certain foreign subsidiaries, which consist of working capital credit lines and facilities for the issuance of letters of credit. As of November 30, 2016, total borrowing capacity for foreign working capital credit lines and letters of credit facilities was $6.6 million, of which $6.5 million was available for utilization. As of November 30, 2015, total borrowing capacity for foreign working capital credit lines and letters of credit facilities was $17.7 million, of which $0.4 million was utilized as letters of credit issued. These letters of credit support commitments made in the ordinary course of business.

Note L—Debt and Credit Lines (Continued)

The Company’s long-term debt consists of the following:



	November 30,
(Dollars in millions)	2016			2015
$350 million Term Loan B (interest at 5.25%)	$	349.2		$	—
$200 million Term Loan B (interest at 4.25%)	—			190.0
Senior Unsecured Notes (interest at 7.875%)	—			150.0
Capital lease obligations	16.8			17.2
	366.0			357.2
Less: current portion	(4.2		)	(2.5		)
Unamortized original issue discount	(3.4		)	(0.5		)
Total long-term Debt	$	358.4		$	354.2

The following table reflects payments on long-term debt (excluding capital lease obligations) through maturity:



	(Dollars in millions)
2017	$	3.5
2018	$	3.5
2019	$	3.5
2020	$	3.5
2021	$	3.5
Thereafter	$	331.7

Between August and November 2016, the Company refinanced its U.S. debt facilities, issuing a $350.0 million Term Loan B ("Term Loan B") and amending and restating its Senior Revolving Credit Facility (“Facility”). A portion of the Term Loan B was used to redeem the outstanding principal and interest on the prior $200.0 million Term Loan B ("Prior Term Loan B"). In addition, $155.9 million of the Term Loan B proceeds were used to redeem the remaining balance outstanding and accrued interest on the Company's 7.875% Senior Notes ("Senior Notes") on November 1, 2016.

The Term Loan B was issued at a discount of $3.5 million which is reflected as unamortized original issue discount. The Company also incurred new debt issuance costs of $5.1 million, which are capitalized as a component of debt issuance costs on the Statements of Operation. These amounts will be amortized over the respective term of the debt as a non-cash component of interest expense. In addition, the Company wrote-off $1.7 million of existing debt issuance costs and the original issue discount related to the Prior Term Loan B and Senior Revolving Credit Facility and $1.2 million of debt issuance costs related to the Senior Notes.

Term Loan

The Company's $350.0 million Term Loan B matures on August 26, 2023. The Term Loan B is primarily secured by all real property, plant, and equipment of the Company's U.S. facilities and fully and unconditionally and jointly and severally guaranteed by the material U.S. subsidiaries of the Company. The Term Loan carries a variable interest rate based on, at the Company’s option, either a eurodollar rate or a base rate, in each case plus an applicable margin. The eurodollar rate is a periodic fixed rate equal to the ICE InterBank Offered Rate (“LIBOR”) subject to a floor of 1.00%. The applicable margin for the eurodollar rate is 4.25%. The base interest rate is a fluctuating rate equal to the higher of (i) the Prime Rate, (ii) the sum of the Federal Funds Effective Rate plus 0.50%, or (iii) the one-month eurodollar rate plus 1.00%. The applicable margin for the base rate is 3.25%. Annual principal payments consist of $3.5 million due in quarterly installments beginning November 30, 2016, and potential annual excess free cash flow payments as defined in the Term Loan B agreement, with any remaining balance to be paid on August 26, 2023. The Company was not required to make any annual excess free cash flow payments during 2016. The Company can prepay any amount at any time without penalty upon proper notice and subject to a minimum dollar requirement, except for prepayments arising from a repricing transaction occurring prior to February 26, 2017 which bear a premium of 1% of the loan amount being repaid. Prepayments will be applied towards any required annual excess free cash flow payment.

Additionally, the New Term Loan B provides for additional borrowings of the greater of $85.0 million or an amount based on a senior secured leverage ratio, as defined in the New Term Loan B, provided that certain requirements are met. The New Term Loan B contains affirmative and negative covenants, including limitations on additional debt, certain investments and acquisitions outside of the Company’s line of business. The New Term Loan B requires the Company to maintain a total net leverage ratio of less than 5.0 to 1.0. The Company is in compliance with this covenant with a total net leverage ratio of 3.5 to 1.0 at November 30, 2016.

