Long-term debt and interest expense, net

3 Months Ended

Mar. 31, 2023

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,
	2023		2022
Syndicated Credit Facility:
Revolving Credit Facility	$	145	$	125
Term Loan B		1,489		1,493
7.75% 2027 Notes		500		500
7.54% 2027 Notes		150		150
Deferred financing		19		19
Obligations under finance leases and other		5		5
Debt discount and issuance costs		(94)		(98)
Total long-term debt		2,214		2,194
Current portion of long-term debt		(21)		(22)
Non-current portion of long-term debt	$	2,193	$	2,172

Syndicated Credit Facility

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 June 2027 (“Revolving Credit Facility”) and (ii) a senior secured first lien term B facility in an aggregate principal amount of $1.5 billion maturing in June 2029, which was issued with an original issue discount of 4.50% (“Term Loan B”).

On June 14, 2022, the Company amended the terms of the Syndicated Credit Facility pursuant to an amended and restated credit agreement (“Amended and Restated Credit Agreement”). The maximum Consolidated Net Debt Leverage Ratio financial maintenance covenant permitted under the Amended and Restated Credit Agreement are (1) 5.00:1.00 for each fiscal quarter ending on or after March 31, 2023 through and including December 31, 2023 and (2) 4.50:1.00 for each fiscal quarter ending on or after March 31, 2024. The required level of the Interest Coverage Ratio maintenance covenant is 2.50:1.00 as of the last day of each fiscal quarter. As of March 31, 2023, the Company was in compliance with its debt covenants.

Borrowings under Term Loan B bear interest at a rate equal to, at the Company’s option, either Adjusted Term SOFR plus an applicable margin ranging from 4.00% to 4.25% or adjusted base rate (“ABR”) plus an applicable margin ranging from 3.00% to 3.25%, in each case depending on the total Consolidated Net Debt Leverage Ratio. Starting September 30, 2022, the Company must make equal quarterly installment payments in aggregate annual amounts equal to 1% of the original principal amount of Term Loan B, with the final balance payable at maturity on June 14, 2029; provided that if the 7.75% 2027 Notes are not repaid in full by the date that is 91 days prior to the maturity date of the 7.75% 2027 Notes, the maturity date for the Term Loan B will be the maturity date of the 7.75% 2027 Notes. Borrowings under Term Loan B may be repaid by the Company, in whole or in part, together with accrued interest, without premium or penalty.

Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company’s option, if such borrowings are in U.S. dollars, either Adjusted Term SOFR plus an applicable margin ranging from 2.75% to 3.50% or ABR plus an applicable margin ranging from 1.75% to 2.50%, in each case depending on the total Consolidated Net Debt Leverage Ratio. The Company may also, at its option, borrow in Canadian dollars, Euros or British Pounds Sterling using the same applicable margins as noted for U.S. dollars. The Revolving Credit Facility is payable at maturity on June 14, 2027. The Revolving Credit Facility may be repaid by the Company, in whole or in part, together with accrued interest, without premium or penalty.

The Revolving Credit Facility includes an aggregate $200 million sub limit under which letters of credit can be issued. The Company had $13 million and $24 million of issued and undrawn letters of credit outstanding under the Revolving Credit Facility as of March 31, 2023 and December 31, 2022, respectively. The $11 million decrease of issued and undrawn letters of credit is primarily due to approximately $10 million of obligations now being collateralized with cash versus previously collateralized by letters of credit. The approximately $10 million of cash collateral is classified as restricted cash within Other current assets on the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023.

7.75% Notes due 2027 

On June 14, 2022, the Company issued $500 million in aggregate principal amount of 7.75% 2027 Notes in a private placement to qualified institutional buyers in the U.S. pursuant to Rule 144A under the Securities Act of 1933, as amended (“Securities Act”) and outside the U.S. pursuant to Regulation S under the Securities Act. The 7.75% 2027 Notes were issued at a price equal to 100% of their face value and are recorded as long-term debt in the consolidated financial statements. The 7.75% 2027 Notes bear interest at the rate of 7.75% per year, payable semi-annually in cash in arrears on June 15 and December 15 of each year, beginning on December 15, 2022. The 7.75% 2027 Notes will mature on June 15, 2027, unless earlier redeemed or repurchased. The 7.75% 2027 Notes are secured on a first-priority basis by liens on the Company’s and the guarantors’ assets that also secure, equally and ratably, the Company’s indebtedness under the Syndicated Credit Facility and the 7.54% 2027 Notes (as defined below) pursuant to the terms of a first lien intercreditor agreement. The 7.75% 2027 Notes are also guaranteed on a senior secured basis by each of the Company’s subsidiaries that are guarantors under the Syndicated Credit Facility and its 7.54% 2027 Notes (as defined below).

7.54% Notes due 2027

On June 25, 2020, the Company issued $150 million in aggregate principal amount of 7.54% Senior Secured Notes due 2027 (“7.54% 2027 Notes”). The 7.54% 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. The 7.54% 2027 Notes were issued at a price of 98.25% and are recorded as long-term debt in the consolidated financial statements. The 7.54% 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 7.54% 2027 Notes will mature on December 31, 2027, unless earlier redeemed or repurchased. The 7.54% 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.

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

	Three Months Ended
	March 31,
	2023		2022
Interest on long-term debt	$	46	$	33
Interest on orbital securitization liability		1		1
Capitalized interest		(18)		(11)
Interest expense, net	$	29	$	23