Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Fair Value Measurements

Fair Value Measurements

Note 7 Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we employ valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances utilizing a fair value hierarchy based on the observability of those inputs.

Under the fair value hierarchy:

● Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market;

● Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and

● Level 3 measurements include those that are unobservable and of a subjective nature.

Our financial liabilities that are accounted for at fair value on a recurring basis as of March 31, 2022 consisted of our common stock warrants. During the three months ended March 31, 2022, the common stock warrants transferred from using Level 3 inputs to Level 1 measurements due to increased trading volume. As of March 31, 2022, our common stock warrants were carried at fair market value and totaled $57.2 million.

Recurring Fair Value Measurements

The fair value of the common stock warrants was initially measured at fair value using a Monte Carlo option pricing model. As of December 31, 2021, the estimated fair value of the warrants is determined using Level 3 inputs. Inherent in the option pricing simulation are assumptions related to expected stock-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its common stock warrants based on implied and historical volatility of the company’s traded common stock. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is based on the Company’s ability to initiate expiration, subject to a 20 business day notice period.

Nonrecurring Fair Value Measurements

We applied fair value measurements to our nonfinancial assets and liabilities measured on a nonrecurring basis, which consist of measurements primarily related to assets held for sale, goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination. Based upon our review of the fair value hierarchy, the inputs used in these fair value measurements were considered Level 3 inputs.

Fair Value of Financial Instruments

We estimate the fair value of our financial instruments in accordance with U.S. GAAP. The fair value of our long-term debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial institutions. The fair value of our debt instruments is determined using Level 2 measurements. The carrying and fair values of these liabilities were as follows:

		March 31, 2022				December 31, 2021
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
	(In thousands)
5.50% senior notes due January 2023		$	21,226	$	21,536	$	24,446	$	24,736
5.10% senior notes due September 2023			62,338		63,685		82,703		84,044
0.75% senior exchangeable notes due January 2024			162,065		168,155		259,839		257,730
5.75% senior notes due February 2025			526,628		513,304		548,458		508,881
6.50% senior priority guaranteed notes due February 2025			—		—		50,485		50,490
9.00% senior priority guaranteed notes due February 2025			218,082		227,346		218,082		226,914
7.25% senior guaranteed notes due January 2026			557,902		557,935		559,978		522,079
7.375% senior priority guaranteed notes due May 2027			700,000		728,049		700,000		724,906
7.50% senior guaranteed notes due January 2028			389,609		379,058		389,609		346,966
2018 revolving credit facility			—		—		460,000		460,000
		$	2,637,850	$	2,659,069	$	3,293,600	$	3,206,746
Less: deferred financing costs			27,758				30,805
		$	2,610,092			$	3,262,795

The fair values of our cash equivalents, trade receivables and trade payables approximate their carrying values due to the short-term nature of these instruments.