(8) Debt

Details of the Company’s debt as of December 31, 2018 and 2017 were as follows (dollars in thousands):



		December 31, 2018					December 31, 2017
		Outstanding				Average	Outstanding				Average
Reference		Current		Long-term		Interest	Current		Long-term		Interest	Maturity
(a)(i)	Revolving credit facility	$	4,200	$	301,000	4.2%	$	-	$	528,000	3.2%	June 2023
(a)(ii)	Revolving credit facility - Rail		-		272,500	4.2%		-		272,000	3.2%	October 2023
(a)(iii)	Revolving credit facility - Euro		-		19,457	2.0%		-		14,736	2.0%	September 2020
(b)(i)	Term loan		1,800		27,300	4.5%		21,900		-	3.4%	April 2023
(b)(ii)	Term loan		111,750		-	3.8%		9,000		111,750	3.1%	October 2019
(b)(iii)	Term loan		7,000		75,500	4.0%		7,000		82,500	3.3%	June 2021
(b)(iv)	Term loan		1,240		15,284	3.4%		1,198		16,524	3.4%	December 2020
(b)(v)	Term loan		2,909		40,651	3.6%		2,805		43,560	3.6%	August 2021
(b)(vi)	Term loan		6,000		92,500	4.6%		-		-	-	October 2023
(c)	Senior secured notes		6,110		52,775	4.9%		6,110		58,885	4.9%	September 2022
(d)(i)	Asset-backed notes 2012-1		17,100		48,450	3.5%		17,100		65,550	3.5%	October 2027
(d)(ii)	Asset-backed notes 2013-1		22,900		74,425	3.4%		22,900		97,325	3.4%	March 2028
(d)(iii)	Asset-backed notes 2017-1		25,307		189,802	3.7%		25,307		215,109	3.7%	June 2042
(d)(iv)	Asset-backed notes 2018-1		34,890		284,935	4.0%		-		-	-	February 2043
(d)(v)	Asset-backed notes 2018-2		34,350		300,563	4.4%		-		-	-	September 2043
(e)	Collateralized financing obligations		39,610		67,615	1.2%		22,549		69,441	1.2%	December 2021
(f)	Term loans held by VIE		1,456		-	3.3%		-		3,286	2.7%	June 2019
			316,622		1,862,757			135,869		1,578,666
	Debt issuance costs		(5,241)		(15,124)			(3,820)		(7,893)
	Total Debt	$	311,381	$	1,847,633		$	132,049	$	1,570,773

(a)Revolving Credit Facilities

Revolving credit facilities consist of the following:

(i) On March 15, 2013, the Company entered into a Third Amended and Restated Revolving Credit Agreement, as amended, with a consortium of banks to finance the acquisition of container rental equipment and for general working capital purposes. On June 27, 2018, the Company entered into an amendment to the Third Amended and Restated Revolving Credit Agreement, pursuant to which the revolving credit facility was amended to, among other things, increase the commitment level from $960.0 million to $1,100.0 million, with the ability to increase the revolving credit facility by an additional $250.0 million without lender approval, subject to certain conditions. The amendment also extended the maturity date of the revolving credit facility to June 26, 2023 and revised certain covenants, restrictions and events of default to provide the Company with additional flexibility, including an increase in the maximum total leverage ratio from 3.75:1.00 to 4.00:1.00, subject to certain conditions.

As of December 31, 2018, the maximum commitment under the revolving credit facility was $1,100.0 million. There is a commitment fee on the unused amount of the total commitment, payable quarterly in arrears. The revolving credit facility provides that swing line loans (short-term borrowings of up to $25.0 million in the aggregate that are payable within 10 business days or at maturity date, whichever comes earlier) and standby letters of credit (up to $30.0 million in the aggregate) will be available to the Company. These credit commitments are part of, and not in addition to, the total commitment provided under the revolving credit facility. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the revolving credit agreement. Interest rates are based on LIBOR for Eurodollar loans and Base Rate for Based Rate loans. In addition to various financial and other covenants, the Company’s revolving credit facility also includes certain restrictions on the Company’s ability to incur other indebtedness or pay dividends to stockholders. As of December 31, 2018, the Company was in compliance with the terms of the revolving credit facility.

