Long-term debt and interest expense, net

3 Months Ended

Mar. 31, 2022

Long-term debt and interest expense, net

Long-term debt and interest expense, net

7. LONG-TERM DEBT AND INTEREST EXPENSE, NET

	March 31,		December 31,
	2022		2021
Syndicated Credit Facility:
Term Loan B	$	1,444	$	1,444
2023 Notes		500		500
2027 Notes		150		150
Deferred financing		24		26
Obligations under finance leases and other		7		5
Debt discount and issuance costs		(36)		(39)
Total long-term debt		2,089		2,086
Current portion of long-term debt		(29)		(24)
Non-current portion of long-term debt	$	2,060	$	2,062

Syndicated Credit Facility

As of March 31, 2022, the Company’s senior secured syndicated credit facility (“Syndicated Credit Facility”) is composed of: (i) a senior secured first lien revolving credit facility in an aggregate capacity of up to $500 million maturing in December 2023 (“Revolving Credit Facility”) and (ii) a senior secured first lien term B facility in an original aggregate principal amount of $2.0 billion maturing in October 2024 (“Term Loan B”).

The maximum consolidated debt leverage ratios permitted under the Syndicated Credit Facility are 7.25x at the end of each fiscal quarter until the quarter ending September 30, 2022, 6.25x at the end of each fiscal quarter thereafter until the fiscal quarter ending March 31, 2023, and 5.50x for each fiscal quarter thereafter (subject to a 0.25x reduction in each maximum level upon a disposition of a business line for greater than $500 million). As of March 31, 2022 and December 31, 2021, the Company was in compliance with its debt covenants.

The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued. The Company had $28 million of issued and undrawn letters of credit outstanding under the Revolving Credit Facility as of March 31, 2022 and December 31, 2021.

Senior Secured Notes due 2023

On December 2, 2019, the Company issued $1.0 billion in aggregate principal amount of 9.75% Senior Secured Notes due 2023 (“2023 Notes”). The 2023 Notes were offered and sold to qualified institutional buyers in the U.S. pursuant to Rule 144A and outside the U.S. pursuant to Regulation S under the Securities Act of 1933, as amended. The 2023 Notes were issued at a price of 98% and are recorded as long-term debt in the consolidated financial statements. The 2023 Notes bear interest at the rate of 9.75% per year, payable semi-annually in cash in arrears, which interest payments commenced in June 2020. The 2023 Notes will mature on December 31, 2023, unless earlier redeemed or repurchased. The 2023 Notes are guaranteed on a senior secured basis by each of the Company’s existing and future subsidiaries that guarantee the Syndicated Credit Facility.

On June 25, 2020, the Company repurchased $150 million aggregate principal amount of its 2023 Notes using proceeds from the sale of its former Canadian subsidiary. The 2023 Notes were repurchased (“2023 Notes Repurchase”) at a price of approximately 112.45% of the principal amount repurchased.

On March 26, 2021, the Company redeemed $350 million aggregate principal amount of its 2023 Notes using a portion of the net proceeds from an underwritten offering of 10 million shares of its common stock (“Offering”). The Company paid premiums of approximately $34 million related to the early redemption. This resulted in a loss on debt extinguishment of $41 million that was recorded in the first quarter of 2021, which is included as part of Interest expense, net within the Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2021. See Note 9 for additional details on the Offering.

Senior Secured Notes due 2027

On June 25, 2020, the Company issued $150 million in aggregate principal amount of 7.54% Senior Secured Notes due 2027 (“2027 Notes”). The 2027 Notes were offered and sold to qualified institutional buyers in the U.S. pursuant to Rule 144A and outside the U.S. pursuant to Regulation S under the Securities Act of 1933, as amended. The 2027 Notes were issued at a price of 98.25% and are recorded as long-term debt in the consolidated financial statements. The 2027 Notes bear interest at the rate of 7.54% per year, payable semi-annually in cash in arrears, for which interest payments commenced December 2020. The 2027 Notes will mature on December 31, 2027, unless earlier redeemed or repurchased. The 2027 Notes are guaranteed on a senior secured basis by each of the Company’s existing and future subsidiaries that guarantee the Syndicated Credit Facility and the 2023 Notes.

The Company accounted for the issuance of the 2027 Notes and the 2023 Notes Repurchase as debt modifications. As a result, the 12.45% premium paid on the repurchase of the $150 million aggregate principal amount of 2023 Notes is accounted for as an incremental discount that is amortized over the life of the 2027 Notes. Separately, the previously incurred unamortized debt discount and debt issuance costs are amortized over the remaining life of the outstanding 2023 Notes.

Interest expense, net on long-term debt and other obligations is as follows:

	Three Months Ended March 31,
	2022		2021
Interest on long-term debt	$	33	$	44
Interest on orbital securitization liability		1		1
Loss on debt extinguishment		—		41
Imputed interest and other		—		1
Capitalized interest		(11)		(9)
Interest expense, net	$	23	$	78