DEBT

Debt consists of the following (in millions).



	March 31, 2017												March 31, 2016
	Interest Rates (A)		Principal			Unamortized Carrying Value Adjustments				Carrying Value			Principal			Unamortized Carrying Value Adjustments				Carrying Value
Third party debt:
Short term borrowings	2.92	%	$	294		$	—			$	294		$	579		$	—			$	579
Novelis Inc.
Floating rate Term Loan Facility, due June 2022	3.00	%	1,796			(53		)	(B)	1,743			1,787			(25		)	(B)	1,762
8.375% Senior Notes, due December 2017	8.375	%	—			—				—			1,100			(6		)		1,094
8.75% Senior Notes, due December 2020	8.75	%	—			—				—			1,400			(15		)		1,385
Capital lease obligations, due through July 2017	3.64	%	2			—				2			5			—				5
Novelis Corporation
5.875% Senior Notes, due September 2026	5.875	%	1,500			(23		)	(B)	1,477			—			—				—
6.25% Senior Notes, due August 2024	6.25	%	1,150			(19		)	(B)	1,131			—			—				—
Novelis Korea Limited
Bank loans, due through September 2020 (KRW 205 billion)	2.62	%	184			—				184			195			—				195
Novelis Switzerland S.A.
Capital lease obligation, due through December 2019 (Swiss francs (CHF) 17 million)	7.50	%	17			(1		)	(B)	16			23			(1		)	(B)	22
Novelis do Brasil Ltda.
BNDES loans, due through April 2021 (BRL 14 million)	5.90	%	4			—				4			5			(1		)	(B)	4
Other
Other debt, due through December 2020	5.01	%	1			—				1			1			—				1
Total debt			4,948			(96		)		4,852			5,095			(48		)		5,047
Less: Short term borrowings			(294		)	—				(294		)	(579		)	—				(579		)
Current portion of long-term debt			(121		)	—				(121		)	(47		)	—				(47		)
Long-term debt, net of current portion:			$	4,533		$	(96	)		$	4,437		$	4,469		$	(48	)		$	4,421

(A)

Interest rates are the stated rates of interest on the debt instrument (not the effective interest rate) as of March 31, 2017, and therefore, exclude the effects of related interest rate swaps and accretion/amortization of fair value adjustments as a result of purchase accounting in connection with Hindalco's purchase of Novelis and accretion/amortization of debt issuance costs related to refinancing transactions and additional borrowings. We present stated rates of interest because they reflect the rate at which cash will be paid for future debt service.


(B)	Amounts include unamortized debt issuance costs and debt discounts.

Principal repayment requirements for our total debt over the next five years and thereafter using exchange rates as of March 31, 2017 for our debt denominated in foreign currencies) are as follows (in millions).



As of March 31, 2017	Amount
Short-term borrowings and Current portion of long term debt due within one year	$	415
2 years	103
3 years	36
4 years	21
5 years	18
Thereafter	4,355
Total	$	4,948

Senior Secured Credit Facilities

As of March 31, 2017, the senior secured credit facilities consisted of (i) a $1.8 billion five-year secured term loan credit facility (Term Loan Facility) and (ii) a $1.0 billion five-year asset based loan facility (ABL Revolver). As of March 31, 2017, $18 million of the Term Loan Facility is due within one year.

In June 2015, we entered into a $200 million secured lien revolving loan facility (the Subordinated Lien Revolver) with a maturity date of September 10, 2016. In June 2016, we amended the Subordinated Lien Revolver to downsize the facility to $150 million and extend the maturity date to October 30, 2016. The Subordinated Lien Revolver was subsequently extinguished in July 2016.

In January 2017, we entered into a new Term Loan Facility. The Agreement provided Novelis with $1.8 billion, and the proceeds were used to extinguish the existing Term Loan agreement originally maturing on June 2, 2022. We incurred lender fees and debt issuance costs of $56 million on the new Term Loan Facility which were capitalized and will be amortized as an increase to "Interest expense and amortization of debt issuance costs" over the term of this instrument, of which we paid $52 million. Additionally, we recorded "Loss on extinguishment of debt" of $22 million in the fourth quarter of fiscal 2017 related to this financing transaction.