As of December 31, 2018, the Company had $794.7 million in availability under the revolving credit facility (net of $0.1 million in letters of credit) subject to its ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at December 31, 2018, the borrowing availability under the revolving credit facility was $91.2 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

The Company’s revolving credit facility, including any amounts drawn on the facility, is secured by substantially all of the assets of the Company (not otherwise used as security for its other credit facilities), including containers owned by the Company, which had a net book value of $477.0 million as of December 31, 2018, the underlying leases and the Company’s interest in any money received under such contracts.

(ii) On October 22, 2018, the Company and CAI Rail Inc. (CAI Rail), a wholly-owned subsidiary of the Company, entered into the Third Amended and Restated Revolving Credit Agreement with a consortium of banks, pursuant to which the revolving credit facility for CAI Rail was amended to, among other things, (i) extend the maturity date from October 22, 2020 to October 23, 2023, (ii) increase the commitment level from $500.0 million to $550.0 million, with the ability to increase the facility by an additional $150.0 million, subject to certain conditions, and (iii) revise certain of the covenants and restrictions under the prior facility to provide the Company with additional flexibility. As of December 31, 2018, the maximum credit commitment under the revolving line of credit was $550.0 million.

Borrowings under this revolving credit facility bear interest at a variable rate. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the revolving credit agreement. Interest rates are based on LIBOR for Eurodollar loans, and Base Rate for Base Rate loans.

As of December 31, 2018, CAI Rail had $277.5 million in availability under the revolving credit facility, subject to its ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at December 31, 2018, the borrowing availability under the revolving credit facility was $18.6 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

The agreement governing CAI Rail’s revolving credit facility contains various financial and other covenants. As of December 31, 2018, CAI Rail was in compliance with the terms of the revolving credit facility. CAI Rail’s revolving credit facility, including any amounts drawn on the facility, is secured by certain assets of CAI Rail, which had a net book value of $363.9 million as of December 31, 2018, and is guaranteed by the Company.

(iii) On September 23, 2016, the Company and CAI International GmbH (CAI GmbH), a wholly-owned subsidiary of the Company, entered into a Revolving Credit Agreement with a financial institution to finance the acquisition of rental equipment. As of December 31, 2018, the maximum credit commitment under the revolving credit facility was €25.0 million. Borrowings under this revolving credit facility bear interest at a variable rate. Interest rates are based on EURIBOR.

As of December 31, 2018, CAI GmbH had €8.0 million in availability under the revolving credit facility, subject to its ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at December 31, 2018, the borrowing availability under the revolving credit facility was €1.2 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

The agreement governing CAI GmbH’s revolving credit facility containers various financial and other covenants. As of December 31, 2018, CAI GmbH was in compliance with the terms of the revolving credit facility. CAI GmbH’s revolving credit facility, including any amounts drawn on the facility, is secured by all of the assets of CAI GmbH, which had a net book value of €24.2 million as of December 31, 2018, and is guaranteed by the Company.

(b)Term Loans

Term loans consist of the following:

(i) On April 19, 2018, the Company entered into a $30.0 million five-year term loan agreement with a bank. The loan is payable in 19 quarterly installments of $0.5 million starting July 31, 2018 and a final payment of $21.5 million on April 30, 2023. The loan bears interest at a variable rate based on LIBOR. As of December 31, 2018, the loan had a balance of $29.1 million.

The following are the estimated future principal and interest payments under these loans as of December 31, 2018 (in thousands). The payments were calculated assuming the interest rate remains 4.5% through maturity of the loan.



2019	$	3,086
2020		3,005
2021		2,924
2022		2,842
2023		22,391
		34,248
Less: Amount representing interest		(5,148)
Term loan	$	29,100

(ii) On December 20, 2010, the Company entered into a term loan agreement with a consortium of banks. Under this loan agreement, the Company was eligible to borrow up to $300.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of the Company’s wholly-owned foreign subsidiaries. The loan agreement is an amortizing facility with a term of six years. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the term loan agreement. The loan bears a variable interest rate based on LIBOR for Eurodollar loans, and Base Rate for Base Rate loans.

On March 28, 2013, the term loan was amended which reduced the principal balance of the loan from $249.4 million to $125.0 million through payment of $124.4 million from the proceeds of the $229.0 million fixed-rate asset-backed notes issued by the Company’s indirect wholly-owned subsidiary, CAL Funding II Limited (CAL II) (see Note 8 (d) below).