Note L—Debt and Credit Lines (Continued)

Senior Revolving Credit Facility

The Company also has a Senior Secured Revolving Credit Facility (the "Facility") with a potential availability of $90.0 million, which can be further increased up to $140.0 million subject to additional borrowing base assets and lender approval. The Facility was amended in August and November 2016, resulting in a new maturity date, a reduction of potential availability from $100.0 million to $90.0 million and a reduction of applicable margins. The Facility now matures on August 26, 2021. The Facility is secured by U.S. accounts receivable, inventory (collectively the “Eligible Borrowing Base”) and intangible assets. Availability under the Facility will fluctuate depending on the Eligible Borrowing Base and is determined by applying customary advance rates to the Eligible Borrowing Base. The Facility includes a $5.0 million sub-limit for the issuance of commercial and standby letters of credit and a $10.0 million sub-limit for swingline loans. Outstanding letters of credit on November 30, 2016 were $0.4 million. The Facility contains affirmative and negative covenants, similar to the New Term Loan B, including limitations on additional debt, certain investments and acquisitions outside of the Company’s line of business. If the average excess availability of the Facility falls below $25.0 million during any fiscal quarter, the Company must then maintain a fixed charge coverage ratio greater than 1.1 to 1.0 as defined in the agreement. Average excess availability is defined as the average daily amount available for borrowing under the Facility during the Company’s fiscal quarter. The Company was in compliance with this requirement as the average excess availability did not fall below $25.0 million during the fourth quarter of 2016.

Advances under the Facility bear interest, at the Company’s option, at either an alternate base rate or a eurodollar rate, in each case plus an applicable margin. The alternate base interest rate is a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 0.50%. The eurodollar rate is a periodic fixed rate equal to LIBOR. Applicable margins are based on the Company’s average daily excess availability during the previous fiscal quarter. If average excess availability is greater than $50 million, the applicable margin will be 1.50% on eurodollar loans and 0.50% on base rate borrowings. If average excess availability is greater than or equal to $25 million but less than or equal to $50.0 million, the applicable margin will be 1.75% on eurodollar loans and 0.75% on base rate borrowings. If average excess availability is less than $25.0 million, the applicable margin will be 2.0% on eurodollar loans and 1.0% on base rate borrowings. The commitment fee for unused credit lines will be 0.25% if outstanding borrowings on the Facility are greater than or equal to 50% of the maximum revolver amount and 0.375% if outstanding borrowings are less than 50% of the maximum revolver amount.

At November 30, 2016, there were no amounts borrowed under the Facility and the amount available for borrowing under the Facility was $63.0 million.

Senior Unsecured Notes

The Senior Notes, which were redeemed on November 1, 2016, had a face value of $150.0 million with a 7.875% interest rate. The Senior Notes would have matured on November 1, 2018 and were unsecured. The Company was permitted to redeem the Senior Notes any time after October 31, 2014 at a premium above par subject to certain restrictions. The Senior Notes were fully and unconditionally and jointly and severally guaranteed on a senior, unsecured basis by all of OMNOVA Solution Inc.'s existing material domestic subsidiaries that from time to time guarantee obligations under the Company's Senior Notes.

The weighted-average interest rate on the Company’s debt was 5.78% and 6.05% during 2016 and 2015, respectively.

The following is a schedule by year of future minimum lease payments for this capital lease together with the present value of the net minimum lease payments as of November 30, 2016.



Year Ending November 30:	(Dollars in millions)
2017	$	1.4
2018	1.5
2019	1.5
2020	1.5
2021	1.4
Thereafter	18.0
Total minimum lease payments	25.3
Less: Amount representing estimated executory costs	(.6		)
Net minimum lease payments	24.7
Less: Amount representing interest	(7.9		)
Present value of minimum lease payments	$	16.8

Deferred Financing Fees

Debt issuance costs and original issue discounts incurred in connection with the issuance of the Company's debt are being amortized over the respective terms of the underlying debt, including any amendments. Total amortization expense of deferred financing costs and original issue discounts was $1.8 million, $2.0 million, and $2.3 million for 2016, 2015, and 2014, respectively. As a result of redeeming debt during 2016, 2015, and 2014, the Company wrote-off $2.9 million, $0.6 million, and $0.8 million, respectively, of existing deferred financing fees.

Cash paid for interest was $23.2 million, $24.9 million, and $30.9 million for 2016, 2015, and 2014, respectively. Included in 2015 and 2014 is the premium paid on the partial redemption of the Senior Notes as described previously.