The Term Loan Facility matures on June 2, 2022, subject to 0.25% quarterly amortization payments. The loans under the Term Loan Facility accrue interest at LIBOR plus 1.85%. The Term Loan Facility also requires customary mandatory prepayments with excess cash flow, asset sale and condemnation proceeds and proceeds of prohibited indebtedness, all subject to customary exceptions. The Term Loan may be prepaid, in full or in part, at any time at the Company’s election without penalty or premium; provided that any optional prepayment in connection with a repricing amendment or refinancing through the issuance of lower priced debt made within six-months after the earlier of (i) completion of the initial syndication of the Term Loan and (ii) April 13, 2017, will be subject to a 1.00% prepayment premium. The Term Loan Facility allows for additional term loans to be issued in an amount not to exceed $300 million (or its equivalent in other currencies) plus an unlimited amount if, after giving effect to such incurrence on a pro forma basis, the senior secured net leverage ratio does not exceed 3.00 to 1.00. The lenders under the Term Loan Facility have not committed to provide any such additional term loans.

In October 2014, we amended and extended our ABL Revolver by entering into a $1.2 billion, five-year, senior secured ABL Revolver bearing an interest rate of LIBOR plus a spread of 1.50% to 2.00% plus a prime spread of 0.50% to 1.00% based on excess availability. In fiscal 2017, we elected to reduce the capacity of the ABL Revolver to $1.0 billion. The ABL Revolver has a provision that allows the facility to be increased by an additional $500 million. The ABL Revolver has various customary covenants including maintaining a minimum fixed charge coverage ratio of 1.25 to 1 if excess availability is less than the greater of (1) $110 million and (2) 12.5% of the lesser of (a) the maximum size of the ABL Revolver and (b) the borrowing base. The fixed charge coverage ratio will be equal to the ratio of (1) (a) ABL Revolver defined Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") less (b) maintenance capital expenditures less (c) cash taxes; to (2) (a) interest expense plus (b) scheduled principal payments plus (c) dividends to the Company's direct holding company to pay certain taxes, operating expenses and management fees and repurchases of equity interests from employees, officers and directors. The ABL Revolver matures on October 6, 2019; provided that, in the event that any of the Notes, the Term Loan Facility, or certain other indebtedness are outstanding (and not refinanced with a maturity date later than April 6, 2020) 90 days prior to their respective maturity dates, then the ABL Revolver will mature 90 days prior to the maturity date for the Notes, the Term Loan Facility or such other indebtedness, as applicable; unless excess availability under the ABL Revolver is at least (i) 25% of the lesser of (x) the total ABL Revolver commitment and (y) the then applicable borrowing base and (ii) 20% of the lesser of (x) the total ABL Revolver commitment and (y) the then applicable borrowing base, and a minimum fixed charged ratio test of at least 1.25 to 1 is met.

The senior secured credit facilities contain various affirmative covenants, including covenants with respect to our financial statements, litigation and other reporting requirements, insurance, payment of taxes, employee benefits and (subject to certain limitations) causing new subsidiaries to pledge collateral and guaranty our obligations. The senior secured credit facilities also include various customary negative covenants and events of default, including limitations on our ability to (1) make certain restricted payments, (2) incur additional indebtedness, (3) sell certain assets, (4) enter into sale and leaseback transactions, (5) make investments, loans and advances, (6) pay dividends or returns of capital and distributions beyond certain amounts, (7) engage in mergers, amalgamations or consolidations, (8) engage in certain transactions with affiliates, and (9) prepay certain indebtedness. The Term Loan Credit Agreement also contains a financial maintenance covenant, prohibiting the Company's senior secured net leverage ratio as of the last day of each fiscal quarter period and measured on a rolling four quarter basis from exceeding 3.50 to 1.00, subject to customary equity cure rights. The senior secured credit facilities include a cross-default provision under which lenders could accelerate repayment of the loans if a payment or non-payment default arises under any other indebtedness with an aggregate principal amount of more than $100 million (or, in the case of the Term Loan Facility, under the ABL Revolver regardless of the amount outstanding). Substantially all of our assets are pledged as collateral under the senior secured credit facilities.

Short-Term Borrowings

As of March 31, 2017, our short-term borrowings were $294 million consisting of $184 million of short-term loans under our ABL Revolver, $50 million in Novelis Brazil loans, and $59 million in Novelis China loans (CNY 405 million) and $1 million of other short term borrowings.

As of March 31, 2017, $20 million of the ABL Revolver was utilized for letters of credit, and we had $448 million in remaining availability under the ABL Revolver.

In fiscal years 2016 and 2017, Novelis Korea entered into various short-term facilities, including revolving loan facilities and committed credit lines. As of March 31, 2017, we had $211 million (KRW 236 billion) in remaining availability under these facilities.