On October 1, 2014, the Company entered into an amended and restated term loan agreement with a consortium of banks, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) reduce the borrowing rates from LIBOR plus 2.25% to LIBOR plus 1.6% (per annum) for Eurodollar loans, (b) increase the loan commitment from $115.0 million to $150.0 million, (c) extend the maturity date to October 1, 2019, and (d) revise certain of the covenants and restrictions under the prior loan agreement to provide the Company with additional flexibility. As of December 31, 2018, the term loan had a balance of $111.8 million.

The following are the estimated future principal and interest payments under this loan as of December 31, 2018 (in thousands). The payments were calculated assuming the interest rate remains 3.8% through maturity of the loan.

(iii) On April 11, 2012, the Company entered into a term loan agreement with a consortium of banks. The agreement, as amended, provided for a five-year term loan of up to $142.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of the Company.

On June 30, 2016, the Company entered into an amended and restated term loan agreement, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) provide the Company with the ability to increase the commitments under the facility to a maximum of $100.0 million, subject to certain conditions, (2) extend the maturity date to June 30, 2021, and (c) revise certain of the covenants and restrictions under the prior agreement to provide the Company with additional flexibility. The term loan’s outstanding principal is amortized quarterly, with quarterly payments equal to 1.75% multiplied by the original outstanding principal. The amended and restated term loan agreement bears a variable interest rate based on LIBOR for Eurodollar loans, and Base Rate for base rate loans. As of December 31, 2018, the loan had a balance of $82.5 million.



2019	$	10,459
2020		10,165
2021		69,953
		90,577
Less: Amount representing interest		(8,077)
Term loan	$	82,500

(iv) On December 22, 2015, the Company entered into a $20.0 million five-year term loan agreement for CAI Rail with a financial institution. The term loan’s outstanding principal bears interest at a fixed rate of 3.4% per annum and is amortized quarterly. Any unpaid principal and interest is due and payable on December 22, 2020. The proceeds from the term loan were primarily used to repay outstanding amounts under CAI Rail’s revolving credit facility. As of December 31, 2018, the loan had a balance of $16.5 million.

The following are the estimated future principal and interest payments under this loan as of December 31, 2018 (in thousands). The payments were calculated based on the fixed interest rate of 3.4%.

(v) On August 30, 2016, CAI Rail entered into a term loan agreement of up to $100.0 million with a consortium of banks for the acquisition of railcars, subject to certain borrowing conditions, which is secured by certain railcars and other assets of CAI Rail. The loan agreement is an amortizing facility with a term of five years. Borrowings under the loan bear interest at a fixed rate as specified in the applicable term note entered into at the time a draw is made under the loan agreement. Principal and interest on the borrowings are payable monthly during the five-year term of the note. At closing of the loan agreement, CAI Rail made a draw of $50.0 million on the facility at a fixed interest rate of 3.6% per annum. Any unpaid principal and interest is due on August 30, 2021. As of December 31, 2018, the loan had a balance of $43.6 million.

The following are the estimated future principal and interest payments under this loan as of December 31, 2018 (in thousands). The payments were calculated based on the fixed interest rate of 3.6%.



2019	$	4,441
2020		4,441
2021		38,524
		47,406
Less: Amount representing interest		(3,846)
Term loan	$	43,560

(vi) On October 18, 2018, the Company entered into a $100.0 million five-year term loan agreement with a bank. The loan is payable in 20 quarterly installments of $1.5 million starting December 20, 2018 and a final payment of $70.0 million on October 18, 2023. The outstanding principal amounts under the loan bear interest at a fixed rate per annum of 4.6%. As of December 31, 2018, the loan had a balance of $98.5 million.

The following are the estimated future principal and interest payments under this loan as of December 31, 2018 (in thousands). The payments were calculated based on the fixed interest rate of 4.6%.



2019	$	10,396
2020		10,122
2021		9,848
2022		9,574
2023		77,266
		117,206
Less: Amount representing interest		(18,706)
Term loan	$	98,500

The Company's term loans are secured by rental equipment owned by the Company, which had a net book value of $461.8 million as of December 31, 2018.

