Debt

9 Months Ended

Sep. 30, 2019

Debt

Debt

Note 6 Debt

Debt consisted of the following:

	September 30,		December 31,
	2019		2018
	(In thousands)
5.00% senior notes due September 2020 (1)	$	293,217	$	614,748
4.625% senior notes due September 2021		637,528		668,347
5.50% senior notes due January 2023		577,042		586,000
5.10% senior notes due September 2023		336,778		342,923
0.75% senior exchangeable notes due January 2024		467,034		450,689
5.75% senior notes due February 2025		781,502		791,502
2012 Revolving credit facility		455,000		170,000
2018 Revolving credit facility		—		—
Other		1,058		561
		3,549,159		3,624,770
Less: current portion		1,058		561
Less: deferred financing costs		31,509		38,325
	$	3,516,592	$	3,585,884

(1) The 5.00% senior notes due September 2020 have been classified as long-term because we have the ability and intent to repay this obligation utilizing our revolving credit facility (see 2018 Revolving Credit Facility below).

During the nine months ended September 30, 2019, we repurchased $378.1 million aggregate principal amount outstanding of our senior unsecured notes for approximately $383.6 million in cash, including principal, and $5.0 million in accrued and unpaid interest. This amount includes the purchase price for the tender offer for $275.0 million of our senior notes due 2020, which closed on June 14, 2019. In connection with these repurchases, we recognized a loss of approximately $0.7 million and $1.8 million for the three and nine months ended September 30, 2019, respectively, which represents the premiums paid and is included in impairments and other charges in our condensed consolidated statement of income (loss).

Subsequent to September 30, 2019 through the date of this report, we repurchased $49.1 million aggregate principal amount outstanding of various series of our senior unsecured notes for approximately $39.9 million in cash, reflecting principal, accrued and unpaid interest.

2018 Revolving Credit Facility

On October 11, 2018, Nabors Delaware, Nabors Drilling Canada Limited, an Alberta corporation (“Nabors Canada”), Nabors and certain other of Nabors’ wholly owned subsidiaries entered into a new five-year unsecured revolving facility with the lenders and issuing banks party thereto and Citibank, N.A., as administrative agent (the “2018 Revolving Credit Facility”). The 2018 Revolving Credit Facility has a borrowing capacity of $1.267 billion and is fully and unconditionally guaranteed by Nabors and certain of its wholly owned subsidiaries. The 2018 Revolving Credit Facility matures at the earlier of (a) October 11, 2023 and (b) July 19, 2022, if any of Nabors Delaware’s existing 5.5% senior notes due January 2023 remain outstanding as of such date. Certain lenders have committed to provide Nabors Delaware an aggregate principal amount of $1.227 billion under the 2018 Revolving Credit Facility, which may be drawn in U.S. dollars, and HSBC Bank Canada has committed to provide Nabors Canada an aggregate principal amount of $40 million in U.S. dollar equivalent, which can be drawn upon in either U.S. or Canadian dollars. The 2018 Revolving Credit Facility contains certain affirmative and negative covenants, including a financial covenant requiring Nabors to maintain a net debt to capitalization ratio not in excess of 0.60:1. Our net debt to capital ratio was approximately 0.58:1 as of September 30, 2019. The net debt to capital ratio is calculated by dividing net debt by net capitalization. For purposes of the 2018 Revolving Credit Facility, net debt is defined as total debt minus the sum of cash and cash equivalents. Net capitalization is defined as net debt plus shareholders’ equity. As of September 30, 2019, our net debt could be higher by approximately $256.8 million, while still maintaining our net debt to capital ratio of 0.60:1. Borrowing from the revolving credit facilities to pay down other debt that matures prior to the maturity date of the 2018 Revolving Credit Facility, such as the 5.00% senior notes due September 2020, does not adversely impact the ratio calculation. Therefore, the entire balance under the revolving credit facilities would be available to pay down outstanding debt. The ratio is only adversely impacted by borrowing under the revolving credit facilities used for purposes other than

retiring debt, which would increase our net debt, and by reductions to shareholders’ equity. We can limit or control our spending through reductions in discretionary capital or other types of controllable expenditures, monetization of assets, accessing capital markets through a variety of alternative methods, or any combination of these alternatives if needed. We cannot make any assurances as to our ability to implement any or all of these alternatives.

Additionally, during any period in which Nabors Delaware fails to maintain an investment grade rating from at least two ratings agencies, the guarantors under the facility and their respective subsidiaries will be required to maintain an asset to debt coverage ratio (as defined in the 2018 Revolving Credit Facility) of at least 2.50:1. As of September 30, 2019, our asset to debt coverage ratio was 3.57:1. The asset to debt coverage ratio is calculated by dividing (x) drilling-related fixed assets wholly owned by certain of Nabors’ subsidiaries that are guaranteeing the 2018 Revolving Credit Facility (the “2018 Revolver Guarantors”) or wholly owned subsidiaries of the 2018 Revolver Guarantors by (y) total debt of the 2018 Revolver Guarantors (subject to certain exclusions). As of the date of this report, we had no borrowings outstanding under our 2018 Revolving Credit Facility. In order to make any future borrowings under the 2018 Revolving Credit Facility, Nabors and certain of its wholly owned subsidiaries are subject to compliance with the conditions and covenants contained therein, including compliance with applicable financial ratios.

2012 Revolving Credit Facility

In connection with entering the 2018 Revolving Credit Facility, on October 11, 2018, Nabors Delaware entered into Amendment No. 3 to its existing credit agreement dated November 29, 2012 (as amended, including such amendment, the “2012 Revolving Credit Facility”), among itself, Nabors, Nabors Canada, HSBC Bank Canada, the other lenders party thereto, Citibank, N.A., and Wilmington Trust, National Association, as successor administrative agent (the “Amendment”). The Amendment, among other things, provided for Citibank, N.A.’s resignation as administrative agent and the appointment of Wilmington Trust, National Association as administrative agent, reduced the overall commitments available to $666.25 million and provided for certain lenders to exit the facility in order to become lenders under the 2018 Revolving Credit Facility. Availability under the 2012 Revolving Credit Facility is subject to a covenant not to exceed a net debt to capital ratio of 0.60:1. Net debt is defined in the 2012 Revolving Credit Facility in the same manner as the 2018 Revolving Credit Facility. As of September 30, 2019, we had $455.0 million outstanding under the 2012 Revolving Credit Facility. The weighted average interest rate on borrowings at September 30, 2019 was 3.86%. The 2012 Revolving Credit Facility matures on July 14, 2020.

We expect to remain in compliance with all covenants under the revolving credit facilities during the twelve month period following the date of this report based on our current operational and financial projections. However, we can make no assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.