In fiscal year 2016, Novelis Middle East and Africa entered into various short-term facilities, including revolving loan facilities and committed credit lines. As of March 31, 2017, we had $40 million in remaining availability under these facilities.

In December 2014, Novelis China entered into a committed facility. As of March 31, 2017, we had $2 million (CNY 11 million) in remaining availability under this facility.

Senior Notes

On August 29, 2016, Novelis Corporation, an indirect wholly owned subsidiary of Novelis Inc., issued $1.15 billion in aggregate principal amount of 6.25% Senior Notes Due 2024 (the 2024 Notes). The 2024 Notes are guaranteed, jointly and severally, on a senior unsecured basis, by Novelis Inc. and certain of its subsidiaries.

Additionally, on September 14, 2016, Novelis Corporation issued $1.5 billion in aggregate principal amount of 5.875% Senior Notes Due 2026 (the 2026 Notes, and together with the 2024 Notes, the Notes). The 2026 Notes are guaranteed, jointly and severally, on a senior unsecured basis, by Novelis Inc. and certain of its subsidiaries.

The proceeds from the issuance of the 2024 Notes and the 2026 Notes were used to extinguish our 8.375% 2017 Senior Notes and our 8.75% 2020 Senior Notes, respectively. In addition, we paid combined tender offer premiums and issuance costs of $139 million associated with the refinancing transactions, including fees paid to lenders, arrangers, and outside professionals such as attorneys and rating agencies. We recorded a "Loss on extinguishment of debt" of $112 million in the second quarter of fiscal 2017 related to refinancing transactions. We incurred debt issuance costs of $45 million on the Notes which were capitalized and will be amortized as an increase to "Interest expense and amortization of debt issuance costs" over the term of these instruments.

The Notes contain customary covenants and events of default that will limit our ability and, in certain instances, the ability of certain of our subsidiaries to (1) incur additional debt and provide additional guarantees, (2) pay dividends or return capital beyond certain amounts and make other restricted payments, (3) create or permit certain liens, (4) make certain asset sales, (5) use the proceeds from the sales of assets and subsidiary stock, (6) create or permit restrictions on the ability of certain of the Company's subsidiaries to pay dividends or make other distributions to the Company, (7) engage in certain transactions with affiliates, (8) enter into sale and leaseback transactions, (9) designate subsidiaries as unrestricted subsidiaries and (10) consolidate, merge or transfer all or substantially all of our assets and the assets of certain of our subsidiaries. During any future period in which either Standard & Poor's Ratings Group, Inc. or Moody's Investors Service, Inc. have assigned an investment grade credit rating to the Notes and no default or event of default under the indenture has occurred and is continuing, most of the covenants will be suspended. The Notes include a cross-acceleration event of default triggered if (1) any other indebtedness with an aggregate principal amount of more than $100 million is (1) accelerated prior to its maturity or (2) not repaid at its maturity. As of March 31, 2017, we were in compliance with the covenants in the Notes. The Notes also contain customary call protection provisions for our bond holders that extend through August 2022 for the 2024 Notes and through September 2024 for the 2026 Notes.

Korean Bank Loans

As of March 31, 2017, Novelis Korea had $93 million (KRW 103 billion) of outstanding long-term loans with various banks due within one year. All loans have variable interest rates with base rates tied to Korea's 91-day CD rate plus an applicable spread ranging from 0.91% to 1.58%.

Brazil BNDES Loans

Novelis Brazil entered into loan agreements with Brazil’s National Bank for Economic and Social Development (the BNDES loans) related to the plant expansion in Pindamonhangaba, Brazil (Pinda). As of March 31, 2017, there are $2 million of BNDES loans due within one year.

Other Long-term Debt

In December 2004, we entered into a fifteen-year capital lease obligation with Alcan for assets in Sierre, Switzerland, which has an interest rate of 7.5% and fixed quarterly payments of CHF 1.7 million, (USD $1.7 million).

During fiscal 2013 and 2014, Novelis Inc. entered into various five-year capital lease arrangements to upgrade and expand our information technology infrastructure.

As of March 31, 2017, we had $1 million of other debt, including certain capital lease obligations, with due dates through December 2020.

Interest Rate Swaps

We use interest rate swaps to manage our exposure to changes in benchmark interest rates which impact our variable-rate debt. See Note 15 — Financial Instruments and Commodity Contracts for further information about these interest rate swaps.