(c)Senior Secured Notes

On September 13, 2012, Container Applications Limited (CAL), a wholly-owned subsidiary of the Company, entered into a Note Purchase Agreement with certain institutional investors, pursuant to which CAL issued $103.0 million of its 4.90% Senior Secured Notes due September 13, 2022 (the Notes) to the investors. The Notes are guaranteed by the Company and secured by certain assets of CAL and the Company.

The Notes bear interest at 4.9% per annum, due and payable semiannually on March 13 and September 13 of each year, commencing on March 13, 2013. In addition, CAL is required to make certain principal payments on March 13 and September 13 of each year, commencing on March 13, 2013. Any unpaid principal and interest is due and payable on September 13, 2022. The Note Purchase Agreement provides that CAL may prepay at any time all or any part of the Notes in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding. As of December 31, 2018, the Notes had a balance of $58.9 million.

The following are the estimated future principal and interest payments under the Notes as of December 31, 2018 (in thousands). The payments were calculated based on the fixed interest rate of 4.9%.



2019	$	8,921
2020		8,621
2021		8,322
2022		42,467
		68,331
Less: Amount representing interest		(9,446)
Senior secured notes	$	58,885

The Company's senior secured notes are secured by rental equipment owned by the Company, which had a net book value of $76.2 million as of December 31, 2018.

(d)Asset-Backed Notes

Asset-backed notes consist of the following:

(i) On October 18, 2012, CAL II issued $171.0 million of 3.47% fixed rate asset-backed notes (Series 2012-1 Asset-Backed Notes). Principal and interest on the Series 2012-1 Asset-Backed Notes is payable monthly commencing on November 26, 2012, and the Series 2012-1 Asset-Backed Notes mature in October 2027. The proceeds from the Series 2012-1 Asset-Backed Notes were used to repay part of the Company’s borrowings under its senior revolving credit facility. As of December 31, 2018, the Series 2012-1 Asset-Backed Notes had a balance of $65.6 million.

The following are the estimated future principal and interest payments under the Series 2012-1 Asset-Backed Notes as of December 31, 2018 (in thousands). The payments were calculated based on the fixed interest rate of 3.5%.



2019	$	19,103
2020		18,509
2021		17,916
2022		14,477
		70,005
Less: Amount representing interest		(4,455)
Asset-backed notes	$	65,550

(ii) On March 28, 2013, CAL II issued $229.0 million of 3.35% fixed rate asset-backed notes (Series 2013-1 Asset-Backed Notes). Principal and interest on the Series 2013-1 Asset-Backed Notes is payable monthly commencing on April 25, 2013, and the Series 2013-1 Asset-Backed Notes mature in March 2028. The proceeds from the Series 2013-1 Asset-Backed Notes were used partly to reduce the balance of the Company’s term loan as described in Note 10 (b)(ii) above, and to partially pay down the Company’s senior revolving credit facility. The Series 2013-1 Asset-Backed Notes had a balance of $97.3 million as of December 31, 2018.

The following are the estimated future principal and interest payments under the Series 2013-1 Asset-Backed Notes as of December 31, 2018 (in thousands). The payments were calculated based on the fixed interest rate of 3.4%.



2019	$	25,809
2020		25,042
2021		24,274
2022		23,507
2023		5,757
		104,389
Less: Amount representing interest		(7,064)
Asset-backed notes	$	97,325

(iii) On July 6, 2017, CAL Funding III Limited (CAL III), a wholly-owned indirect subsidiary of CAI, issued $240.9 million of 3.6% Class A fixed rate asset-backed notes and $12.2 million of 4.6% Class B fixed rate asset-backed notes (collectively, the Series 2017-1 Asset-Backed Notes). Principal and interest on the Series 2017-1 Asset-Backed Notes is payable monthly commencing on July 25, 2017, with the Series 2017-1 Asset-Backed Notes maturing in June 2042. The proceeds from the Series 2017-1 Asset-Backed Notes were used for general corporate purposes, including repayment of debt by the Company. As of December 31, 2018, the Series 2017-1 Asset-Backed Notes had a balance of $215.1 million.

The following are the estimated future principal and interest payments under the Series 2017-1 Asset-Backed Notes as of December 31, 2018 (in thousands). The payments were calculated based on the weighted average fixed interest rate of 3.7%.



