Note 5 – Debt Obligations

At March 31, 2014, we had $912.2 million in outstanding debt. Our debt consisted of the following at March 31, 2014 and December 31, 2013:



		March 31,		December 31,
		2014		2013

Senior notes, 12% fixed rate, due 2018	$	554,000	$	554,000
Convertible senior notes, 5.5% fixed rate, due 2016		135,000		135,000
Convertible senior notes, 6.5% fixed rate, due 2017		17,500		-
Term loan facility, variable rate, due 2017		125,000		-
Revolving credit facility, 13% fixed rate, due 2014		-		115,163
Convertible bonds, 11.5% until March 31, 2014 and 7.5% thereafter, due 2016		80,692		78,437
		912,192		882,600
Less: debt discount, net of premium		(18,223)		(11,722)
Less: current maturities		(2,140)		-
Long-term debt	$	891,829	$	870,878

Senior Notes

In February 2012, we closed the private placement of $350 million aggregate principal amount of 12% first priority notes due 2018 and $150 million aggregate principal amount of 12% second priority notes due 2018. In October 2012, we completed a private placement of an additional $54 million aggregate principal amount of 12% first priority notes due 2018 (collectively, the “2018 Notes”).

5.5% Convertible Senior Notes

In July 2011, we issued $135 million aggregate principal amount of our 5.5% Convertible Senior Notes due July 15, 2016. Interest on these notes is payable semi-annually at a rate of 5.5% per annum. The 5.5% Convertible Senior Notes are convertible into shares of our common stock at an initial conversion rate of 54.019 shares (equivalent to $18.51 per share) of common stock per $1,000 principal amount of the notes, subject to certain anti-dilution adjustments.

6.5% Convertible Senior Notes

On February 28, 2014, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) relating to the issuance of up to $55 million in common stock, warrants and convertible notes. We closed on an initial $30 million in late February and early March 2014, comprised of:

2.9 million shares of our common stock;

warrants to purchase 0.7 million shares of our common stock at an exercise price of $5.292 per share, expiring on February 28, 2019; and

$17.5 million in aggregate principal amount of our 6.5% convertible senior notes (the “6.5% Convertible Notes).”

The purchasers also have a 90-day option (the “Purchasers’ Option”) to purchase up to $25,000,000 of additional common stock, warrants and convertible debt on the same terms as the initial issuance, subject to certain limitations.

The 6.5% Convertible Notes will mature one day following the earlier of (i) November 30, 2017 and (ii) the date 91 days prior to the maturity date of our outstanding 5.5% Convertible Senior Notes due 2016 and our 11.5% Convertible Bonds due 2016, if such securities have not been converted, cancelled or extinguished prior to such date or extended or refinanced in full prior to such date with a resulting maturity date not earlier than March 1, 2018. Interest is payable on the 6.5% Convertible Notes quarterly, commencing on June 1, 2014. The notes are subject to customary events of default.

The 6.5% Convertible Notes are:

convertible at any time;

convertible initially at a rate 214.5002 shares of our common stock per $1,000 principal amount of 6.5% Convertible Notes (equivalent to an initial conversion price of approximately $4.662 per share of our common stock);

subject to certain anti-dilution adjustments;

general unsecured and unsubordinated obligations; and

equally ranked in right of payment with all of our existing and future unsubordinated indebtedness and senior in right of payment to any of our future indebtedness that is expressly subordinated to the 6.5% Convertible Notes.

Term Loan Facility

On January 24, 2014, we entered into a $255 million agreement consisting of a $125 million senior secured first lien term loan facility (“Term Loan Facility”) and a $130 million Combined Procurement Agreement. The proceeds of the Term Loan Facility were used to repay the outstanding amounts under our Revolving Credit Facility. The repayment included a prepayment fee and accrued interest of approximately $2.0 million. Subsequent to the repayment, the Revolving Credit Facility was terminated, all of the associated liens on our collateral obligations were released, and we recorded a loss of $3.5 million on the early extinguishment of financing agreements.

The Term Loan Facility bears quarterly interest of LIBOR plus 7.00% annually (provided LIBOR equals at least 1.25% annually) and will mature on the earlier of (a) November 30, 2017 and (b) the date 91 days prior to the maturity of our 5.5% convertible senior notes due 2016 and our 11.5% convertible notes due 2016, provided the notes have not been converted, cancelled, extinguished, extended or refinanced prior to that date with a maturity date prior to March 1, 2018.

Borrowings under the Term Loan Facility are unconditionally guaranteed by us and each of our current and future restricted subsidiaries. The credit agreement contains covenants and provisions with respect to events of default that are substantially similar to the covenants in the indentures governing our 2018 Notes including, but not limited to, restrictions on our ability to: (i) pay distributions or repurchase or redeem our capital stock or subordinated debt; (ii) make certain investments; (iii) incur additional indebtedness (iv) create or incur certain liens; (v) sell assets; (vi) consolidate, merge or transfer all or substantially all of our assets; (vii) enter into agreements that restrict distributions from our restricted subsidiaries to the Company; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. In addition, the Term Loan Facility contains various financial and technical covenants, including:

a minimum interest coverage ratio of 1.50:1.0;

a maximum leverage ratio of 5.0:1.0; and

a minimum asset coverage ratio of 2.0:1.0.

Revolving Credit Facility

On April 12, 2012, we entered into a Revolving Credit Facility, with Cyan Partners, LP, as administrative agent, under which we ultimately borrowed $115 million.

On January 24, 2014, we repaid the balance outstanding under the Revolving Credit Facility with proceeds from the Term Loan Facility. Following the repayment, the Revolving Credit Facility was terminated and all of the associated liens on the collateral securing our obligations were released.

11.5% Convertible Bonds

Our 11.5% Convertible Bonds bore interest at a rate of 11.5% per annum until March 31, 2014; and at a rate of 7.5% thereafter. Interest is compounded quarterly and added to the outstanding principal balance each quarter. The bonds are convertible into shares of our common stock at an initial conversion price of $16.52 per $1,000 of principal, which represents a conversion rate of approximately 61 shares of our common stock per $1,000 of principal.

Fair Value

The fair value of our outstanding debt obligations was $804.2 million and $868.4 million at March 31, 2014 and December 31, 2013, respectively. The fair values of long-term debt were determined based upon external market quotes for our 2018 Notes and 5.5% Convertible Senior Notes and discounted cash flows for other debt, which results in a Level 3 fair-value measurement.