2019	$	32,770
2020		31,842
2021		30,914
2022		29,986
2023		29,058
2024 and thereafter		94,394
		248,964
Less: Amount representing interest		(33,855)
Asset-backed notes	$	215,109

(iv) On February 28, 2018, CAL III issued $332.0 million of 4.0% Class A fixed rate asset-backed notes and $16.9 million of 4.8% Class B fixed rate asset-backed notes (collectively, the Series 2018-1 Asset-Backed Notes). Principal and interest on the Series 2018-1 Asset-Backed Notes is payable monthly commencing on March 26, 2018, with the Series 2018-1 Asset-Backed Notes maturing in February 2043. The proceeds were used for general corporate purposes, including repayment of debt by the Company. As of December 31, 2018, the Series 2018-1 Asset-Backed Notes had a balance of $319.8 million.

The following are the estimated future principal and interest payments under the Series 2018-1 Asset-Backed Notes as of December 31, 2018 (in thousands). The payments were calculated based on the weighted average fixed interest rate of 4.0%.



2019	$	47,045
2020		45,650
2021		44,254
2022		42,858
2023		41,462
2024 and thereafter		157,734
		379,003
Less: Amount representing interest		(59,178)
Asset-backed notes	$	319,825

(v) On September 19, 2018, CAL III issued $331.5 million of 4.3% Class A fixed rate asset-backed notes and $12.0 million of 5.2% Class B fixed rate asset-backed notes (collectively, the Series 2018-2 Asset-Backed Notes). Principal and interest on the Series 2018-2 Asset-Backed Notes is payable monthly commencing on October 25, 2018, with the Series 2018-2 Asset-Backed Notes maturing in September 2043. The proceeds were used for general corporate purposes, including repayment of debt by the Company. As of December 31, 2018, the Series 2018-2 Asset-Backed Notes had a balance of $334.9 million.

The following are the estimated future principal and interest payments under the Series 2018-2 Asset-Backed Notes as of December 31, 2018 (in thousands). The payments were calculated based on the weighted average fixed interest rate of 4.4%.



2019	$	48,300
2020		46,799
2021		45,297
2022		43,796
2023		42,295
2024 and thereafter		180,397
		406,884
Less: Amount representing interest		(71,971)
Asset-backed notes	$	334,913

The Company's asset-backed notes are secured by rental equipment owned by the Company, which had a net book value of $1,249.2 million as of December 31, 2018.

The agreements under each of the asset-backed notes described above require the Company to maintain a restricted cash account to cover payment of the obligations. As of December 31, 2018, the restricted cash account had a balance of $30.7 million.

(e)Collateralized Financing Obligations

As of December 31, 2018, the Company had collateralized financing obligations of $107.2 million (see Note 3). The obligations had an average interest rate of 1.2% as of December 31, 2018 with maturity dates between March 2019 and December 2021. The debt is secured by a pool of containers covered under the financing arrangements.

The following are the estimated future principal and interest payments under the Company’s collateralized financing obligations as of December 31, 2018 (in thousands). The payments were calculated assuming an average interest rate of 1.2% through maturity of the obligations.



2019	$	40,784
2020		22,084
2021		36,414
2022		10,147
		109,429
Less: Amount representing interest		(2,204)
Collateralized financing obligations	$	107,225

(f)Term Loans Held by VIE

On June 25, 2014, one of the Japanese investor funds that is consolidated by the Company as a VIE (see Note 3) entered into a term loan agreement with a bank. Under the terms of the agreement, the Japanese investor fund entered into two loans; a five year, amortizing loan of $9.2 million at a fixed interest rate of 2.7%, and a five year, non-amortizing loan of $1.6 million at a variable interest rate based on LIBOR. The debt is secured by assets of the Japanese investor fund, and is subject to certain borrowing conditions set out in the loan agreement. As of December 31, 2018, the term loans held by the Japanese investor fund totaled $1.5 million and had an average interest rate of 3.3%.

The Company's term loans held by VIE are secured by rental equipment owned by the Japanese investor fund, which had a net book value of $8.5 million as of December 31, 2018.

The agreements relating to all of the Company’s debt contain various financial and other covenants. As of December 31, 2018, the Company was in compliance with all of its debt covenants.

Less: Amount representing interest